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Senators, Governor's Team Quarrel Over Budget Totals

Nov. 27, 2007 — Senators and members of the governor's financial team grappled over numbers Tuesday as the first of two Finance Committee meetings designed to sift through the government's fiscal year 2007 revenues and expenditures began on St. Thomas.
As is usual in most Finance Committee meetings, the two sides had different views on what the figures actually are. While financial team members said the government only had about $795 million available for appropriations in FY 2007, senators argued that the figure totaled upwards of $800 million, leaving some money in the government's coffers. After some heated debate both on and off the floor, Nathan Simmonds, the governor's senior fiscal policy advisor, wrapped up the meeting by saying that the team isn't intentionally hiding any financial information.
"The executive branch cannot spend a dime unless this body appropriates it," he said. "So there's no point in us hiding any information. Sometimes we really just don't have it."
For the meeting, Simmonds had prepared a detailed written statement, outlining FY 2007 revenue collections, expenditures and cash balances. Most of the information presented was not new, however, as financial team members gave similar statements before and after the summer budget hearings. To back up claims of a cash shortfall, Simmonds and Debra Gottlieb, director of the Office of Management and Budget, also reminded senators that a two-percent budget cut was implemented across the board in FY 2007, resulting in General Fund appropriations of about $798 million.
"You will recall … that when we appeared before you in March of this year, we advised the committee that we were experiencing a cash-flow shortfall in the General Fund in FY 2007 estimated at $46.5 million," Simmonds said. "However, you will also recall that we said we would manage that shortfall throughout the allotment process, and manage it we did."
Total allotments for FY 2007 totaled $798 million, Simmonds added — $3 million more than was available after the government's gross collected revenues were lessened by payments out for debt service, income-tax refunds and customs dues. According to financial documents provided during the hearing, the cause for the shortfall was a decrease in projected revenues — including corporate income taxes, which came in at nearly $153 million instead of the anticipated $175 million.
OMB allocations would have been in line with available revenues had a $25 million transfer anticipated from the Insurance Guaranty Fund actually come through, Gottlieb said. However, about $4 million of the anticipated amount had to go to the Commissioner of Insurance Fund, she said, which cut revenues even more.
"Bottom line, the total appropriations for FY 2007 was $843 million," Simmonds said. "The total revenue available to fund those appropriations was $795 million, which was $48 million less than what we anticipated."
Preliminary figures from the Department of Finance put total FY 2007 expenditures at $876.8 million, including $84.9 million for tax refunds. Breaking down total expenditures into two categories, Finance figures put FY 2007 payroll expenses at $444.6 million and non-payroll expenses at $432.2 million. The $876.8 million figure is cumulative of all four fiscal year quarters.
Simmonds stressed that the figures are still preliminary and unaudited, prompting senators to question when the government plans on turning out the final figures for FY 2007. The government has plans to close out the year by the end of December, said Finance Commissioner Claudette Watson-Anderson.
Questions about getting the financials out of the government's old financial-management system (FMS) and onto the new enterprise resource planning system (ERP) also abounded during Tuesday's hearing. Senators asked why allotments were now being made on a monthly instead of quarterly basis.
Gottlieb explained that the new system was easier, allowing departments and agencies the opportunity to view their allotments on the ERP.
"By doing this, we are able to control the allotment based on the amount of funds available," she said. "This way the departments and agencies are getting the full 25-percent appropriation. When we did it quarterly, we generally allotted something like 22 percent. But as of last Monday, everyone could see and process their documents against their General Fund allotment."
Trying to assure senators that the implementation of the ERP was still moving along, financial team members explained that one of the biggest challenges faced over the past few months was validating figures pulled off the old FMS. Savas Karas, the government's ERP project manager, explained that many departments and agencies had stored various financial data in two different systems, as opposed to putting it all on one database.
"Converting the old data and bringing it forward on to the ERP has presented many, many challenges," Karas said. "We thought that this would be a difficult transition, but we're finding out that we have data from different departments and agencies that's been stored in multiple systems, multiple places. We now have to go back and reconcile those numbers, find out what the true balances are, validate those balances and bring them forward onto the ERP. We're still in the process of doing that."
Compiling all the figures onto one government-wide database will ultimately aid in the end-of-the-year reporting process, Gottlieb said.
"The auditors audit the official records of the government," she explained. "Those will now be on the ERP, all in one place. In the end, it will make all this much easier."
Present during Tuesday's meeting were Sens. Liston Davis, Carlton "Ital" Dowe, Juan Figueroa-Serville, Louis P. Hill, Neville James, Terrence "Positive" Nelson, Basil Ottley Jr. and Russell.
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Nov. 27, 2007 -- Senators and members of the governor's financial team grappled over numbers Tuesday as the first of two Finance Committee meetings designed to sift through the government's fiscal year 2007 revenues and expenditures began on St. Thomas.
As is usual in most Finance Committee meetings, the two sides had different views on what the figures actually are. While financial team members said the government only had about $795 million available for appropriations in FY 2007, senators argued that the figure totaled upwards of $800 million, leaving some money in the government's coffers. After some heated debate both on and off the floor, Nathan Simmonds, the governor's senior fiscal policy advisor, wrapped up the meeting by saying that the team isn't intentionally hiding any financial information.
"The executive branch cannot spend a dime unless this body appropriates it," he said. "So there's no point in us hiding any information. Sometimes we really just don't have it."
For the meeting, Simmonds had prepared a detailed written statement, outlining FY 2007 revenue collections, expenditures and cash balances. Most of the information presented was not new, however, as financial team members gave similar statements before and after the summer budget hearings. To back up claims of a cash shortfall, Simmonds and Debra Gottlieb, director of the Office of Management and Budget, also reminded senators that a two-percent budget cut was implemented across the board in FY 2007, resulting in General Fund appropriations of about $798 million.
"You will recall ... that when we appeared before you in March of this year, we advised the committee that we were experiencing a cash-flow shortfall in the General Fund in FY 2007 estimated at $46.5 million," Simmonds said. "However, you will also recall that we said we would manage that shortfall throughout the allotment process, and manage it we did."
Total allotments for FY 2007 totaled $798 million, Simmonds added -- $3 million more than was available after the government's gross collected revenues were lessened by payments out for debt service, income-tax refunds and customs dues. According to financial documents provided during the hearing, the cause for the shortfall was a decrease in projected revenues -- including corporate income taxes, which came in at nearly $153 million instead of the anticipated $175 million.
OMB allocations would have been in line with available revenues had a $25 million transfer anticipated from the Insurance Guaranty Fund actually come through, Gottlieb said. However, about $4 million of the anticipated amount had to go to the Commissioner of Insurance Fund, she said, which cut revenues even more.
"Bottom line, the total appropriations for FY 2007 was $843 million," Simmonds said. "The total revenue available to fund those appropriations was $795 million, which was $48 million less than what we anticipated."
Preliminary figures from the Department of Finance put total FY 2007 expenditures at $876.8 million, including $84.9 million for tax refunds. Breaking down total expenditures into two categories, Finance figures put FY 2007 payroll expenses at $444.6 million and non-payroll expenses at $432.2 million. The $876.8 million figure is cumulative of all four fiscal year quarters.
Simmonds stressed that the figures are still preliminary and unaudited, prompting senators to question when the government plans on turning out the final figures for FY 2007. The government has plans to close out the year by the end of December, said Finance Commissioner Claudette Watson-Anderson.
Questions about getting the financials out of the government's old financial-management system (FMS) and onto the new enterprise resource planning system (ERP) also abounded during Tuesday's hearing. Senators asked why allotments were now being made on a monthly instead of quarterly basis.
Gottlieb explained that the new system was easier, allowing departments and agencies the opportunity to view their allotments on the ERP.
"By doing this, we are able to control the allotment based on the amount of funds available," she said. "This way the departments and agencies are getting the full 25-percent appropriation. When we did it quarterly, we generally allotted something like 22 percent. But as of last Monday, everyone could see and process their documents against their General Fund allotment."
Trying to assure senators that the implementation of the ERP was still moving along, financial team members explained that one of the biggest challenges faced over the past few months was validating figures pulled off the old FMS. Savas Karas, the government's ERP project manager, explained that many departments and agencies had stored various financial data in two different systems, as opposed to putting it all on one database.
"Converting the old data and bringing it forward on to the ERP has presented many, many challenges," Karas said. "We thought that this would be a difficult transition, but we're finding out that we have data from different departments and agencies that's been stored in multiple systems, multiple places. We now have to go back and reconcile those numbers, find out what the true balances are, validate those balances and bring them forward onto the ERP. We're still in the process of doing that."
Compiling all the figures onto one government-wide database will ultimately aid in the end-of-the-year reporting process, Gottlieb said.
"The auditors audit the official records of the government," she explained. "Those will now be on the ERP, all in one place. In the end, it will make all this much easier."
Present during Tuesday's meeting were Sens. Liston Davis, Carlton "Ital" Dowe, Juan Figueroa-Serville, Louis P. Hill, Neville James, Terrence "Positive" Nelson, Basil Ottley Jr. and Russell.
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.