June 11, 2001 – Gov. Charles W. Turnbull announced Monday that all government employees will get their long-awaited negotiated step increases starting Oct. 1, thanks in large part to the efforts of the Economic Development Agency (formerly the Industrial Development Commission) and the taxpayers in the top personal income bracket that it has brought to the territory.
In a press conference called for 3 p.m. at Government House and then delayed for an hour and a half while last-minute information was added to his speech, Turnbull said revenue collections were expected to exceed projections for fiscal year 2001 by $100 million.
Turnbull's chief labor negotiator, Karen Andrews, said the negotiated step increases for classified employees would cost about $30 million annually.
The increases mean an entry-level police captain's salary will go from $38,000 to $45,000, Andrews said. A starting firefighter would go from the current $21,968 to $26,000.
Turnbull said he does not anticipate any problem sustaining the expanded revenues to fund the step increases.
Louis Willis, director-designate of the Internal Revenue Bureau, said already this year the IRB has received $39 million in estimated tax returns, $8 million more than all of last year -– and more than any preceding year. And with two more quarters left, Willis said, he expects to collect another $30 million by the end of this fiscal year.
Echoing Turnbull, Willis said, "If we did not know it [the revenue increase] was recurring, we wouldn't be making this announcement. Indeed, we can sustain these revenues. The economy is moving up."
Willis said the majority of the $100 million is coming from income taxes. "We are blessed that a few good taxpayers have taken advantage of the EDA and have become residents of the V.I." he said.
In addition, he said, because of the timely payment of tax refunds, a number of taxpayers have changed their W-4 filing status, thus boosting revenues. As the government got ever more behind in paying tax refunds over the last several years, he explained, taxpayers took to listing more dependents so that less tax was deducted from their paychecks.
"And we've not yet addressed delinquent taxes," Willis added.
Both Turnbull and Willis said it was crucial to make the V.I. more business friendly.
IRB collections, which are not the territory's only revenues, are projected to be $485 million for fiscal year 2001. That's $100 million more than in 2000 and $165 million more than in 1999.
Willis projected that IRB revenues for Fiscal Year 2002 will be $470 million. He attributed the $17 million decrease from 2001 to President George Bush's tax rebates.
While the Virgin Islands tax system mirrors that of the federal system, Willis said, "We don't mirror the federal surplus" used to fund the federal tax rebates.
After the step increases, Turnbull said, priority will be given to "costs associated with increased health insurance premiums and funds for public school summer maintenance."
Andrews said non-union classified employees also will receive increases.
Turnbull said he would be calling the Senate into special session Friday to consider a bill providing for supplemental appropriations to the general fund to pay the increases and fund the health insurance and school repairs. He will be submitting additional legislation to address other "critical needs and prior year obligations."
Turnbull thanked the 23rd and 24th Legislatures, especially the current Senate majority, for their cooperation.
