There’s a been a lot of trash-talking about the government’s newest borrowing bill, but the bottom line is that it’s going to keep the territory afloat until the economy really picks up, Gov. John deJongh Jr. said in a candid radio address Monday.
The address, broadcast over several local radio stations, sets the stage for Tuesday’s full Senate session, where the bill will either be voted up or down.
"The Senate has a choice to make: reclaim our economic prosperity or set our territory back," deJongh said in his speech, adding that he will make another address after the Senate makes its final decision.
The bill bumps the government’s current borrowing authorization up to $500 million, allowing officials to float up to $250 million in new bonds to plug some current funding gaps and pay down $100 million on an existing line of credit, which will free up some more money for fiscal year 2011.
During a Committee of the Whole hearing last month, members of the governor’s financial team said they hope to sell and close on the bonds by next month in hopes of getting some more cash into the coffers before they run dry during the summer.
Senators held the vote on the bill, with many saying they were hesitant to pass anything that would "pile more debt" on to future generations. Last year the government was authorized to borrow up to $250 million, and doubling the authorization means adding another large chunk onto the government’s already staggering debt, they said.
Many also called for the government to provide a more comprehensive plan for cutting costs, while some said officials are just using "scare tactics," such as threatening layoffs and furloughs, to push for what they want.
Not true, deJongh said in his radio address Monday, as he picked apart many of the arguments he said have been floating around.
"There has been a great deal of false information and politicking around this current bill and as I have said, it is time to clarify this situation for all Virgin Islanders," he said. "This bill that we are awaiting action on by the Legislature, plain and simple, will keep our government functioning."
The reality is that the government needs about $1.3 billion a year to function, but this year, has only collected about $759 million, deJongh said, adding that revenues — including taxes, fees and fund contributions — are down 27 percent.
"These are real facts, and they are not something that any elected officials of this territory should be misinterpreting or spreading false impressions," he said.
DeJongh said senators have consistently been updated on the territory’s current financial picture, which comes as a result of the global economic downturn, but some have chosen to ignore how severe the situation is. There’s been a lot done by government officials to stop the bleeding, and that seems to have given some senators the impression that the government has more money than it really does, he said.
"Unfortunately, for some this has caused a misguided opportunity to spread misinformation in many quarters where people are stating that we do not have a real financial crisis or that we can somehow afford to lower the demands for government funds by just sending people home," deJongh said. "Home where? Who will pay for their health care, their housing, their food? And how do we make up the approximately $2.5 million that is spent locally each week by our government workers in our local stores and businesses? We cannot delude ourselves that there is a separation between the well-being of our government workers and our private workers. If the former are out of work, the latter will soon follow."
But there is a bargaining chip, he added. While many other state and territorial governments are mounting severe deficits and being forced to make it up with severe cutbacks in jobs and services, the territory is in a unique position to borrow money — backed by future rum revenues — in order to avoid having to do the same.
"Financial institutions see what we have done and they are willing to let us borrow at very competitive rates because they know we have the ability to pay it back," the governor said. "We have the very real ability to borrow what we need today to keep our government functioning as we move out of this recession and adjust to new economic realities as well as pave the way for our economic future and that of our children and grandchildren."
If there were any other alternatives, borrowing would not be an option, deJongh said. But senators know that the anticipated increase in rum revenues from a new Captain Morgan Rum distillery and expanded Cruzan plant are real and can be used to pay off the debt without putting any extra burden on upcoming generations, he added.
Describing some of the Senate’s recent arguments as "irresponsible," deJongh said it’s time for them to put "political pandering" aside and act.
Speaking Tuesday afternoon, Sen. Louis P. Hill said the session will begin with testimony from representatives of the territory’s three major semi-autonomous agencies — both hospitals and the University of the Virgin Islands.
"After that, we may ask some more questions of the governor’s financial team, but I will be calling for senators to vote the bill up or down before the end of the day," Hill added.
Tuesday’s session is scheduled to begin at 10 a.m. at the Earle B. Ottley Legislative Hall on St. Thomas.