The V.I. government could find itself in yet another fiscal pickle as early as February of next year, despite the recent authorization granted the Turnbull administration to negotiate for the issuance of $300 million in general obligation bonds.
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 said his 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," Malone said, 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. "By February 2000, we anticipate not having sufficient cash flow to meet basic operating costs, a shortfall of some $26.8 million," he said.
Malone projects third-quarter revenues coming up short by $49.9 million and a shortfall of $15 million for the fourth quarter.
But Berry noted that several issues could either enhance or further muddy the financial outlook. "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," she said.
Final action on the federal rum excise-tax rebate legislation now bogged down in congressional politics could also impact on revenues. Berry noted that "$22 million dollars is projected in the end of the fourth quarter," but she later acknowledged that the lifting of the cap on rum-tax rebates to the territory is not a done deal in Washington.
The V.I. rum revenue legislation is tied to a measure for Puerto Rico. The Vieques controversy with the U.S. Navy over the use of the bombing range there has worked its way into the pending rum-tax legislation.
Berry said on the television program that "denial" exists in the community about the state of the government’s finances. The $300 million loan authorization granted the administration will not be a cure-all, she said.
