May 11, 2003 – The Virgin Islands' crime and publicly aired fiscal problems — and the way they are reported — were blamed for the territory's lackluster economy at an economic forum Saturday.
Louis Willis, Internal Revenue Bureau director, blasted the news media, saying investors have been turned off by headlines in local papers. "If you read 'V.I. on brink of bankruptcy,' would you come?" he asked. He said the Economic Development Commission beneficiaries "are driving the economy," but "the media is driving them out."
Tourism Commissioner Pamela Richards pointed to a six-page spread on the Fountain Valley massacre published in a print newspaper last fall on the 30th anniversary of the event as being the kind of publicity that is harming the territory. She said she got a call from a reporter from The Los Angeles Times wanting to know about the event as though it had happened recently.
"I told the reporter," Richards said, "'Did you know that happened 30 years ago, around the same time as the Manson killings? Are you still reporting on that event?'"
Gov. Charles W. Turnbull jumped on the media, too, saying, "They don't seem to want to see us succeed."
The timing of the economic forum, sponsored by Sen. Roosevelt David, was coincidental, David said, to the governor's April 24 announcement that the government is facing a serious financial crisis. "The Virgin Islands is not alone," David said. "The Virgin Islands is part of the global community, and the global economy affects the Virgin Islands economy."
Turnbull at one point called upon divine intervention and faith to help solve the territory's problems. "With God's help, we are going to get out of this," he said.
The panel of presenters, selected by David, were Bruce Hamlin, assistant Police commissioner; Senate President David Jones; Richards; Gershwain Sprauve, corporate secretary of The West Indian Co.; Turnbull; businessman Neil Weiss and Willis.
The forum was held from 9 a.m. to noon at the Holiday Inn Windward Passage Hotel and was broadcast live from 9 to 11 a.m. on WVWI Radio.
In an unusually relaxed and convivial mood, Turnbull stayed for the whole forum, responding during the question-and-answer session and bantering with the assembled government officials and business leaders.
Apparently referring to a recent headline in a local print publication that said the "V.I. tops the world in debt per capita,", Turnbull said: "We are the worst of this; we are the worst of that," then added, "We have never been the worst of anything."
He said that "we are all in the same boat," and that the boat is not at the "bottom of the ocean."
Turnbull said he had been meeting with his financial team and was "thinking of calling a special session [of the Legislature] for May 16," with the emphasis on "thinking." He said he didn't want to be quoted as saying there was definitely going to be a session on that date.
Also referring to media criticism of what were called "secret meetings," Turnbull said both the administration and the Legislature have "the right" to meet for private brainstorming sessions.
Frank Mills, director of the Eastern Caribbean Center at the University of the Virgin Islands, said it was important when comparing the territory to other places to make reference to the size differences. "We are a place of only 110,000 people," he pointed out.
Mills also expressed concern about the "brain drain" in the Virgin Islands, adding, "That's why we are starting the technology park." Last year the Legislature approved the development of a UVI Research and Technology Park on St. Croix.
The moderator of the forum, economist Richard Moore, earlier pointed out that with between 42,000 and 44,000 people employed at any given time in the territory, it is impossible to assimilate into the work force the approximately 1,200 students who graduate from V.I. high schools every year.
Hence, Moore said, those students have to be prepared to compete on the U.S. mainland.
Not everyone agreed that the government's fiscal problems were necessarily made worse by the media. Some spoke of the current reality in the Virgin Islands as being the real problem.
Laurie Chapman, vice president of the Vendors Association on St. Thomas, asked, "Is the media telling the truth?" She added, "If you don't like the message, you kill the messenger."
Realtor April Newland, rather than blaming the media, recalled a time when people gathered in Charlotte Amalie at night for dinner and bar hopping. Crime drove those people out of town, she said, and is now driving investors out of the territory. Newland spoke of two EDC beneficiaries that are selling their expensive properties and giving up on the territory because they don't feel safe.
Competition at sea and on land
Chapman voiced another concern for local retailers — one that has been circulating in the St. Thomas community for several months: Some cruise ships appear to have altered their itineraries and are now taking passengers to other popular shopping ports — particularly St. Martin — before St. Thomas, thereby leaving passengers with empty pockets by the time they reach Charlotte Amalie.
Richards dismissed Chapman's concern, saying: "I could care less; I just want them to come to the V.I."
Cassan Pancham, St. Thomas-St. John Chamber of Commerce president, expressed astonishment at Richards' response. "I'd rather be first than fifth," he said. "The tourist has a limited amount of money to spend … If we don't have the priority, we lose the spending."
But Richards stood her ground. "Mr. Pancham, I'm surprised that you don't recognize that the ship is the greatest competitor," she retorted.
Most of today's cruise ships have extensive shopping facilities on board, selling many of the same items that are sold on land at their ports of call.
Studies have documented that overnight guests spend far more per capita in the Virgin Islands than cruise visitors. But — in part because of limited and costly airlift into the territory — V.I. hotels are often far below capacity, unlike some other Caribbean destinations.
Glen Smith, former president of the St. Thomas-St. John local of the American Federation of Teachers, said that for mainland residents, "it is cheaper to go to Europe than to get to these islands."
Willis said he had called a hotel in Las Vegas to reserve a room for him and his family, only to be told that the 3,500-room facility was completely booked for the month of May.
Stating that the Virgin Islands has a total of 5,200 hotel rooms, Willis said he didn't understand why they couldn't be filled regularly.
However, Richards said overnight arrivals are up, evidenced by a $2 million increase in room tax payments for April over the same period last year.
Hamlin said many destinations have enacted legislation stiffening penalties for tourist-related crimes. He suggested that as one solution to crime problems in the territory.
Turnbull also advocated stiffer penalties. "Our laws were made for a more gentle society," he said. "We need to make laws more draconian.
"The laws are too lenient. In other places, criminals don't have all the rights."
The governor, Hamlin and several others present expressed faith that recently appointed Police Commissioner Elton Lewis as a person who can lead the department in a successful war on crime.
Hamlin pointed to recent police response to an apparent gang fight that ended with a bust that netted illegal weapons and other paraphernalia of crime including bulletproof vests and ammunition.
On the fiscal front, Weiss said that "immediate
aid" is needed. "We don't have that much time," he said.
Weiss advanced an idea he said he has promoted before: a gasoline tax that he said would amount to between $1 and $2 per week to the consumer and could be used to secure bonds to be used to give low-interest second mortgages to businesses willing to develop in the Virgin Islands, especially on St. Croix.
Weiss suggested that such businesses as computer technology companies from California's Silicon Valley, destination resorts, and retirement communities, along with Golden Gaming, could be lured to the territory by the promise of such loans. Golden Gaming is one of two enterprises proposing to build casino-resort complexes on St. Croix.
Richards said she was courting new airlines to come to the territory, saying that competition would drive down fares.
Sprauve said the cruise industry is alive and well and that an overall plan includes working with other public and private agencies to turn cruise passengers into overnight guests.
Willis said changes are desperately needed in V.I. tax law. Mirroring the federal system, particularly regarding the Earned Income Credit, "is killing us," he said.
Willis brought up the specter of what could happen to the territory's new-found gold mine of EDC investors if President Bush's initiative to stop taxing stock dividends should become a reality.
Bush's rationale for doing away with taxes on dividends is that the wealthy shareholders are already paying corporate taxes. However, in the Virgin Islands, the lure of the EDC program is that those companies that qualify do not have to pay corporate taxes.
The payoff to the territory for benefits provided is that the owners of the EDC companies are required to maintain residency in the V.I. and thus pay their personal income taxes here.
In fact, Willis said Saturday, the $100 million windfall that came to the government coffers in 2001 came from those personal income taxes.
If the Bush plan were to become law — which seems unlikely now for lack of support in Congress, Willis said, "We are dead."
After the forum, Willis said he recommends that an individual be appointed to spend about two years researching and then drafting legislation that would mitigate the problems caused by V.I. tax law mirroring federal law. He said the Virgin Islands has the legal right to such regulatory action.
Revenues vs. expenditures
Willis and Richards addressed revenues using graphs, statistics and optimism. No one at the table directly addressed expenditures.
St. John businesswoman Wilma Marsh Monsanto said: "We keep gathering money, but we keep putting it into pockets that have holes." She wanted to know how the government plans to cut back on expenditures, saying money coming into the government has been "totally mismanaged."
Jones said one problem is the financial management system. "If you don't know how much money you have, it's hard to determine how you are going to spend it," he said.
There is no doubt, Jones said, that "the private sector would be better served by having a leaner, more productive public sector."
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