The Virgin Islands Port Authority monthly financial report shows wharfage and tonnage fees collected by U.S. Customs and Border Protection are in arrears by $6.3 million, going back to January 2008, and the annual operating costs for the U.S. Customs Service has doubled.
The report was distributed Wednesday at the authority’s monthly board meeting.
The authority received only one payment of $124,393, in August, for fees Customs has collected since January 2008.
One other remittance was made to the authority in August 2008 for $1.6 million, V.I. Finance Commissioner Angel Dawson said in a September interview.
However, the August 2008 payment was for fees collected prior to January 2008, Judith James, the authority’s director of Administration and Finance, said Wednesday.
A 1994 agreement between the V.I. government and Customs arranges for Customs to collect wharfage and tonnage fees remitted by cargo ships. Cruise ships fees are collected directly by VIPA.
Source efforts to obtain a copy of the agreement have been rebuffed by the Port Authority. Government House does not have a copy, according to a spokesman there.
“We collect the money and forward it to our financial center in Indianapolis where money is taken out for our operational expense,” according to Louis Harrigan, area port director for US. Customs and Border Protections for the area port of the Virgin Islands.
Harrigan said the funds are then forwarded to the V.I. government. The V.I. government remits the money back to the Port Authority after extracting another five percent for administration, according to Dawson.
The collection of the fees by Customs is atypical of Customs’ usual tasks. Customs performs this effort at no other port, according to Harrigan. Other U.S. ports typically collect a light tonnage tax.
The practice here dates back to the time when the islands were Danish-owned, Harrigan said.
The arrangement supports Customs’ pre-departure station in the Virgin Islands, allowing visitors to clear into the U.S. here. The V.I. Government agreed to pay for the operation, according to Harrigan
“In the past, visitors departing to the U.S. cleared customs in the States,” Harrigan said.
According to a chart included in VIPA’s report published for the October board meeting, Customs collected wharfage and tonnage fees amounting to $4.3 million in 2008,and $3.4 million through the end of this August. With duties and other fees collected, total receipts by Customs were $16.8 million for 2008 and $14 million through August of 2009.
Customs assessed $18 million in 2008 for operational costs, and $13.4 million through August of 2009 according to the chart.
The chart shows that annual operational costs doubled beginning in 2004. Customs operational costs for years 2001, 2002 and 2003 averaged $7.8 million, jumping to an average of $14 million in subsequent years.
2004 is roughly the same time that Customs came under the umbrella of the U.S. Dept. of Homeland Security, along with many other agencies and including Border Protection.
Port Authority Board Chairman Cassan Pancham said that the increase in fees coincided with the federal restructuring that put Customs with Immigration. “We’re in the process of raising it with Customs,” Pancham said.
“The agreement was signed by Gov. (Alexander A.) Farrelly,” Pancham said, “It allowed Customs to collect the fees … until either one terminates the agreement.”
Pancham said it is fair to note that when the agreement was made, the equation for backing out the Customs Service operating costs did not foresee inclusion of operational costs for Immigration or Border Protection activities.
However, he did not want to comment further because he is engaged in negotiating with the agency.
Lloyd Easterling, acting director for the Media Relations Division in the Office of Public Affairs for U.S. Customs and Border Protection had not commented in time for this report.