March, 24, 2004 — Still smarting from Tuesday's approval of a watered-down bond authorization, two of those senators who voted against the measure expressed their disappointment at what they see as further indebtedness for the territory, which could have been avoided.
Sens. Emmett Hansen and Usie Richards were sharply critical of the authorization in Tuesday's marathon session, lasting more than 12 hours. Senators crossed party lines in objecting to the bond authorization.
Wednesday morning, Hansen, who had led Tuesday's drive to reprioritize the previous 2003 bond funds, called the measure "absolute and utter madness." He said, "How stupid can it be that, at the same time you're talking about a balanced budget, you are floating more bonds? This is not a good day for the V.I. It really, really is not."
Hansen continued: "They (the administration) use every single revenue stream we have, and then they wonder why we have a cash flow problem. Our money is gone before we see it. It's all tied to bond indebtedness."
In Tuesday's session, Hansen had suggested using unspent money in the $268 million bond authorization passed last December. After questioning Kenneth Mapp, Public Finance Authority executive director, and Nathan Simmonds, director of the Office of Fiscal and Economic Recovery Implementation and head of the governor's financial team, the senators found there was still money left from the bond proceeds.
Referring to Mapp's disapproval of the idea of reprogramming the previous bond proceeds, which included funds for waste water treatment, Hansen said Wednesday, "If we have to reprioritize our bonds, we are not reprogramming because waste water was included in the first ones. If we have to reprioritize the bonds to come into compliance with a federal consent order, I think that's pretty responsible."
On Tuesday, before the session recessed to consider amendments to the governor's legislation, Mapp said, "I want to make it abundantly clear that the Legislature is undertaking to determine that it knows at this juncture how the market will respond to the ultimate use of the bond proceeds, and it is assured that it knows the market will not demand the return of the proceeds that were floated in the 2003 bonds.
Mapp added, "I will present it to the bond holders and bring you back the answer, should the reprogramming be voted into law."
Richards said Wednesday, "My concern in particular is the bonded indebtedness of the government. I understand the three types of bonding we can enter into, but what concerns me is when we don't have an accurate understanding of the amount of our cash flow or that the rum excise taxes can, in fact, go into the general fund to help alleviate the fiscal needs of the government."
The bond authorization would be paid from the federal rum tax, part of which normally goes to the general fund.
"Less than eight months ago," Richards continued, "we borrowed to pay vendors and the existing contractual agreements with bargaining units. The mere fact that, prior to the 1999 borrowing, there are still outstanding payments to vendors, makes me believe it is not wise to enter into a contractual agreement based on rum taxes.
"The other concern I have is that these same funds could have been available without going to the bond market. It appears that the administration will now have an opportunity to have a 'slush fund' that would provide them an opportunity to match that with a lump sum budget."
Richards has voiced opposition to a lump sum budget since he first took office last year. "That puts control of the purse strings in the hands of the executive branch. The Legislature should be setting spending limits; not the other way around."
None of the senators Tuesday opposed the proposed waste water treatment plants simply the manner in which they would be funded. (See "New bond issue finds little favor in Senate".)
Hansen also took issue with the bond's proposed call for construction of only one waste water treatment plant on St. Croix. "You could fit both islands and include Water Island on St. Croix and still have room left over," he said. "How do we compensate when St. Croix is so much larger? We are going to expand. What happens then, another bond issue?"
Mapp throughout Tuesday's session extolled the virtues of the bond authorization. He supplied a detailed document outlining the PFA's bonding usage, including projections on the rum tax from which the bonds will be paid.
He said that that revenue is anticipated to increase at least through 2007, where his graph shows rum tax revenues approaching $80 million by 2007. The tax increases about 5 percent a year, according to estimates Mapp cited.
Sen. Norman Jn Baptiste was having none of it. "How about competition from other markets? We run the risk of using the excise tax because of the rum markets in Brazil and Trinidad. What then?" he asked.
Jn Baptiste had taken Mapp to task earlier in the day when Mapp told the senators, "If you're not going to approve the bonds, are you going to make the people of the V.I. swim in water with the floaters because sewage is running in the streets?"
Jn Baptiste, shot back, "The real choice is between swimming with the floaters or sinking in debt." The senator was among the seven who voted against the bond measure.
While the V.I. government's debt is difficult to estimate, Mapp admitted Tuesday that it is already high.
Concurring with Mapp's estimation were Simmonds and the governor's bond counsel, who said the current debt is now $742.6 million, which includes the recently passed $268 million from the 2003 bonds, $283.3 million from the 1999 bond issuance, and $180.3 from the 1996 Hurricane Marilyn Federal Emergency Management Agency (FEMA) loan.
Senators were unsatisfied with the administration's answers to the school funding, which proposes $70 million to replace Addelita Cancryn Junior High School on St. Thomas and Central High School on St. Croix, and the construction of a new high school on St. Thomas.
Sens. Celestino A. White Sr. and Carlton Dowe were particularly surprised when the officials could supply no drawings of the proposed schools nor even say where they would be located.
When White asked Michael where the new schools are to be built, she said the site plans aren't final. "No site has been situated, but Bournefield, or an area near Muller school, or the Island Block location [are under consideration]," she said.
Later, the senators quizzed Simmonds on the Island Block location. "Oh, it's not just Island Block," he said. "It would include Percy's Bus Stop and all the way over to the gas station."
The senators appeared incredulous. The site Simmonds referred to — across from the seaplane ramp and the Frenchtown Post Office — is one of the noisiest and busiest on the island. "If a quiet, safe environment is to be desired," White said, "Where would Island Block fit in?"
Voting in favor of the $105 million bond authorization were Sens. Lorraine Berry, Canton, Roosevelt David, Dowe, Jones, Almando "Rocky" Liburd, Shawn-Michael Malone and Luther Renee.
Voting against were Sens. Adlah "Foncie" Donastorg, Hansen, Louis Hill, Jn Baptiste, Richards, Ronald Russell and White.
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