79.7 F
Charlotte Amalie
Thursday, October 6, 2022
HomeNewsArchivesCLASHES, CLOSED DOORS MAKE BUDGET A MYSTERY

CLASHES, CLOSED DOORS MAKE BUDGET A MYSTERY

Nov. 4, 2003 – The V.I. government is now 36 days into Fiscal Year 2004 without a budget in place.
Why this has come to be is widely understood: disagreement between the executive and legislative branches over how to address the territory's fiscal crisis. How it has come about is a textbook case of conducting the public's business out of sight of the sunshine.
It has long been the purview of the Senate Finance Committee to hold hearings preliminary to producing a draft budget that ultimately goes to the full Senate for a vote. At the hearings, the heads of departments and agencies make their case for the amount of money they would like, and for what.
The Finance Committee then "marks up" the budget — making its decisions about who should actually get what — and sends it to the Rules Committee which then sends it to the Senate floor.
Sen. Adlah "Foncie" Donastorg, the Finance Committee chair, announced on Oct. 30 that he has scheduled "final hearings" on the FY 2004 budget for Nov. 10 and 12. According to Senate sources, the budget will move to the Rules Committee for hearings on Nov. 13 and 14, and will proceed to the Senate floor for a vote sometime between Nov. 18 and 21.
The public, however, hasn't a clue at this point as to what that budget will look like. The testimony the Finance Committee took in July and August hearings was given before Gov. Charles W. Turnbull submitted his proposed budget, three months late. The governor called for appropriations far less than the agency heads requested. However, the Senate has spent the last month dissecting and reconstructing the executive budget in meetings that have not been open to the public or the media.
Compounding the uncertainly is the fact that this year's budget, unlike those of recent times, is as least as much about revenues as it is about appropriations. The battle between the two branches of government over new and increased taxes versus spending reductions was joined six months ago when the governor submitted his so-called fiscal recovery package to the Legislature. The battlefield is now the FY 2004 budget.
Tracking the troubles
On April 24, Gov. Charles W. Turnbull publicly acknowledged what had been common knowledge from before the start of his second term in office: The territory was facing a serious Fiscal Year 2003 deficit.
By May 31, annually, the governor is required to submit his proposed budget for the coming fiscal year to the Senate. Turnbull announced late in May that he would not do so for Fiscal Year 2004 until the Senate acted on his controversial package of six bills to address the fiscal crisis — sent to the Senate on the night of May 20 for consideration at a special session he had called for May 22.
The governor's package called for a number of new and increased taxes. On June 5, the Finance Committee eviscerated the tax enhancement portion of the package, killing more than $80 million of Turnbull's proposed $95 million in revenues from new and increased taxes. But the lynchpin of his fiscal recovery plan was the borrowing of another $235 million on the bond market, and that remained to be taken up separately.
As a condition of taking up the bond borrowing bill, all 15 senators called on Turnbull to roll back huge salary increases he had granted to unclassified government employees in 2002. The governor's concession was to impose a six-month reduction of 2 to 10 percent in those salaries in excess of $40,000 a year. The increases he had granted in 2002 averaged more than 24 percent for upper-level personnel and more than 20 percent for mid-level staff.
On June 26, the Senate authorized the bond issue.
On July 2, Donastorg announced that the Finance Committee was going to begin FY 2004 budget hearings the following week with or without the governor's proposed budget. And that it did, with department, office and agency heads making their own pitches for funding. Most of them, despite the government's fiscal straits and in the face of across-the-board 10 percent reductions imposed by the governor in February, asked for more money than they had been appropriated for FY 2003.
Numerous agency heads appearing before the committee also testified that they had yet to receive their allocations for the fourth quarter of FY 2003, which began on July 1.
On Aug. 22, Turnbull wrote to Donastorg asking him to postpone the wrap-up sessions with the administration's financial officials then set for Aug. 26 and 27. Donastorg acquiesced, rescheduling the hearing for Sept. 23 and 24. He said at the time that he expected to have a budget marked up by the first or second week of October.
On Aug. 29, Turnbull unveiled his budget at a press conference and sent it down the hill to the Legislature. He called for spending — to be balanced by revenues — of $557.7 million — down by $10 million from the FY 2003 budget adopted by the Legislature.
The massive document (see "Turnbull plan: Try anew on taxes, cut work week") again called for new and increased taxes, including some rejected earlier in the summer. What made headlines, however, were plans to cut government employees back to a 36-hour work week, reduce annual leave for government workers, impose a one-year moratorium on union contract negotiations, and impose a 10 percent surcharge on personal income-tax obligations.
The governor's budget also came under fire for proposing to transfer $8 million from the Insurance Guaranty Fund to the General Fund as part of the balancing act. Several unions demonstrated against the reduced work week and the other labor-related measures.
It turned out the Finance Committee wrap-up hearing took only one day — Sept. 23. There was no meeting of the minds as administration officials sought to defend the reduced work week and calls for taxes rejected just months earlier — and were met with scorn and derision.
After that, Donastorg scheduled the markup of the budget for Oct. 14.
On Oct. 9, Senate President David Jones asked him to delay it, so as to "enable further input from stakeholders who will be most affected." Donastorg complied with Jones's request. "Although I stand ready to proceed, I do understand and appreciate your concerns," he told the Senate president. There was no immediate indication of when the mark-up would be rescheduled, although Donastorg told Jones: "I truly hope that we can bring the budget process to a successful and productive conclusion before the end of this month."
Donastorg said he was aware that the legislative legal counsel's office had been "inundated with requests from members of this body for budget-related amendments, and that our attorneys require additional time to research and draft this legislation." It has become traditional for the Legislature to enact a massive Omnibus Bill addressing all manner of issues along with the actual fiscal year budget appropriation measures.
The next word publicly heard came a week later, on Oct. 16, not from Donastorg but from Jones, who said he anticipated having the budget before the full Senate "about mid-November." The mark-up process was to begin on Oct. 23.
Jones was at that point in the midst of holding meetings of the Legislature and budget "stakeholders" — none of which took place in an open forum.
The senators were to confer with union leaders Oct. 16 on St. Croix; with officials of the Water and Power Authority, the Port Authority and The West Indian Co. on Oct. 17 on St. Croix; with the governor's financial team Oct. 20 on St. Thomas; with Government Employees Retirement System and Economic Development Authority officials on Oct. 21 on St. Thomas; and via teleconference hookup with cruise line representatives on Oct. 22.
Donastorg said on Oct. 16 that his committee was prepared to proceed as soon as the budget was ready. "The biggest setback has bee
n preparing all the amendments — never mind that the minority's proposals are still being drafted," he said.
Discussions have continued behind closed doors, including a session at Government House on St. Thomas last week.
On Oct. 30, Donastorg announced that the final Finance Committee hearings on the budget would take place on Nov. 10 and 12. "We have developed legislation to substitute for most of what the governor proposed," he said, offering no details. "We have held some very productive round-table discussions." He added that he was "pleased at the level of cooperation" among his colleagues and the stakeholders.
The minority's measures and matters
That does not mean all is harmony and light within the legislative body, however. The five-member minority bloc has been drafting and redrafting revenue-enhancing and cost-cutting recommendations since the governor announced the fiscal crisis last spring. A few of its proposals found their way into the administration's fiscal recovery package.
On Sept. 24, the minority submitted to the Senate leadership a budget-balancing plan that incorporated many of the same ideas that had not earlier been co-opted, along with others. (See "Minority offers its own budget-balancing plan".) A day later, it invited the public to submit other recommendations.
On Monday, Sen. Usie Richards, the minority leader, wrote to Jones thanking him for inviting the Minority Caucus to the budget mark-up session scheduled for Thursday — but asking that the date be changed because of a conflict involving all of the minority senators.
Richards said the "Invitation to Budget Mark-up" had arrived in his office at 5:01 p.m. Friday, and he was not made aware of it until Saturday. Meantime, he said, the minority members "around mid-day on Friday" had confirmed their participation at a Central Labor Council summit scheduled for Thursday.
"We must note that this date was not previous discussed and we are therefore requesting that an earlier date be considered in order to respect the schedules and appointments made by the members of the Minority Caucus," Richards wrote Jones on Monday. "We thank you for your invitation and look forward to being accommodated like every other stakeholder."
There was no word from Jones on Tuesday concerning the request — reiterated in a release sent out by the minority on Tuesday as well. In order for the mark-up to be scheduled at "an earlier date" than Thursday, it would have to be on Wednesday.
Richards also said the minority remains committed to the adoption of a line-item budget for Fiscal Year 2004. Line-item budgets were adopted for 2002 and 2003, with one exception (the Inspector General's Office for 2003), in the face of administration objections; as a result, several agency heads were forced to appear hat in hand before the Finance Committee to request a reshuffling of funds to cover shortfalls in some areas with unexpended allocations in others. In February, in a special session called by the governor, the Legislature changed the FY 2003 budgets to lump-sum allocations.
Along with his letter to Jones, Richards provided an update on the minority's cost reduction and revenue generating proposals.
Figures and more figures
The Finance Committee spent the better part of six weeks taking testimony from agency heads on their FY 2004 budget needs and wants. Whether that was meaningful work or an exercise in futility is a matter for conjecture. As the last month's deliberations have taken place behind closed doors, there is no way of knowing how the disparities between the budget hearing requests and the amounts called for in the governor's budget are being resolved. In all cases but one (the Personnel Division), the governor is seeking lesser appropriations.
The significance of Donastorg's Oct. 30 comment that "we have developed legislation to substitute for most of what the governor proposed" remains to be seen at such time as the Senate majority makes its revamped version of the budget public.
Following are comparisons of the General Fund appropriations requested by department and agency heads in the six weeks of hearings conducted before the Finance Committee in July and August (given first), and the amounts proposed in the budget submitted by the governor on Aug. 29 (given second).
Office of the Governor — $7,691,266 — $6,639,170
Office of Management and Budget — $1,430,064 — $1,234,907
Office of the Lieutenant Governor — $8,932,414 — $5,106,164
Office of the Inspector General — $1,277,417 — $1,072,319
Office of Collective Bargaining — $413,902 — n/a
Office of Adjutant General — $1,763,777 — $1,482,096
Office of Veterans Affairs — $302,823 — $267,868
Agriculture Department — $2,905,060 — $2,641,513
Education Department — $145,793,629 — $138,500,794
Board of Education — $1,010,125 — $1,247,535
Board of Vocational Education — $565,000 — n/a
Finance Department — $7,655,517 — $6,933,966
Health Department — $33,976,528 — $24,954,232
Juan F. Luis Hospital — $19,056,023 — $18,742,355
Roy L. Schneider Hospital/Myra Keating Smith Communitly Health Center — $22,267,657 — $20,927,828
Housing, Parks and Recreation Department — $6,008,178 — $5,145,787
Human Services Department — $35,373,358 — $34,573,527
Internal Revenue Bureau — $9,122,188 — 8,459,473
Justice Department — $27,117,266 — $25,364,731
Labor Department — $3,047,843 — $2,752,278
Licensing and Consumer Affairs Department — $2,658,390 — $2,271,545
Personnel Division — $2,680,854 — $2,809,874
Planning and Natural Resources Department — $6,229,427 — $5,100,929
Police Department — $38,786,663 — $36,294,206
Property and Procurement Department — $4,582,597 — $4,156,521
Public Works Department — $27,225,226 — $26,373,971
Tourism Department — $3,478,474 — $3,058,940
V.I. Election System — $1,162,185 — $808,725
St. Croix Board of Elections — n/a — $49,000
St. Thomas-St. John Board of Elections — n/a — $42,940
V.I. Fire Service — $13,014,652 — $11,891,070
Public Television — $6,329,864 — $2,205,168
Territorial Court/Public Defender — $24,899,098 (Territorial Court) + $3,241,508 (Public Defender) — $22,022,007 (combined)
Judicial Council — n/a — $352,353
University of the Virgin Islands — $35,618,452 — $25,342,414
Legislature — n/a –$13,945,500
Miscellaneous — n/a — $93,830,210
Legal Services of the V.I. — $500,000 — n/a
East End Clinic — $760,155 — n/a
Frederiksted Health Center — $1,818,266 — n/a
Board of Nurse Licensure — $151,408 — n/a
V.I. Cultural Institute — $151,808 — n/a
Law Enforcement Planning Commission — $605,208 — n/a
Narcotics Strike Force — $762,393 — n/a
Casino Control Commission — $1,575,900 — n/a
Public Employees Relations Board — $692,044 — n/a
Economic Development Authority — $3,043,703 — n/a
Housing Finance Authority — $1,740,000 — n/a
Labor Management Commission — $146,036 — n/a
Law Revision Commission — $170,000 — n/a
Commission on Uniform State Laws — $25,000 — n/a
V.I. Council on the Arts — $266,170 — n/a
V.I. Carnival Committee — $550,000 — n/a
St. John Festival — $691,800 — n/a
Crucian Festival — $674,170 — n/a
Water and Power Authority — $155,356,137 — n/a

The Finance Committee requests from the General Fund total $676,450,370. Those from the governor total $557,681,917.

Back Talk

Share your reaction to this news with other Source readers. Please include headline, your name, and the city and state/country or island where you reside.

Publisher's note : Like the St. Thomas Source now? Find out how you can love us twice as
much — and show your support for the islands' free and independent news voice … click here.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.




Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.