April 30, 2003 – In June of 1999, one of Gov. Charles W. Turnbull's financial advisers warned that "the government's fiscal position is precarious and requires immediate action." Three years later, in May 2002, she again warned that, given the then-current revenue and expenditure projections, "the General Fund will experience a significant cash shortfall."
The budget deficit in 1999 was projected by the governor's financial advisory team at $58 million. (See "Business as usual will double debt in 10 years").
The $100 million "windfall" that Turnbull had announced in 2001 did not prevent the same financial adviser, Margaret Guarino, public finance adviser for Banc of America Securities, from making the same dire predictions in 2002 that she had made in 1999.
Last week, Turnbull announced a projected deficit of $115 million for Fiscal Year 2003.
In a confidential memo dated May 31, 2002, that has been leaked to specific media outlets, Guarino said: "At this point individual income taxes do not appear to be on target to achieve previous [collection] projections of $354.3 million." In order to achieve the projections, Guarino said, collections would "need to be up for the period May through September [2002] by $24.6 million or 20 percent when compared to the same period last year."
The memo was addressed to Karen Andrews, the administration's chief labor negotiator; Kent Bernier, assistant to the governor for economic affairs; Kenneth Mapp, Public Finance Authority director of finance and administration; Ira Mills, Office of Management and Budget director; Nathan Simmonds, Office of Fiscal and Economic Recovery Implementation director; Bernice Turnbull, Finance commissioner; and Louis Willis, Internal Revenue Bureau director.
About a month after Guarino's 2002 memo to Turnbull's top financial advisers, and four months before last November's general election, the governor approved raises to his commissioners and about 1,100 unclassified employees amounting to $8.7 million a year. (See "Proposed exempt employee pay hikes total $8.7 million").
Also prior to the election, at least half a dozen personal services contracts were given to Turnbull political cronies in amounts ranging from $10,000 to $250,000.
The $250,000 is the approximate value per year of a contract given to Mapp to run the PFA. Four months prior to getting that appointment, Mapp had announced his intention to run for governor; then, in February 2002, he withdrew his bid. A month later, it was announced that he would be replacing Amadeo Francis, who had been fired by the governor unceremoniously and without explanation in December 2002 after 10 years as PFA director.
Well after the election, it seems that personal service contracts still are being drafted. One of them, for $60,000 — to be paid over a period of six months — was drawn up for Genesis Consultants to "provide coordination and supervisory and quality control of the public schools' maintenance and summer maintenance program in the district of St. Thomas-St. John during the term March 10, 2003, through Sept. 30, 2003." Genesis Consultants is owned by Horace M. Brooks — the father of Horace T. Brooks, confidential assistant to the governor.
There is no listing in the telephone directory for Genesis Consultants. It is unknown what particular credentials Horace M. Brooks has that qualify him for the management contract. It's also unknown if the contract, which calls for a $10,000 prepayment, was executed.
Turnbull increased Horace T. Brooks' own salary twice within nine months. It became known last May that he had raised the confidential assistant's pay to $58,000 from $45,000 in October 2001. Last June, he raised it again, to $65,000.
Turnbull also attempted in December 2002, the month after his re-election, to raise his own salary to $135,000 from $80,000 and that of Lt. Gov. Vargrave Richards to $115,000 from $75,000. His bill, introduced and passed in the final session of the 24th Legislature, on Dec. 23, also increased senators' salaries to $85,000 from $65,000. In January, in the face of vehement public outcry that disrupted his inaugural festivities on St. Thomas, St. John and St. Croix, Turnbull vetoed the same bill.
Guarino's May 2002 memo, which also carried the name of financial analyst Larry Soule, an associate of Guarino's and also a member of the administration advisory team, said that "other categories of income tax collections … must experience a very sizable increase for the remaining months of this fiscal year compared to last year in order to achieve the projected collections."
The memo was sent to the V.I. finance officials in advance of a meeting set for June 4, 2002.
"We would like to discuss in further detail the individual income tax projection to confirm whether or not it is still realistic to expect an increase of 20 percent for the last five months of the year when there was only a 9.3 percent increase during the first seven months of the year compared to last year," Guarino wrote. "This is of particular concern because the increase for the first seven months is mainly due to a one-time cover over payment in February of $31.6 million.
She pointed out that "Without this one-time cover over payment … collections would have been … $8 million lower than the prior year for the same period."
Turnbull, however, in his 2003 State of the Territory address delivered in January, was adamant that projected revenue increases were not from one-time occurrences, but the result of "disciplined tax-collection efforts" and a "reinvigorated" Economic Development Commission program which had "built" the money into the revenue base.
It is not known whether the June 4 meeting was held or, if so, who was present for it. A telephone call to Guarino was not returned Wednesday. Phone calls to government offices on Wednesday — a half-day government holiday on St. Thomas and St. John for V.I. Carnival Fair Day, formerly known as Food Fair Day — were not answered.
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