74.7 F
Charlotte Amalie
Friday, March 29, 2024
HomeNewsArchivesPFA DIRECTOR WARNS SENATE AGAINST FUNDS GRAB

PFA DIRECTOR WARNS SENATE AGAINST FUNDS GRAB

Public Finance Authority Director Amadeo Francis gave an explicit "hands off" Monday to the 23rd Legislature's attempts to direct $20 million in PFA funds to support salary increases, warning that such a move would make it difficult to fund future capital projects and further hobble the territory's economy.
Francis said, "The attempt to create revenues for General Fund purposes out of the PFA, where they do not exist, must be rejected."
Sen. Alicia "Chucky" Hansen has been trying to obtain PFA funds for several months for government operating expenses . Gov. Charles W. Turnbull vetoed an amendment appropriating $20 million from the authority, which Hansen had attached to a bill appropriating $11 million to pay salary increases for striking teachers. The bill was passed in the Legislature earlier this month.
Hansen's amendment, which passed on a 7-6 vote, directed the PFA to contribute $20 million in earnings on interest on government bonds. Sen. Adelbert "Bert" Bryan last week failed in a petition to get his colleagues to call a Senate session to override Turnbull's veto.
In his veto message, Turnbull said there was not $20 million in "uncommitted, unrestricted or unattached resources in the PFA accounts."
First Union, the government's financial consultants, backed up the governor in an opinion issued Monday. The consultants said they believed the "analysis of the ( legislative) Post Auditor with respect to the ability of the PFA to transfer this $20 million is flawed." The consultants explained that retained earnings on bonds is an accounting accumulation of net income that is not distributed and does not represent liquid assets.
The opinion said that proceeds of bond issues are pledged to bondholders for specific projects.
After reviewing PFA's balance sheet, the consultants concluded that only $6.5 million exists in PFA's current assets, and "we would not recommend transferring this amount to the General Fund leaving the PFA with no liquid cash."
Francis recounted the history of the PFA, which he said was created during the Farrelly administration to be a conduit for the V.I. indebtedness at a time when the V.I.'s ability to raise capital in the U. S. bond market was at an all-time low. He said that the PFA has "entered into a number of binding commitments with the bond holders which are formalized in bond indentures."
In conclusion, Francis said, "Its erroneously based initiatives would result in crippling the PFA … and would send a devastating message to the municipal bond market which would result in undermining the ability of the PFA, and the V.I. government to issue additional bonds in the future to cover essential capital projects, without which our fragile economy cannot grow."

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.