83.9 F
Charlotte Amalie
Tuesday, June 18, 2024


I am pleased that a dialogue took place on the issue of the government floating another $235 million in bonds at the recent town hall meetings for all concerned that were held on St. Croix and St. Thomas.
First, we must define what the problem is. We lack a true fiscal picture of this government. It is hard to make critical decisions without this information. I believe that we do not understand the full dimensions of the territory's fiscal problems, but if the experience of other places is a guide, it is, in fact, worse than we are being told by the government.
In addition, because of the overwhelming role that government plays in the V.I. economy, the term "fiscal crisis" is not adequate to describe this situation. It is a fiscal, economic, and social crisis that has been slowly building for at least two decades, driven by the inordinate role that the government payroll plays in the territory's life.
A little background on the bonded indebtedness of the V.I. government:
In the last audited financial statement, for Fiscal Year 2001, our long-term debt was more than $1.6 billion, which equals $15,080 for every man woman and child in the territory. In fact, the V.I. per capita bonded debt is reported to be the highest in the world. By continuing to borrow in this manner we are in essence trading off future public services for current services. This is why we are not receiving the most basic of public services at levels that are required. Consider the present state of education, health care, environmental quality and public safety (fire and police).
When you borrow today, you are committing a portion of future revenue to the servicing of old debt rather than providing future services. To make matters worse, we have pledged every revenue stream for the payment of our debts, which begs the question: Just what are we using to back these new proposed bonds? Like credit card debt, are we maxed out?
We should not continue to borrow ourselves out of this structural crisis. If anyone tells you differently, please question them. Currently, as I see it, there is no plan of action by our elected leaders, with a timetable and realistic goals, to control costs and aggressively collect current and past-due taxes. We borrowed $300 million about four years ago, with 26 more years to pay it off. Will we continue to borrow every few years?
Borrowing for capital projects is a good idea; however, without a feasibility study for analysis of these projects, it is hard to judge the cost vs. the benefits.
As I see things, we have three choices:
– We can allow our present elected officials to continue conducting business as usual. In other words status quo — all of the government proposals, executive and Senate, fall into this category. At best, they will slightly slow the deterioration of the situation.
– We can allow ourselves to go into receivership, which would be horrible. This means that an appointed judge would have control of our finances. Receivership is defined as "the state of an insolvent individual or business in bankruptcy proceedings when the court appoints a person to take charge of all legally relevant assets in order to preserve them for sale and distribution to creditors."
– We can consider a financial control board with real authority to regulate our spending.
I favor a board, one consisting of a majority of members from previous successful control boards elsewhere (or their representatives) and the remaining seats filled by local professionals with no ties to the local government. Funding and technical skills should be provided by the U.S. Department of Interior at realistic levels in line with the problem. Interior would need to use all of the tools available to ensure that federal funds are spent and used properly. Each branch of government would be informed of the board's actions and must commit itself to following the directives of the board, regardless of whether they agree with them.
Yes, it would be difficult to make this a reality, but it is a reality that we must face. Because we are such a small community, it will be very difficult for a majority of local board members to make the hard choices that affect our neighbors and family. If we could have implemented all of the recommendations by the V.I. Inspector General and the U.S. Interior Department's Office of Inspector General concerning our audits, we might not be facing these issues.
If we look back over time, the government has always been a step away from the canyon's edge of a fiscal crisis. Rather than see failure, let us look at this time for an opportunity to make real changes in government. Gov. Mark Warner of Virginia puts it this way concerning difficult choices: "Use this as an opportunity not just to balance your budget, but use this as an opportunity to take on some of these issues that you know in the good times there won't be the political will to do."
He recently made this comment to governors seeking his advice on how to turn their budgets around. Streamlining management and technology systems with reforms in our tax structure is the way we can stem the tide of red ink in the V.I.. Cutting our costs and collecting delinquent taxes is the key to success now. However, a long-range plan of action with milestone dates to achieve a streamlined government is what is truly needed.
How do you get from A to B? In particular, is there an alternative model that can be successful that does not involve the imposition of an external and powerful control board? In my judgment, there is not, and that is why it is useful to spell out the criteria and choices. I offer these criteria for the solutions to be considered:
– Imposition of structures and measures to bring about long-term change in the governance and fiscal management of the territory, getting at underlying irresponsibility and corruption, while imposing transparent systems for financial management.
– Avoidance of new taxes and a focus on revenue collection and the cost side of the budget, particularly the elimination of non-productive patronage positions.
– Preservation and improvement of core public safety, educational and environmental services, none of which are adequate today.
– Assistance in providing a "soft-landing" for non-political public workers who may be displaced.
– Elimination of impediments to environmentally sound economic growth, particularly in the tourist economy.
The St. Thomas-St. John Chamber of Commerce and the St. Thomas-St. John Hotel and Tourism Association jointly have some very good ideas that need to be repeated. I would also suggest the long- and short-term recommendations of the League of Women Voters of the Virgin Islands. These groups had an opportunity to speak before the Legislature recently. I endorse both plans of actions.

Editor's note: Jason Budsan is a St. Thomas small business owner and is active in a number of community advocacy groups and not-for-profit organizations.
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