March 18, 2009 — After speaking about the economy, the stimulus plan and a multitude of government initiatives, Gov. John deJongh Jr. received the loudest hand Wednesday when he addressed education and crime at the annual meeting of the V.I. Hotel and Tourism Association.
In closing remarks, the governor said, "Two areas require our immediate attention, and may be interrelated: education and crime. In many instances, youth problems go by the wayside," deJongh said. "We hear all the cliches, but something needs to be done. For too long young people are leaving school in the seventh or eighth grades.
"We know what we have to do. Fundamentally, if we don't deal with this issue, these problems aren't going to go away. We have to address our education system and its importance to our children to achieve and embrace opportunities — dropout rates, parents need to be involved, starting at early childhood."
Dejongh said, "There is a definite correlation between education, crime and quality of life. We need after school programs for children to give them something to do until their parents come home at five." He said he has sent legislation to the Senate three times outlining a program to fill that need. It hasn't yet seen action on the Senate floor.
DeJongh, who was in the private sector for a number of years, knew many of the community stakeholders.
"Everyone in this room realizes that things are bad and they are likely to get worse," the governor said. "It will feel this way as we go into the low season." However, deJongh offered a bit of ancient philosophy: "The Chinese symbol for crisis is the same as opportunity. We must seize the opportunity to use this crisis to prepare ourselves for when things improve."
This remark resonated well with the audience, anxious to hear words of encouragement. DeJongh didn't pull any punches. "This economic environment is being compared to the Great Depression," he said. "Unemployment is trending upward. Hotels have a hiring freeze. The 2008-2009 cruise season is flat. Territorially, 44 retail businesses have closed, or are in the process. Hovensa has had a cutback in contract workers."
The governor said, "We are concerned about the durability of government revenues." He said as a result of the economic environment, "we have revised downward our 209 projected net revenues available for appropriation to $837.5 million." He noted the government over the years has continuously appropriated more funds than are available in current revenue collections. "Last fiscal year, we appropriated $77 million more than the revenue collected."
Among the challenges the territory faces, deJongh said, "At 47 hotels, we are below our capacity high of 65 in 1980. Hotel rooms at 3,678 is below the high of 2000. Our retail trade on St. Croix is going through growing pains. On St. Thomas, we are criticized for too much of the same product.
"Our transportation system is highly criticized," deJongh said, a remark echoed with a chorus of groans. Later, the governor said he has hired a transportation consultant. Asked if the consultant would investigate water taxis, the governor said he would, noting the waterways would become federal highway routes.
There is already a blue ribbon airline panel in place, which has held meetings with airline officials for several months, the governor said. He also noted progress made in the last week with the Seatrade convention in Miami.
"We know we are the premier destination," the governor said, "but we want to be stop one or stop two, not the last on the itinerary where the passengers have already spent their money elsewhere."
The governor noted two encouraging aspects of the local economy: "Airlines have had some success," deJongh said, "with St. Thomas up about 10 percent. We have a 4 percent year-over-year increase on St., Thomas, and on St, Croix, all but 5 percent of proposed reductions have been restored."
Also, "Our banks didn't engage in sub-prime lending. The territory isn't experiencing a housing crisis, rather the secondary effects of economic softness."
Meanwhile, the economic downturn has reduced tourism and cut tax revenues.
"We were down in revenue by 20 percent by the end of the year," the governor said. "With declining business, gross-receipts tax revenue are especially hard hit." There is growth, however, in some areas, and infrastructure improvements already under way as well as those in the stimulus package will create long-term expansions in opportunities.
The governor laid out a multi-faceted strategy to "sustain our businesses in an extremely difficult economic environment, and to set the stage for growth."
That's where the stimulus package, the American Recovery and Reinvestment Act of 2009, comes in. "To the tune of $249 million, which is 25 percent of the General Fund budget." (See “Economy May Sink or Swim Based on Stimulus Spending Choices, Officials Say”)
DeJongh said the stimulus "is a foundation to assist through this period by providing tax reductions, investment infrastructure, keeping social programs intact, shoring up education, efforts in career and technical and workforce investment, and competitive grants for numerous projects."
DeJongh said there is about $7 million in stimulus money for law enforcement, but he emphasized that early childhood education is the long-term solution to street crime. "We need to make the investments so children don't drop out at the seventh grade and never come back."
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