March 24, 2004 – Last Dec. 10, Gov. Charles W. Turnbull submitted to the U.S. Department of Interior a draft of a new Memorandum of Understanding to supersede the one signed by him and then-Interior Secretary Bruce Babbitt in 1999.
The document became public knowledge on Tuesday night during the Senate's special session called by the governor, when Sen. Celestino A. White Sr. produced a copy of the draft cover letter addressed to David B. Cohen, Interior's deputy assistant secretary for Insular Affairs.
Sen. Usie Richards later circulated a copy of the draft new MOU itself.
The 1999 MOU was put into effect to help the V.I. government out of a fiscal crisis it was then experiencing. The governor committed the territory to make certain fiscal reforms in exchange for obtaining federal aid. One of those reforms was to be implementation of the Five-Year Operating and Strategic Financial Plan developed by the Economic Recovery Task Force appointed by Turnbull in 1999, his first year in office.
While select portions of the plan have been implemented, the overall proposal has for the most part gone ignored by the administration.
Nathan Simmonds, director of the administration's Office of Fiscal and Economic Recovery Implementation, told the Source about a year ago that the contents of the five-year plan were "suggestions. We don't have to follow them."
Under questioning by senators on Tuesday night, Simmonds, who heads the governor's team of financial advisers, and Ira Mills, director of the Office of Management and Budget, acknowledged that Turnbull had submitted the draft new MOU, saying that he had done so at Cohen's request. However, Simmonds said there is no superseding MOU "in effect" at this time.
Telephone calls late Wednesday afternoon to Keith Parsky, insular affairs and public policy specialist on Cohen's staff in Washington, D.C., were not returned.
Five years after entering into the 1999 agreement, the government is finding itself more deeply mired in debt than before, and continuing to borrow. (See "New bond issue idea finds little favor in Senate".) On Tuesday night, the Senate by a vote of 8-7 authorized the governor to issue another $105 million in bonds — a reduction from the $180 million he had proposed. The money is earmarked for federally mandated wastewater and solid waste and road improvements and cleanup of the territory's two landfills.
In the draft new MOU, Turnbull asks for $104 million in federal assistance over the next five years. The lion's share would go to fund wastewater and solid waste management infrastructure.
The governor asked for "no less than $15 million per year for the next five years, beginning in fiscal year 2004," for improvements to the territory's environmental and capital infrastructure as required by the federal courts, including "improvements to its solid waste, wastewater and transportation systems."
Turnbull also asked for "technical and financial assistance in amounts of not less than $8 million for the next three fiscal years … to strengthen financial management, human resource and information technology systems."
In this section, he asked for assistance for the "further organization and consolidation of the departments, agencies and programs of the government." This was an item the governor had line-item vetoed in the Legislature's 2004 Omnibus Bill; the Senate on March 10 overrode the veto.
In addition, he asked for $1 million for technical assistance for the V.I. Tax Study Commission, $1.5 million for the Internal Revenue Bureau to update its software systems, $1.5 million for continued implementation of the Five Year Operating and Strategic Financial Plan, and $1 million in technical assistance to the government and the University of the Virgin Islands for UVI's new Research and Technology Park.
The governor also sought federal assistance for the territory's marine industry. He asked for Cohen's help in obtaining an exemption from the "six-pack rule" which limits most charter boats to six passengers; such boats typically sail to the British Virgin Islands, where they are not limited to carrying six passengers. The rule is administered by the U.S. Customs Service.
Turnbull also asked for technical and financial assistance for V.I. fishermen who he said have been displaced as a result of the new and expanded underwater national monuments off St. John and St. Croix, respectively.
In sharp contrast to the calls for financing of the new MOU draft, the 1999 memorandum asked for little specific monetary aid. The only dollar figure mentioned was for a scholarship of up to $50,000 a year for three years for a National Park Mentorship Program for UVI students to learn about stewardship of resources by working with National Park Service experts.
The agreement focused on Interior assisting the territory largely in addressing environmental and educational issues.
The V.I. government in turn was to create the five-year plan — which it did — and take several steps to cut government spending, including a 50 percent reduction in overtime pay, a hiring freeze and a 5 percent reduction in payroll costs from FY 1999 baseline figures. The government has sporadically, but not consistently, followed these dictates. (See MOU compliance audit: successes, shortcomings".)
The V.I. government has complied with the MOU mandate to complete single audits for each fiscal year from 1995 through 2001. It currently is in substantial compliance with the Single Audit Act of 1984 as amended. Previously, only one single audit had been completed in 14 years.
Under the draft new MOU, the government would be obligated to balance its budget annually, keep employment at a level consistent with revenue growth or lack thereof, continue to submit single audits, establish a Federal Grants Management and Development Office (which also was a 1999 requirement) and submit quarterly reports to the Secretary of the Interior on progress made in achieving these objectives.
Turnbull line-item vetoed a section of the 2004 Omnibus Bill which required the administration to make a similar report to the Legislature. Here, too, the Senate overrode his veto.
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