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DeJongh Signs $200 Million 'Borrowing Bill'

June 16, 2009 — A short-term financing proposal authorizing the government to borrow up to $200 million to cover some critical operating expenses was signed into law Tuesday by Gov. John deJongh Jr.
Dubbed the "borrowing bill," the proposal seeks to bridge multi-million dollar budget shortfalls projected for fiscal years 2009 and 2010 by allowing the government to borrow up to $200 million from public fund accounts and if needed turn to financial institutions for a line of credit or other form of short term financing. The government anticipates using both options — taking about $50 million in local funds and borrowing about $150 million from a bank or financial institution — to fill the holes, members of the governor's financial team said recently. (See "'Borrowing Bill' Passed By Senate.")
The bill was approved by the full Senate during a session late last month. But in a letter sent Tuesday to Senate President Louis P. Hill, the governor pointed out a couple of sections that need tweaking.
The bill doesn't give the government the ability to use any of the money to cover overdue vendor payments, the governor wrote.
"As we continue to feel the negative effects of the international economic slowdown and the Virgin Islands enters its annual slow season, I believe it is prudent to put these monies into the hands of those who have assisted the government in providing services to the public and place these additional dollars in circulation in our economy," he said.
The bill also says that any money borrowed within a given fiscal year has to be repaid by the end of that fiscal year.
"That means if the government borrows $150 million today, it has to be repaid by the end of September," explained Government House spokesman Jean P. Greaux Jr. In his letter to Hill, deJongh said the requirement was counter-productive.
"My financial team previously testified that the economic doldrums are expected to continue throughout the rest of the current fiscal year and well into FY 2010," the governor explained. "As recently noted by the National Governors Association and the National Association of State Budget Officers, most states find themselves facing the same or similar fiscal challenges in this and the following fiscal years.”
Having to pay back the debt within the same fiscal year would "only increase the fiscal strain on the government in the following year and not provide the relief intended to be obtained by utilizing these financial tools," he said.
DeJongh sent Hill an amendment that would allow the government to use the money for outstanding vendor payments and pay off the debt by the end of the fiscal year in which the money was borrowed or, if not "practicable," at a later date to be decided upon by the governor.
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June 16, 2009 -- A short-term financing proposal authorizing the government to borrow up to $200 million to cover some critical operating expenses was signed into law Tuesday by Gov. John deJongh Jr.
Dubbed the "borrowing bill," the proposal seeks to bridge multi-million dollar budget shortfalls projected for fiscal years 2009 and 2010 by allowing the government to borrow up to $200 million from public fund accounts and if needed turn to financial institutions for a line of credit or other form of short term financing. The government anticipates using both options -- taking about $50 million in local funds and borrowing about $150 million from a bank or financial institution -- to fill the holes, members of the governor's financial team said recently. (See "'Borrowing Bill' Passed By Senate.")
The bill was approved by the full Senate during a session late last month. But in a letter sent Tuesday to Senate President Louis P. Hill, the governor pointed out a couple of sections that need tweaking.
The bill doesn't give the government the ability to use any of the money to cover overdue vendor payments, the governor wrote.
"As we continue to feel the negative effects of the international economic slowdown and the Virgin Islands enters its annual slow season, I believe it is prudent to put these monies into the hands of those who have assisted the government in providing services to the public and place these additional dollars in circulation in our economy," he said.
The bill also says that any money borrowed within a given fiscal year has to be repaid by the end of that fiscal year.
"That means if the government borrows $150 million today, it has to be repaid by the end of September," explained Government House spokesman Jean P. Greaux Jr. In his letter to Hill, deJongh said the requirement was counter-productive.
"My financial team previously testified that the economic doldrums are expected to continue throughout the rest of the current fiscal year and well into FY 2010," the governor explained. "As recently noted by the National Governors Association and the National Association of State Budget Officers, most states find themselves facing the same or similar fiscal challenges in this and the following fiscal years.”
Having to pay back the debt within the same fiscal year would "only increase the fiscal strain on the government in the following year and not provide the relief intended to be obtained by utilizing these financial tools," he said.
DeJongh sent Hill an amendment that would allow the government to use the money for outstanding vendor payments and pay off the debt by the end of the fiscal year in which the money was borrowed or, if not "practicable," at a later date to be decided upon by the governor.
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.