May 23, 2003 – Citing mismanagement of finances as the reason for the government's current fiscal crisis, Sen. Ronald E. Russell is looking to draft a bill that would create a V.I. Fiscal Management Board.
Seven members from the public and private sectors would comprise the board, which would be charged with financial oversight of all three branches of the government.
"My proposal would change the current management by politics," Russell said, adding that the practice isn't limited to the executive branch and that the Legislature is guilty of the same thing.
Residents bear the tax burden, while government officials "haven't spoken about spending and how you're going to address the real problems facing the territory," he charged. So, he said, "I believe a receivership is the way to go."
The plan is patterned after the District of Columbia Financial Responsibility and Management Act, Russell said, which in 1995 created a control board to see the federal district out of its crushing debt.
The control board's 1998 annual report stated: "The District of Columbia has reached a turning point. Three years ago, it faced virtual bankruptcy, no access to private capital markets and disarray — if not dysfunction — in the provision of important government services. Actions taken by the District of Columbia Financial Responsibility and Management Assistance Authority since 1995 have helped to alleviate the immediate financial crisis that the district faced [and] greatly improve its prospects for future stability and growth."
Russell's proposed make-up of a local board is a lawyer, a banker, an engineer, a private sector accountant from each district, the territory's inspector general and the 25th Legislature's post auditor.
"I am very serious about it," Russell said Thursday night. The government has ended up in the fiscal mess it is in, he said, because its officials "did not make the hard decisions."
The D.C. board's mandate is to exist only until two things happen: the District's government has access to short- and long-term credit, and expenditures don't exceed revenues for four consecutive years.
In the first three years, according to the 1998 annual report, the D.C. control board:
– Stabilized the District's cash flow to pay employees, service providers and vendors regularly.
– Restored the District's ability to obtain favorable credit market access.
– Significantly reduced the District's General Fund deficits for Fiscal Years 1995 and 1996.
– Generated a surplus for FY 1997 and a projected surplus for FY 1998.
– Implemented a new financial management system to provide accurate and timely information on financial and budget policies and processes.
– Created a structure to reform regulations and streamline government administrative procedures.
Russell is unlikely to get a lot of support from his colleagues for a local control board, despite regular threats of — and some wishing for — a federal takeover of the territory's finances, which many informed sources believe will never happen, either.
Sen. Almando "Rocky" Liburd said Thursday night at the Senate special session called to address several borrowing, taxation and spending bills submitted by Gov. Charles W. Turnbull that if Russell's proposed bill should ever appear, it will be "dead on arrival."
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