There might have been a few quibbles, but for the most part, it was all quiet on the Senate front Monday, as members of the governor’s financial team gathered on St. Thomas for the kickoff of the summer budget season, which began with an overview of the $1.1 billion fiscal year 2011 spending plan.
Surprisingly, few argued with the numbers presented by the financial team, which basically showed a local economy on the slow "turning point" toward economic recovery. Pulling out of the recession, many of the territory’s key financial indicators, according to Office of Management and Budget Director Debra Gottlieb, are still negative, but have improved from last year’s record lows.
Meanwhile, the government’s most recent General Fund cash balance was about $2 million, making things "a little tight" until officials close next month on a $400 million bond issue expected to pay off some of the government’s borrowed debt, cover most of the $150 million shortfall projected for this year and free up some more cash for FY 2011.
"I can’t wait for that to close," Finance Commissioner Angel Dawson said Monday. "This is a bad position for us to be in."
Dawson assured senators that the government should be able to pull through until the bonds close on July 15.
The overall $1.1 billion spending plan for FY 2011 includes: $176.3 million in federal funds, $93.9 million in non-governmental funds, $69.4 million in other appropriated funds, $46.5 in other non-appropriated funds and $6.6 million from federal American Recovery and Reinvestment Act funds.
The overall total is usually inclusive of projected tax refunds, pegged at $85.2 million for FY 2011, along with debt service payments (nearly $50 million) and transfers out from the General Fund to other public government fund accounts ($6.7 million). According to the most recent totals, the FY 2010 overall spending plan added up to about $1.3 billion, which also includes an existing $862.3 million in appropriations.
This time around, the FY 2011 General Fund budget — used to cover most central government operations — is based on net revenue projections of $781.9 million and is about $72.5 million less than the budget submitted for FY 2010, and more than $82 million more than the current appropriation level. Cutting departments and agencies’ budgets across the board was a key maneuver, but also pared back this year is the Miscellaneous Section of the budget — which is down to $79.8 million — and transfers in from other government fund accounts, which have dropped approximately $12.3 million.
When asked Monday why this year’s budget wasn’t along the same appropriation level as the one proposed for FY 2011, Gottlieb said that an immediate cutback would have called for a 5 to 10 percent decrease in allotments, rather than the existing 2 percent.
"Last October, we were not prepared to immediately slash appropriations," she explained, adding that when the FY 2010 budget was submitted, the government had a higher and more expensive workforce, which dropped from 9,550 employees in the second and third quarters of FY 2010 to 9,527 due to the continuation of the government’s limited hiring freeze and attrition program, which seeks to eliminate positions left vacant by retirees.
To get the government through FY 2011, about $135.1 million in borrowed funds expected to come from a newly negotiated line of credit is factored into the General Fund total, along with $99 million, or two years’ worth, of real property tax bills.
The FY 2011 budget factors in bills issued for fiscal years 2007 and 2008, while this year’s budget — in effect until the end of October — includes projected FY 2006 property tax collections, expected to come in from bills that will be issued this summer.
Residents who have already paid their 2006 bills will be credited, and those who overpaid will have those amounts applied to their FY 2007 bills, officials said Monday. Tax Assessor Bernadette Williams said FY 2006 bills will be due by August 15 and considered delinquent by October 15.
Meanwhile, the government’s ongoing property tax court case has yet to be settled in District Court, she added.
Other revenues projected for FY 2011 and factored in to the budget include: $391.7 million in individual income taxes, $52.6 million in corporate income taxes, $22.9 million in trade and excise taxes and $141.3 million in gross receipts taxes.
To balance the budget, there are also additional drops in all general budget categories, including personnel services costs, which customarily rise each year as salary increases are factored in. But for FY 2011, that total also makes the turn downward to $356.6 million, while fringe benefits are set at $142.3 million. About $1.3 million has been set aside for capital outlays and $13.4 million toward supplies. The "other services and charges category," which includes everything from professional services contracts to travel expenses, is $125.3 million, while $18.1 million is set aside for utilities.
The "all expenses" category includes: $59.2 million to be split between the Legislature and Judicial branches, $33.4 million for the University of the Virgin Islands, $4.4 million for WTJX Channel 12 and $27.6 million for the V.I. Waste Management Authority.
Present during Monday’s hearing were Sens. Craig W. Barshinger, Carlton "Ital" Dowe, Louis P. Hill, Neville James, Wayne James, Terrence "Positive" Nelson, Sammuel Sanes, Patrick Simeon Sprauve and Michael Thurland.
