The Turnbull administration has overestimated revenue projections for its revised $432 million FY 2000 budget by $135.3 million, according to a report from Post Auditor Campbell Malone.
Moreover, Malone identified two other potential revenue losses that could boost the shortfall to as high as $160 million.
One is the pending sale of Chase Manhattan Bank to the V.I. Community Bank — if VICB is granted tax relief on those additional assets. The other is the interest the government would pay on a $300 million bond issue recently authorized by the Legislature.
However, another financial analyst who asked not to be named cautioned that the pending bank sale and the bond issue, which are not yet in place, could happen far enough into FY2000 to lessen their impact on revenue projections.
Meanwhile, the Senate Finance Committee late Thursday abruptly postponed until next Tuesday a meeting at which the committee was to take action on 16 remaining individual budget bills. The meeting had been scheduled for early Thursday afternoon.
Calling the situation "another challenge" in formulating a "viable" budget, Committee Chair Lorraine Berry said balances in various unidentified government funds must be reconciled with the Finance Department and Office of Management and Budget before the committee moves forward.
In his 52-page report sent Oct. 13 to Berry, Malone broke down into 10 areas his estimate that projected revenues realistically should be reduced by $135.3 million.
The largest suggested cut was in personal income-tax projections, which the post auditor said should be reduced by $68.1 million.
Malone attributed much of the projected shortfall to the general decline in economic activities, saying, "Revenues are down, major funds are overdrawn, layoffs and firings are imminent," resulting in a 9 percent decline in income tax collections.
Malone also said the revenue projections were incorrectly counting twice the witholding payments of government employees.
Malone said projected revenues from the Caribbean Basin Initiative Fund, the Interest Revenue Fund, the V.I. Lottery and the Internal Revenue Matching Fund, amounting to $11.3 million, should be removed because "none of these funds could sustain the indicated appropriations as suggested in the FY 2000 budget."
Malone said the sale of delinquent property liens should be removed entirely as a source of revenues because there was no basis to indicate an increase in revenues. "If a more substantial basis, say a signed commitment," were secured for sale of the liens, then the revenues could be upgraded, Malone said.
Malone also said there was no basis to include revenues from a solid waste fund in the budget.
Of the $14.4 million projected for collection of back taxes by the Internal Revenue Bureau, Malone said, "This definitely requires more than lip service; an absolute, funded commitment must be undertaken in order to realize these collections. Given the current funding levels and difficulties at IRB, this goal definitely seems unrealistic, as least by the amount of the reduction."
Malone decreased the projected revenues as follows:
Personal income taxes, $68,080,151.
Trade and Excise taxes, $3,500,000.
Gross receipt taxes, $9,000,000.
Caribbean Basin Initiative fund, $2,300,000.
Interest Revenue Fund, $2,000,000.
VI Lottery Commission, $349,000.
Internal Revenue Matching fund, $6,700,000.
Sale of delinquent property tax liens, $27,000,000.
Solid Waste Fund, $2,000,000.
Collection of accounts receivable, $14,400,000.
Malone's report contained a number of measures he said must be taken to improve cash flow and revenues for the current fiscal year, many of which have been previously discussed.
Reprogramming funds from the tobacco settlement.
Eliminating subsidies to revenue-generating agencies.
Eliminating requirements for bid bonds and performance bonds.
Renegotiating government leases.
Initiating actions to recover a user fee for the Port Authority and other quas-government entities.
Initiating landfill tipping fees.
Outsourcing accounts receivable in IRB, the Finance Department and Property and Procurement.
Initiating a cruise-ship user fee.
Installing parking meters.
Privatizing a number of agencies.
Initiating a shoppers' visa program.