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Charlotte Amalie
Friday, May 17, 2024


The Virgin Islands is a company town, but the "company" is not a manufacturer, not a distributor of natural resources, not a producer of any product. It is a provider of service, the primary care-giver to a population of approximately 100,000 men, women and children.
It is the government. And more than 10,500 people—about about one-third of the total workforce—draws a government salary.
In 1999 the cost of the payroll and benefits was a staggering $290.3 million. It ate up 73 percent of the government's total General Fund operating revenues, and even that wasn't enough. The General Fund was only able to cover 8,444 workers. The government tapped into "other funds" (revenues generated by federal sources) to pay another 2,100, according to the Five Year Operating and Strategic Financial Plan.
But as V.I. taxpayers know all too well, the annual price tag is only part of the story.
An unwieldy, ever-increasing burden known as retroactive pay obligations—comprised of salary increases contracted in the past but not yet paid—is crippling the government and embittering its employees.
At the beginning of this year, the dollar figure for retroactive wages owed to unionized government employees was $271.7 million, according to the plan. Further, "unpaid amounts are accumulating at an annual rate of $25 million."
The "looming presence" of this unfunded obligation "has had an adverse impact on government operations. Government union workers question the commitment of decision-makers to make these payments and do not believe the explanations of the government's financial bind."
In the past few years, the retroactive pay issue has generated or contributed to countless slow-downs, sick-outs, strikes and other job actions.
A significant factor in any discussion of the government workforce is the role organized labor plays in it. The Five Year Plan notes that more than 90 percent of local public sector employees are unionized. That compares to just 37.3 percent of their mainland counterparts.
A chart in the plan lists the following retroactive sums owed to various bargaining units for the period 1992-2000:
– American Federation of Teachers, $111.8 million;
– Seafarer's International Union (Master), $53.9 million;
– United Steelworkers of America (Master), $33.7 million;
– District 2A, AMO, $25 million;
– Police Benevolent Association, $17.4 million;
– Educational Administrator's Association, $10.9 million;
– Law Enforcement Supervisory Union, $5.9 million;
– Seafarer's International Union (secondary), $5.9 million
– Licensed Practical Nurses Association, $3.3 million;
– International Association of Firefighters, $1.9 million;
– Virgin Islands Nurses Association, $1.2 million;
– Seafarer's International de Puerto Rico, $600,897.
While the plan recognizes these obligations, it states "unions must accept the economic reality that a massive tax increase to cover aggregate obligations is unrealistic given the no-growth status of the private sector and the currently stagnant private sector employment."
The Economic Recovery Task Force recommends in the plan that the government negotiate with the unions to find a way to implement step increases and obtain a 100 percent forgiveness of the retroactive obligation.
Other recommendations in the plan for reigning in payroll costs include:
– Quarterly monitoring of the Memorandum of Understanding between the Virgin Islands and the federal government, showing the progress on implementing overtime reduction, a hiring freeze and a 5 percent reduction in payroll costs as per the MOU that was signed last year
– Cutting in half the overtime payments that were made in 1999
– Hiring only one person for every two who leave government service
– Continue a 5 percent reduction in payroll costs through fiscal year 2004
– Mandate that government employees share retirement and health insurance benefits costs on a 50-50 basis with the government
– Consider eliminating five local paid government holidays
– Make an analysis of various governmental funds with an eye toward reorganizing the system, eliminating some funds and thus reducing the administrative work of maintaining them.

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