June 16, 2004 – Although resolution of the territory's fiscal problems may not be any closer, ideas on the means of reaching a solution got a spirited airing — and some unexpected testimony — Wednesday at the hearing on Delegate Donna M. Christensen's bill before Congress to establish a temporary position of chief financial officer and a permanent integrated financial management system for the territory.
In the bill's only scheduled hearing before the House Committee on Resources, the U.S. Department of the Interior opposed the legislation, while V.I. Republican Party Committeeman Holland L. Redfield II not only endorsed it but said it doesn't go far enough.
Gov. Charles W. Turnbull and Senate President David Jones maintained their unswerving opposition to the bill, Turnbull again voicing his indignation that it should even exist.
Sitting in for the invited Interior witness, David Cohen, Interior deputy assistant secretary for Insular Affairs, was acting deputy assistant secretary Nikolao Pula. He praised Christensen for her "great courage" in bringing the bill forward as a solution to "periodic fiscal crises faced by the Virgin Islands." However, he said he could not support the legislation.
"We believe solutions can be found within the local territorial government before turning to the outside for help," Pula said. He said only under "extraordinary circumstances" would the Department of the Interior step in. Under questioning later, he said if the legislation should pass, "the Secretary would have to follow through."
Pula also made it clear that Interior has no interest in providing a financial management system for the territory. First, he said, the cost would be considerable and isn't in the current budget; second, a year's timetable is "unrealistic"; and third, "it is the responsibility of the V.I. to develop and fund its own system."
Christensen, speaking from Washington by telephone later Wednesday, said she thought the hearing went well other than the fact that there were opposing opinions. But she was "very, very disappointed in the testimony from the Department of the Interior," she added, "and I think the department should be very disappointed."
Of Pula's testimony, she continued, "I don't think he spoke clearly to the issues in the bill. Many of the areas he opposed were not really properly in our bill. Near the end, he sort of started to back away from some of the positions."
On WVWI Radio Wednesday afternoon, Christensen said the Interior Department "doesn't deny that fiscal problems exist." She also said she sensed "a lot of sympathy" from her fellow committee members. "It was generally supportive of the bill."
She said she plans to follow up with questions for Interior "before the end of the month."
Holmes Relates D.C. Results
Speaking before the committee on Wednesday, Christensen said while it is not her intent to cast aspersions on the policies of the Turnbull administration, she could not "idly sit by in the face of fiscal crisis after fiscal crisis … without offering some solution to temper or soften the difficult decisions that have to be made by us, not the federal government, to get us out of this roller coaster approach to managing our affairs."
Further, she said, "The imperative is that we act now to avoid future fiscal catastrophe by putting into place a mechanism where the pressures to spend more than you have, no matter how worthy the effort, will be tempered by the reality that the budget must be balanced."
Christensen had strong support from the other U. S. territories and from Eleanor Holmes Norton, congressional representative of the District of Columbia. Norton played a leading role in efforts to bring the local D.C. government out of its fiscal crisis in the 1990s.
Firmly endorsing Christensen's legislation, Holmes said that for the federal district, "What is the result of having a CFO? It is seven consecutive balanced budgets; it's an A2 bond rating; a $1.4 billion turnaround in the General Fund; and when you borrow money, you don't have to pay high interest rates."
Turnbull and Jones, who have attacked the bill and its author since it was introduced last November, continued their campaign in the House hearing.
The bill was well received by residents attending town meetings Christensen held throughout the territory. But it has been assailed by politicians who fear it will undermine their authority and who say that any federal intervention would be a step backward toward colonialism.
Christensen said at the hearing: "What would indeed be more colonialist than the Virgin Islands having to lose all ability to govern ourselves, as we would if we were to become bankrupt? As a proud daughter of the Virgin Islands, I am deeply offended by this charge."
Turnbull, by far the most outspoken opponent of the bill, in a lengthy and impassioned plea called it a "ill- considered effort — unprecedented in V.I. history — to reverse course. It would severely impair the authority of elected territorial officials and place power in the hands of a single unelected person who would remain unaccountable to the people."
Proposed V.I. Review Board Brought Up
Jones mainly confined his remarks to denoting the present powers and responsibilities of the Office of Management and Budget director and to a detailed description of Sen. Lorraine Berry's Financial Review Board legislation, which is expected to be heard by a Senate committee soon.
Jones said the review board "commands the governor to submit for its approval a five-year financial plan and establishes clear standards, principals and policies for the attainment of fiscal stability; whereas, H.R. 3589 [Christensen's bill] solely imposes federal involvement in the selection of an individual to head the Office of Management and Budget, and, if enacted, could adversely impact the progress the government … has recently made toward the resolution of its problems."
Christensen questioned the governor and Jones about the review board later in the hearing. "What authority does the board have to ensure a balanced budget?" she asked Jones.
"The Organic Act ensures a balanced budget," Jones replied. "You can't submit an unbalanced budget." The delegate then countered: "We've had budgets out of balance in many fiscal years. When is the last time we had a balanced budget?"
Jones replied, "When the Legislature appropriates money , the governor can spend up to the level of projections. When projections don't pan out, the OMB office has to determine spending."
Christensen said, "The fact that we have had deficits shows that process hasn't worked as well as it should."
Jones said, "What happened was in the reporting mechanism. If there is a shortfall, it's called a deficit; it's not a deficit; it's a shortfall."
In further questioning, Christensen asked Jones why he was calling for an independent review board. "Personally," he replied, "I don't support the review board. I believe we have a mechanism in place already."
Nor would the governor commit to approving the proposed board. "At least it's internal," he said. "If it passes, it will be organic. It will come from the Virgin Islands people."
Turnbull maintained through extensive questioning that the government is making strides in addressing its fiscal problems, "going forward."
Congresswoman Madeleine Z. Bordallo of Guam asked what he could forecast for the Virgin Islands if it should end up in the situation that Washington, D.C., was in a decade ago and has pulled itself out of.
Turnbull replied: "We are not in the same position. We are heading away from that situation. We are running
in the right direction. We are heading toward a balanced budget at this time. We do not need a CFO."
Their appearances on Wednesday marked the first time the Senate president and the governor have been in agreement publicly in months. The 25th Legislature and the governor have been at odds over budget matters since early 2003. In fact, Jones has already announced that he will support an override of Turnbull's veto of the Senate's $9 million appropriation to fund negotiated government employee raises.
Social, Financial Statistics Cited
Turnbull and Jones, like Christensen, are Democrats. The delegate got support from one fellow V.I. party member Wednesday, Sen. Ronald Russell, who chairs the Education and Youth Committee.
Russell pointed out that, according to the 2003 Kids Count research findings, the territory has 12,600 children living in poverty; that the Education Department is in dire fiscal straits; and that problems managing federal grant funding exist in both the Health and Education Departments.
He told the committee it is "highly unlikely" that the Legislature that censured the delegate for introducing the CFO bill would approve the financial review board. Russell was the lone holdout against the resolution in the Senate majority.
Russell was a late addition to the witness lineup for the hearing. The list announced earlier included Arthur Joseph, chair of the Independent Citizens Movement political party. However, the ICM has not taken a stand on the delegate's bill.
Representing the territory's Republicans, Redfield, a six-term former senator, said the territory's fiscal crisis and what to do about it "is clearly not a partisan issue. There is no question when anyone looks at this issue that this government is on the brink of bankruptcy," he said."The institutions charged with responsibilities of sound fiscal management clearly have failed."
He told the congressional committee: "Our deficit is between $80 million to $100 million. Our accumulated debt is around $1 billion. Our unfunded liability to the Government Employees Retirement System is approaching $1 billion. Our per capita debt, based on a population of 108,000, is $1,058 per person, giving the V.I. the distinction of the highest per-capita debt in the nation."
Redfield said the V.I. Republican Party is behind Christensen's legislation, but "we feel it has not gone far enough."
Once the legislation is fine tuned, he said, "there should be an amendment to create a provision that will encompass a sunrise and sunset provision. This would give the executive and legislative branches of government an opportunity within 180 days to bilaterally balance the budget and institute corrective legislation to address the economic crisis."
He urged that the federal and local government enter into a Memorandum of Understanding setting forth such requirements.
Asked if he thought such a 180-day amendment had a chance of the V. I. government acting on it, Redfield said, "If I was to bet on it, I'd say they wouldn't do anything. However, maybe with this hanging over their heads, it basically puts them in a position to do it or get the CFO legislation."
Christensen said it might work, but only "in the short term."
Committee Could Vote on Bill within Weeks
Speaking later, Christensen said of the CFO bill's immediate future: "What usually happens is sometime within two to three weeks, it will come up for a vote. Since we have the testimony of the governor and the Senate president, that could slow it down a bit. Usually, they don't vote on just one bill unless it's a major piece of national legislation."
The delegate has said she plans to make a couple of amendments to her bill, but she declined to say on Wednesday what they are. They are not included in the original version of the legislation posted on the Library of Congress bill tracking Web site. To access it, in the "Bill Number" window Type in HR3589, then click on "Search."
Christensen said she tried during Wednesday's hearing not to be "confrontational relating to the close to a billion dollars in debt owed to the GERS alone." Her proposal, she said, "clearly doesn't take away. It really gives them a strong argument." And she had praise for Turnbull. "It's extraordinary that we have been able to do even as well as we have," she said. "We just can't rely on us being able to continue to do it."
She also said that from the Interior Department testimony, it should be obvious to those who think the federal government wants to move in and take over the Virgin Islands "that it does not."
Interior is given credit for "more clout than they actually have," she said. "They should have a stronger mandate than that. They have oversight of the territory. As long as we are a territory, they have a role to play in helping us to be fiscally and politically viable."
Christensen lamented the fact that the territory has never succeeded in adopting its own constitution."Without that, the onus is on us," she said. "In all these years, we haven't done it, and we leave ourselves open to far worse things than a CFO who would assist the governor and the Legislature to keep us operating within our financial means."
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