May 14, 2003 – A clear pattern has emerged as Gov. Charles W. Turnbull and his 25-member, all-goverment financial team seek to find a viable solution to the territory's fiscal crisis.
In half a dozen or more meetings the governor and the team have held since Turnbull announced on April 24 that the territory was facing a Fiscal Year 2003 deficit of more than $100 million, suggestions from the public and private sectors as to what to do have to a large degree been diametrically different.
Government workers, and especially those who are unionized, are focusing for the most part on increasing revenues — calling for tax increases, greater efforts at obtaining federal grants, floating additional bonds — and gestures such as curtailing the use of cellular phones and motor vehicles.
Business leaders are calling for the government to reduce spending — first and foremost by downsizing payroll and contract service expenditures.
Government representatives tend to be adamantly against downsizing of the government work force, and union leaders have threatened dire action if Turnbull should push his own idea of reducing the work week to 36 hours from 40.
Private-sector leaders are unalterably opposed to any increases in taxes targeting the business community, arguing that the effect will be to put more businesses out of business, drive existing businesses away, and discourage new business investment.
On Tuesday, the administration distributed a release concerning two meetings held at Government House on Monday — one with business leaders and the other with union representatives. The pattern held true.
In the morning, the team met with business people including representatives of the St. Thomas-St. John and the St. Croix Chambers of Commerce and the St. Thomas-St. John Hotel and Tourism Associations. According to the release, suggestions advanced then included:
– Government salary reductions.
– Government pension reform.
– Reduction of operating expenses.
– Reduction of personal services contracts.
– Prohibition on subletting of government leases.
– Execution of government leases at fair market value.
– Payment by non-residents of taxes related to local real estate transactions.
– Privatization of garbage and mass transit operations.
– Implementation of a 5 percent personal use tax on purchases in excess of $1,000.
– Aggressive tax collections.
Cassan Pancham, St. Thomas-St. John chamber president, said on Tuesday night that the meeting with business leaders — the second within a week — lasted about an hour and a half. He said the business group reviewed the suggestions previously made public by the Turnbull administration. "The thing that particularly concerned us were the tax increases," he said.
However, he said, "the governor's financial team was receptive to our suggestions."
Pancham and Fred Laue, president of the St. Croix Hotel and Tourism Association, said on Tuesday night that raising taxes, particularly the hotel occupancy tax, would not serve the best interests of the territory.
"Government does not create revenue; businesses create revenue," Laue said.
When asked whether pay cuts for government employees would be a feasible way to help reduce the deficit, Laue pointed to recent cutbacks in private industry, notably American Airlines, as cost-reduction measures. "Why the Virgin Islands thinks we don't have to cut salaries makes you wonder," he said.
The Government House release stated that the following suggestions were submitted to Turnbull "by the business sector" and "were also a part of the presentation made by the financial management team":
– Direct deposit of payroll checks.
– Legislative authorization of short-term borrowing.
– Application of an excise tax to imported personal items.
– A $10 increase in vehicle registration fees.
– Application of the road tax to taxis, with the revenues to be used for road maintenance and repairs.
– Establishment of a federal grants development office.
– Promotion of economic development incentives.
– Establishment of one-stop business service centers.
In the afternoon, the administration team met with representatives of the American Federation of Teachers, Police Benevolent Association, Seafarers International Union, Law Enforcement Seafarers Union, United Steel Workers, V.I. Licensed Practical Nurses, International Association of Firefighters and others. According to the release, "most did not agree on reduction in salaries or a shortened work week."
The union leaders did, the release stated, call for:
– Standardizing government vehicles.
– Reorganizing government departments and agencies.
– Instituting a cap on Economic Development Authority benefits.
– Floating additional bonds for capital improvements.
– Advancing existing or pending capital projects.
– Installing parking meters in the downtown areas.
– Aggressive collection of money owed the government.
– Better use of prison labor.
– Fostering a partnership of the private sector, government and the unions.
– Reducing the government's unclassified work force.
– Inventorying government property for possible sale of items.
– Revisiting the government's contract with Hovensa.
– Expanding the road tax to include trailers and other commercial vehicles.
– Reducing rental expenditures.
– Making better use of government-owned property.
– Instituting trash removal and environmental impact fees.
– Reinstituting home nursing care.
– Making all supervisors and agency heads more accountable.
Turnbull told the union members that before the territory seeks any further loans, "there must first be a viable repayment plan in place," the release stated.
One set of recommendations from a government group does emphasize reductions in payroll and expenses: the 25-item list submitted on April 28 by the Minority Caucus of the 25th Legislature.
It calls for canceling the hefty pay raises given to unclassified employees a year ago; instituting a cap of $60,000 on salaries except for those of the governor, lieutenant governor and Territorial Court judges; suspending the contracts of anyone hired for exempt positions since last Nov. 1; consolidating offices and eliminating rental of office space where possible; instituting a hiring freeze except for safety, health and social welfare personnel; and utilizing teleconferencing of meetings to cut down on air travel between the districts.
Valerie Lovett contributed to this report.
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