Editors Note: St. Thomas resident Jason Budsan sent the following letter to Richard Pombo, chairman of the U.S. House Resource Committee, concerning the Virgin Islands Fiscal Accountability Act, commonly know as the CFO Bill.
Mr. Chairman Pombo and Committee members:
The issue of external fiscal oversight for the Virgin Islands is not a question of personalities. It is not about either the Governor of the territory or the Delegate. Nor is it a question of good versus evil, or about whether one party or the other is "sincere" or "well intentioned", accolades that take on a decidedly negative cast when applied to the Delegate in these circumstances. In a fundamental way, the decision that is made relative to an external fiscal officer and the implementation of effective financial systems for the V.I. government is a decision on the territory's future viability as a cohesive entity, a decent place to live, and a place to do business, particularly the small businesses that are the life blood of a community.
It is a measure of the territory's fiscal problems that no one seems capable of stating with any certainty exactly what the depth of the problems is. There is a lack of transparency and an absence of reliable numbers that would be unthinkable in any state. We as citizens lack a true fiscal picture of this government; it is hard to make critical decisions without 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. Experience tells us that in situations like these, where conflicting numbers, obfuscation, and double talk mask fiscal reality, the reality is invariably worse than we think it is. In this sense, the need for fiscal accountability, transparency, and a clear picture of the challenges that the territory faces are vital in and of them, but also will provide a platform for other reforms that will be essential if the Virgin Islands is to reverse its current downward slide. And what a slide it has been. In public forums that I have attended, certain realities have come forward for which I agree.
In the last twenty- five years the government has not been successful in carrying out its mandates or in maintaining sound policies, fiscal and financial. Our elected leaders and policy makers have not addressed the imbalance between the needs and demands of this community and its revenues. It is predicted that we will have structural deficit of $ 90 million in FY ' 05 and further structural deficits in FY '08 such deficits occur when appropriations for daily operations exceed general revenues. Revenues for expenses such as union increases are often tied to projected collections of one-time revenues such as unpaid taxes without a stated definite funding source for these projected costs, which gives our unions a false sense of hope. The government of the Virgin Islands has indebted the territory for over a half a billion dollars (principal and interest) to cover operating expenses payable over the next 30 years. This obligation is in excess of $ 54 million per year to the overburdened general fund. I believe that our legislative and executive branches of government have failed to meet their commitment of a balanced budget for FY' 04. Worse yet, we are operating under FY '03 budget that might not address the public's needs.
A strong public sector is going to play a central role in building a better future for the territory. Because the local economy is so dependent on the public sector, it is essential to think of this and related reforms within a context of a soft landing, to protect the territory and its communities for major social and economic disruptions that could attend " putting the fiscal brakes on" abruptly or in some ideological or formula driven manner.
To move any discussion from diversionary issues of personality and the use of " red flag" like "colonialism", here are some basic questions that the Governor and other witnesses should address:
1) Is there agreement that the territorys fiscal situation has progressively deteriorated over the past decade? If not, what indicators are there to support a belief in sustained improvement?
2) If there is agreement on the deterioration of the fiscal situation, why have local efforts, including the never implemented fiscal plan, not succeeded in correcting or, at least, reversing the situation?
3) What are the objective measures that the government can point to that demonstrate sustained progress in moving toward financial stability? (Measures that increase long-term indebtedness cannot be counted in this instance.)
4) Can the government point to objective measures of improvement in the services that it provides? Aside from fiscal responsibility, there is a basic question of just what Virgin Islanders (and stateside taxpayers at large) get for their money. Again with a budget of more than a billion dollars for approximately 130,000 residents, can the V. I. Government point to any service area in which quality and productivity are not in the bottom 10 20 percent when compared to states, municipalities, or other Caribbean governments with notable exceptions like Haiti, Antigua, etc?
5) Can the government point to any actions or solid plans that would indicate that its performance will improve sufficiently in the future to reverse a situation which it is incapable of even defining?
If the answer to question 1 is " yes", to question 2 is a blank stare or gobbledygook, and 3, 4, and 5 are "no" the question of the need for outside fiscal oversight and an investment in systems and management answer themselves. Without such a hook, per say, the downward path can only accelerate as the chickens of prior quick fixes and gimmicks come home to roost.
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