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HomeNewsArchivesSenators Question Ways to Trim Budgets in Face of Shortfall

Senators Question Ways to Trim Budgets in Face of Shortfall

May 5, 2008 — A budget shortfall of at least $30 million has officials looking for ways to cut expenses, but senators Monday questioned the criteria used to determine how to trim the fat from departments, agencies and the miscellaneous section of the budget.
Current government revenues are projected to come in around $805 million for fiscal year 2008, while appropriations to date have already topped $851 million, according to Claudette Farrington, deputy director of the Office of Management and Budget. Government departments and agencies are looking at a two to five percent cut, and have recently been asked to determine where they can "accommodate" any kind of reduction, Farrington said during a Senate Finance Committee meeting on St. Croix.
Cuts from the "substantial" miscellaneous budget are taken on a case-by-case basis, she said. However, the agency will probably look at funding more "essential costs," such as appropriations to government departments and agencies, Farrington explained. OMB has also allotted on a monthly instead of quarterly basis to reign in spending, she added.
While revised revenue projections have not yet been disclosed in their entirety, General Fund collections have increased by $20.9 million, according to Gizette Thomas, director of the Bureau of Internal Revenue (BIR). Still, Thomas cautioned senators that spikes in revenues seen on the bureau's side is offset by the fact that the government has not collected property taxes in two years.
Individual income tax collections as of the end of March were $160 million, while corporate income and gross-receipts collections have come in at $37 million and $68 million, respectively. Excise tax collections did not come in at the projected levels, and current figures do not take into account government debt-service payments, income tax refunds or any other deductions from gross revenues, Thomas said.
BIR began paying out its 2007 tax refunds in mid March, which to date totals some $28.5 million.
Earlier in the day, representatives from OMB, Finance and BIR said they are currently performing "significantly" under budget. Their testimony prompted senators to question how close the government is to implementing full performance-based budgeting standards, which will eventually determine how much each department and agency receives during the budget process.
"We should do an analysis of the past three years' budgets and see how the departments spend the money and where the funds are actually going — those are the numbers that should actually come into play when we're talking about performance-based budgeting," said Sen. Ronald E. Russell. "But we've been talking about this thing for about six years now — we really need something in place. And we need some actual figures here. We don't need to work on projections any more."
OMB is currently moving its federal grants unit to the Public Finance Authority's old headquarters on St. Thomas, and will set up its performance-based budgeting unit after the move, Farrington said.
Senators said steps should also be taken to cut down on future over-appropriating, with the government setting aside five to 10 percent of revenues before the beginning of each fiscal year.
Present during Monday's hearing were Sens. Terrence "Positive" Nelson, Basil Ottley Jr., Usie R. Richards, Russell and James Weber III.
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May 5, 2008 -- A budget shortfall of at least $30 million has officials looking for ways to cut expenses, but senators Monday questioned the criteria used to determine how to trim the fat from departments, agencies and the miscellaneous section of the budget.
Current government revenues are projected to come in around $805 million for fiscal year 2008, while appropriations to date have already topped $851 million, according to Claudette Farrington, deputy director of the Office of Management and Budget. Government departments and agencies are looking at a two to five percent cut, and have recently been asked to determine where they can "accommodate" any kind of reduction, Farrington said during a Senate Finance Committee meeting on St. Croix.
Cuts from the "substantial" miscellaneous budget are taken on a case-by-case basis, she said. However, the agency will probably look at funding more "essential costs," such as appropriations to government departments and agencies, Farrington explained. OMB has also allotted on a monthly instead of quarterly basis to reign in spending, she added.
While revised revenue projections have not yet been disclosed in their entirety, General Fund collections have increased by $20.9 million, according to Gizette Thomas, director of the Bureau of Internal Revenue (BIR). Still, Thomas cautioned senators that spikes in revenues seen on the bureau's side is offset by the fact that the government has not collected property taxes in two years.
Individual income tax collections as of the end of March were $160 million, while corporate income and gross-receipts collections have come in at $37 million and $68 million, respectively. Excise tax collections did not come in at the projected levels, and current figures do not take into account government debt-service payments, income tax refunds or any other deductions from gross revenues, Thomas said.
BIR began paying out its 2007 tax refunds in mid March, which to date totals some $28.5 million.
Earlier in the day, representatives from OMB, Finance and BIR said they are currently performing "significantly" under budget. Their testimony prompted senators to question how close the government is to implementing full performance-based budgeting standards, which will eventually determine how much each department and agency receives during the budget process.
"We should do an analysis of the past three years' budgets and see how the departments spend the money and where the funds are actually going -- those are the numbers that should actually come into play when we're talking about performance-based budgeting," said Sen. Ronald E. Russell. "But we've been talking about this thing for about six years now -- we really need something in place. And we need some actual figures here. We don't need to work on projections any more."
OMB is currently moving its federal grants unit to the Public Finance Authority's old headquarters on St. Thomas, and will set up its performance-based budgeting unit after the move, Farrington said.
Senators said steps should also be taken to cut down on future over-appropriating, with the government setting aside five to 10 percent of revenues before the beginning of each fiscal year.
Present during Monday's hearing were Sens. Terrence "Positive" Nelson, Basil Ottley Jr., Usie R. Richards, Russell and James Weber III.
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.