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HomeNewsArchivesFY 2001 REVENUES FALL $15M SHORT OF SPENDING

FY 2001 REVENUES FALL $15M SHORT OF SPENDING

Financial officers had no good news Tuesday for lawmakers trying to balance a 2001 budget. The executive branch revenue projections have dropped $15 million since Gov. Charles W. Turnbull submitted his $429.6 million budget proposal in July, leaving the budget at least that far out of whack.
The official revenue projection for 2001 now stands at $414.6 million, and expenditures at $429.6 million.
The biggest single factor in the drop was the Legislature's rejection of the administration's proposal to temporarily increase the gross receipts tax from 4 percent to 5 percent. Budget Director Ira Mills told the Senate Finance Committee that the administration had been counting on $111 million in gross receipts taxes. It has revised that figure to just $93 million.
Slight increases were made in some categories: individual income taxes from $205.2 million to $207 million; and trade and excise taxes from $18 million to $19 million. But it was not enough to offset decreases in others, including a drop in franchise tax projections from $10 million to $6.2 million.
Senators voiced concerns that revenues will drop even further in the near future.
One worry is the pending District Court case that Gary Berne filed over how his St. Thomas commercial property has been assessed. Tax Assessor Roy Martin and Finance Commissioner Bernice Turnbull said they believe that a ruling against the government could directly or indirectly apply to all property—commercial and residential—throughout the territory, and substantially lower the amount of property tax collected. Neither would cite a dollar estimate.
Another consideration is the loss of the Foreign Sales Corporation industry. Mills said estimates of the revenue loss range from $7 million to $10 million but that it will not effect 2001 revenues.
Committee Chairwoman Lorraine Berry said the 2001 budget is now $29.7 million under year 2000 expenditures and said the Legislature will be trying to bridge the gap.
"We are bringing cuts," she said.
Mills said the administration cut spending for departments by at least five percent "in the first go-round" on the proposed budget and then another 3 percent to 6 percent.
Berry also said majority senators have been caucusing, trying to reach consensus on revenue measures. The process is difficult, she said. Nevertheless she predicted her committee will finish with the budget by Friday or Monday at the latest.
Meanwhile, Mills told the committee that the administration wants to reestablish the tax study commission to look into revisions of the tax code.
He also provided them with a written opinion from Attorney General Iver Stridiron that it is impossible for the administration to comply with the balanced budget act that the Legislature passed last year.
Stridiron said the law requires the governor to certify the average of the prior two fiscal years' revenues for the purpose of determining the total appropriations permitted in the upcoming fiscal year budget. The task is impossible because the data is not available before the legally required deadline for the submission of the coming year's budget, May 30.

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Financial officers had no good news Tuesday for lawmakers trying to balance a 2001 budget. The executive branch revenue projections have dropped $15 million since Gov. Charles W. Turnbull submitted his $429.6 million budget proposal in July, leaving the budget at least that far out of whack.
The official revenue projection for 2001 now stands at $414.6 million, and expenditures at $429.6 million.
The biggest single factor in the drop was the Legislature's rejection of the administration's proposal to temporarily increase the gross receipts tax from 4 percent to 5 percent. Budget Director Ira Mills told the Senate Finance Committee that the administration had been counting on $111 million in gross receipts taxes. It has revised that figure to just $93 million.
Slight increases were made in some categories: individual income taxes from $205.2 million to $207 million; and trade and excise taxes from $18 million to $19 million. But it was not enough to offset decreases in others, including a drop in franchise tax projections from $10 million to $6.2 million.
Senators voiced concerns that revenues will drop even further in the near future.
One worry is the pending District Court case that Gary Berne filed over how his St. Thomas commercial property has been assessed. Tax Assessor Roy Martin and Finance Commissioner Bernice Turnbull said they believe that a ruling against the government could directly or indirectly apply to all property—commercial and residential—throughout the territory, and substantially lower the amount of property tax collected. Neither would cite a dollar estimate.
Another consideration is the loss of the Foreign Sales Corporation industry. Mills said estimates of the revenue loss range from $7 million to $10 million but that it will not effect 2001 revenues.
Committee Chairwoman Lorraine Berry said the 2001 budget is now $29.7 million under year 2000 expenditures and said the Legislature will be trying to bridge the gap.
"We are bringing cuts," she said.
Mills said the administration cut spending for departments by at least five percent "in the first go-round" on the proposed budget and then another 3 percent to 6 percent.
Berry also said majority senators have been caucusing, trying to reach consensus on revenue measures. The process is difficult, she said. Nevertheless she predicted her committee will finish with the budget by Friday or Monday at the latest.
Meanwhile, Mills told the committee that the administration wants to reestablish the tax study commission to look into revisions of the tax code.
He also provided them with a written opinion from Attorney General Iver Stridiron that it is impossible for the administration to comply with the balanced budget act that the Legislature passed last year.
Stridiron said the law requires the governor to certify the average of the prior two fiscal years' revenues for the purpose of determining the total appropriations permitted in the upcoming fiscal year budget. The task is impossible because the data is not available before the legally required deadline for the submission of the coming year's budget, May 30.