Nov. 28, 2007 — A bill calling for the Public Finance Authority to manage the investment portfolios of specific government agencies stalled in the Finance Committee Wednesday after senators could not muster up enough members for a quorum.
Despite the poor attendance, however, representatives from several of the government's semi-autonomous agencies said they would be able to support the bill — which has gone through several draft changes over the past few weeks — if it ever came forward again. At the end of the meeting, bill sponsor Sen. Carlton "Ital" Dowe seemed optimistic about the bill's chances, saying that he would special order the measure onto the floor at the next legislative session.
The absence of the committee's minority members struck a sour chord for Dowe, who said that certain senators — such as Sens. Juan Figueroa-Serville and Neville James — failed to show up on purpose to keep the bill from moving forward.
"They were here all morning," Dowe said. "But where are they now? Nowhere."
Earlier in the day, the committee continued taking testimony from members of the governor's financial team, who gave a quick wrapup on the numbers — government revenues, expenditures and cash balances — for fiscal year 2007. On Tuesday, the team revealed that the government's total gross revenue collections for FY 2007 totaled $944.1 million.
However, a cash-flow shortfall during the year left only about $795 million available to sustain the more than $840 million worth of appropriations made by the Legislature. To balance the budget, a two-percent budget cut — which represents about $12 million worth of savings — was implemented across the board, resulting in General Fund allotments from the Office of Management and Budget of about $798 million.
However, all the money has not yet been used, said Finance Commissioner Claudette Watson-Anderson, who explained that only about $791.9 million has been spent on FY 2007 budget appropriations.
On Wednesday, James said financial team members were not "telling it like it is," and showing that government revenues were better in September than during the same period in FY 2006. However, he and other senators were not present during the second half of the meeting, when Dowe's bill — which was once part of another proposal designed to pay off a portion of the government's retroactive wage debt — was up for consideration, causing some heated debate on the Senate floor.
While a few people testifying — such as PFA Executive Director Julito A.H. Francis — said some changes need to be made to the proposal, most said that they would be able to support the bill in its current form as long as they were not mandated to turn over their investment portfolios to the PFA.
Francis said the point of bill, which hinges on the pooling of the agencies' financial assets, was to stir up more revenue for the government. He did, however, suggest that one portion of the bill — which sets up guidelines for the hiring of a PFA director — be more specific, making sure potential applicants have at least seven years experience managing investment portfolios and/or financial risk management.
One section of the bill also allows the PFA to manage the agencies' investments for a four-year period, which Francis said is "far too short a time."
"The intended purpose of the pooling of the assets is towards reducing costs and raising capital through the growth of the government's cash flows to fund future projects," he explained. "Therefore, the time frame for investment management should be in line with the stated objective, and not an arbitrary number of years."
During a recent interview, Dowe explained that several government entities — including central government departments and semi-autonomous agencies such as the V.I. Water and Power Authority — currently have close to $330.1 million available in investment earnings or bond proceeds. Much of that money, he said, is channeled through investment firms or money managers that charge at least a one-percent investment fee or reap handsome commissions after stock or bond transactions.
The territory would be able to retain thousands of dollars annually if agencies get together and pool their financial resources, then allow the PFA — an entity set up to raise revenue and capital for the government — to manage the investments, he explained. (See "Senate Committee Approves Plan to Pay $45 Million in Retroactive Wages.")
On Wednesday, Francis agreed with Dowe's points, saying the mismanagement of revenues over the years has continued to "burden the General Fund" and "led to increasing debt levels on and off our balance sheets."
"I have stated before in previous testimony, much of the benefits of pooling each entity's financial assets from the perspective of financial management cost savings," he added. "I say to you today that the effort is truly much broader and of much more importance in scope if we are to effectively manage our financial affairs."
Also testifying during the meeting were representatives from the V.I. Port Authority, WAPA, West Indian Co. and the University of the Virgin Islands.
Dowe said he and other senators would keep working with the various agencies on the bill, and will make a move to bring it forth during an upcoming legislative session.
Present during Wednesday's meeting were Sens. Liston Davis, Dowe, Figueroa-Serville, Louis P. Hill, Neville James, Terrence "Positive" Nelson and Ronald E. Russell.
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