Gov. John deJongh Jr. again sounded the alarm Monday over the government’s budget crisis, saying unless the Legislature changes course and takes stronger measures to fill the gap, the government will run out of money and have to start terminating employees by late summer.
“Given that the dismissal of hundreds of V.I. government employees is becoming inevitable, I find it very disturbing that there was not a single discussion in the formal session of the Legislature last Wednesday as to how we bridge the remaining current fiscal year deficit,” deJongh said in a statement Monday.
“The Senate is very much aware that based on current projections, the limited cash in the government’s coffers will run out by end of summer, which means we will have no choice but to terminate employees and curtail vital government services to our communities," he said.
The deJongh administration has been sounding the fiscal alarm since governor’s state of the territory address earlier this year, when he said the government faced a $75 million shortfall this year and an even larger one next year.
In February, deJongh submitted an austerity package to meet the shortfall by freezing salaries, cutting budgets, freezing hiring, raising taxes and adding new fees. His proposal would have changed three paid holidays to unpaid holidays: Transfer Day, Holy Thursday (the Thursday before Easter) and the day after Christmas. It would also have implemented a 1-percent increase in the gross receipts tax, a 2-percent increase in hotel tax, and a 911 surcharge of $1 on cell phones, a charge that already exists for landlines.
Amid teacher protests, senators balked at any pay freezes and at eliminating any paid holidays. The final austerity package passed the second week of April also cut the proposed increase in gross receipts tax to 0.5 percent. It also imposed 3-percent cuts on a number of agencies, bans some agencies from purchasing new government vehicles for two years and makes some smaller policy adjustments.
When deJongh signed the Legislature’s final version of the act earlier this month, he issued a statement saying it came up about $16.4 million short of closing the gap. He urged the Legislature to take the hard road and quickly take the sort of unpopular salary-freezing and tax-increasing measures the administration says are necessary.
Monday in his statement, deJongh once again raised the alarm. "To date, we have not seen any further proposals from the Senate to close this deficit,” deJongh said, calling for all elected leaders of the territory to come together and develop a plan that addresses the fiscal crisis and avoid "the catastrophic effects that will begin to take shape as early as June."
“We cannot continue to ignore the fact that between now and the end of September, absent any meaningful proposals and decisive action, we cannot reduce the projected deficit,” deJongh said.
