The Virgin Islands government could find itself in yet another financial pickle as early as February of next year despite the recent authorization granted the Turnbull administration to negotiate for a $300 million general obligation bond issuance.
That assessment came from Senate Post Auditor Campbell Malone Wednesday night when he and Sen. Lorraine L. Berry detailed the methodology by which the Fiscal Year 2000 budget was formulated and approved last week by the 23rd Legislature.
Berry, who chairs the Senate Finance Committee, appeared with the post auditor on public television’s "Face to Face" program.
Malone’s assessment emerged from a "hypothetical seasonalization" of the government budget outlook.
"The first quarter shows slightly higher than average cash flow activity, due in part to the $300 million bond issue," but the gravity of the government’s fiscal health is revealed in the remaining three quarters where a combined $81.5 million shortfall is anticipated, according to Malone.
"By February 2000, we anticipate not having sufficient cash flow to meet basic operating costs, a shortfall of some $26.8 million," the post auditor said.
Malone projects the third quarter coming in short by $49.9 million and the fourth quarter of the fiscal year 2000 by $15 million.
But Berry noted that several issues could either enhance or further muddy the financial forecast.
"This overall projection is based on several items, capital projects, changes to the mirror tax code, the governor’s five-year fiscal recovery plan and the federal government’s willingness to forgive previous community disaster loans," Berry said.
Also to impact the financial forecast of the territory is the final disposition of the rum excise legislation now bogged down in Congressional politics. "Twenty-two million dollars is projected in the end of the fourth quarter," Berry noted but later acknowledged that the lifting of the cap on rum revenues is not yet a done deal in Washington.
The Virgin Islands rum revenue legislation is tied to a similar measure that affects Puerto Rico. The Vieques controversy with the U.S. Navy over the use of the bombing range has worked its way into the pending rum revenue legislation.
In other comments on Wednesday night's program, the Finance Committee chairwoman also expressed her opinion that "denial" exists in the community
about the true state of the government’s finances. It is wrong to believe that the
loan authorization granted the administration for $300 million would be a cure all for the fiscal problems, she said.
