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Monday, July 4, 2022
HomeNewsArchivesSenate Finance Committee Begins Going Over 2012 Budget

Senate Finance Committee Begins Going Over 2012 Budget

Members of the Senate Finance Committee sat down to their first hearing on the 2012 budget Tuesday, as members of the governor’s financial team explained the proposed $1.2 billion spending plan for the territory.

The fiscal year 2012 budget submitted last week by Gov. John deJongh Jr. includes a net $731.2 million General Fund budget—$38.5 million less than what’s projected to date for FY 2011.

Projected gross operating revenues in the new budget include: General Fund operating revenues of $770.6 million, transfers-in from other public funds of $103.5 million and $700,000 from other revenue sources, for a total of $874.8 million.

Payments deducted from that amount include $80 million for income tax refunds, $47.4 million for debt service requirements, and $16.1 million for various transfers-out to other funds, leaving the $731.3 available for appropriation.

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Members of the governor’s financial team told senators at Tuesday’s Finance Committee meeting that the projected $770.6 million in gross collections included projected taxes, fees and contributions, along with "other financing sources."

The General Fund budget includes: $311.7 million for personnel services; $138.4 million for fringe benefits; $13 million for supplies; $131.2 million for other services and charges; $20.9 million for utilities; $115.3 million for "all expenses," and $800,000 for capital outlays.

The "all expenses" category includes a proposed $52.9 million for the judicial and legislative branches, $30.9 million for the University of the Virgin Islands, $4.05 million for WTJX Channel 12 and $25.9 million for the V.I. Waste Management Authority.

The miscellaneous section of the budget is $83.4 million.

Within the tax categories, $386.5 million is projected for income tax collections, which Office of Management and Budget Director Debra Gottlieb said could be impacted by the possible layoff of 600 government employees, along with the implementation of an unpaid holiday schedule included under the "enabling legislation" section of the budget. Gottlieb said corporate income taxes are expected to total $56.5 million for FY 2012, while gross receipts taxes are projected at $177.3 million.

The gross receipts tax increase was a sore spot for senators who said that they already approved a .5 percent increase a few months ago as a compromise to the governor’s initial request of 1 percent, which was submitted as part of an austerity package that ended up being amended by the Senate. The loss in projected revenues anticipated by cutting the rate was tempered, according to senators, by an alternative plan submitted by the Legislature, but the governor subsequently said it still left a $17 million hole in the coffers.

Also factored into the projections is $95.5 million in real property tax collections, which Tax Assessor Bernadette Williams said includes a portion of the money for FY 2008, along with bills from FYs 2009 and 2010, which have not yet been issued.

Asked if the government expects to collect all of the money, Williams said yes, and added that generally, 75 percent of payments usually come in by the time the bills become delinquent.

In her testimony to the Senate, Gottlieb also described government efforts to ramp up collections by using technology that would allow officials to "track filers from monthly reporting to annual tax return filings, increase the speed and efficiency of tax audits and utilize collection tools at their disposal to file levies, liens and garnishments to collect more efficiently and effectively."

And to generate new income, the territory is partnering with the U.S. Internal Revenue Service to beef up current collections, while reviewing 1099’s filed by local employees to see if they are correctly classified or should be switched to full time status, she said.

Transfers-in from other funds are also contributors to the budget, and in response to questions from senators about local rum revenue projections, the governor’s Senior Policy Advisor Nathan Simmonds said revenues from St. Croix’s Diageo refinery are factored in at $99 million, while Cruzan rum revenues are projected to total $103.9 million.

Gottlieb also gave an overview of the territory’s current economic conditions, which includes an FY 2011 budget shortfall of $20.3 million and an average 8.6 percent unemployment rate in the second quarter.

"Employment growth slowed in the wake of job reductions in the manufacturing, accommodation and other services industries," she said. "Other sectors followed, as jobs in the trade, education and health, and construction sectors decreased in the second quarter from the same quarter last year."

On a more positive note, Gottlieb said that there was consistent growth in tourism, with visitor arrival numbers increasing "consistently" since 2010, but she added that those numbers were tempered by a decline in air passenger numbers. Hotel occupancy rates also declined 8.8 percent in the second quarter and 6.2 percent in the first months of the fiscal year, while cruise ship arrival numbers "turned negative in March 2011," she said.

"Hopefully, this is an anomalous event, but it may be a forewarning of things to come," Gottlieb added. "And an additional drop in cruise passengers is anticipated this summer."

It will be "some time" before the unemployment rate gets back down to 5 or 6 percent, Gottlieb said.

Looking to the future, she added that the same economic conditions are expected for FY 2012, which will keep the government under pressure with spending and growth in the economy "slow and uneven."

"The unemployment rate will remain elevated near 8 percent in 2011, before yielding to greater improvement in 2012," Gottlieb said.

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Members of the Senate Finance Committee sat down to their first hearing on the 2012 budget Tuesday, as members of the governor's financial team explained the proposed $1.2 billion spending plan for the territory.

The fiscal year 2012 budget submitted last week by Gov. John deJongh Jr. includes a net $731.2 million General Fund budget—$38.5 million less than what's projected to date for FY 2011.

Projected gross operating revenues in the new budget include: General Fund operating revenues of $770.6 million, transfers-in from other public funds of $103.5 million and $700,000 from other revenue sources, for a total of $874.8 million.

Payments deducted from that amount include $80 million for income tax refunds, $47.4 million for debt service requirements, and $16.1 million for various transfers-out to other funds, leaving the $731.3 available for appropriation.

Members of the governor's financial team told senators at Tuesday's Finance Committee meeting that the projected $770.6 million in gross collections included projected taxes, fees and contributions, along with "other financing sources."

The General Fund budget includes: $311.7 million for personnel services; $138.4 million for fringe benefits; $13 million for supplies; $131.2 million for other services and charges; $20.9 million for utilities; $115.3 million for "all expenses," and $800,000 for capital outlays.

The "all expenses" category includes a proposed $52.9 million for the judicial and legislative branches, $30.9 million for the University of the Virgin Islands, $4.05 million for WTJX Channel 12 and $25.9 million for the V.I. Waste Management Authority.

The miscellaneous section of the budget is $83.4 million.

Within the tax categories, $386.5 million is projected for income tax collections, which Office of Management and Budget Director Debra Gottlieb said could be impacted by the possible layoff of 600 government employees, along with the implementation of an unpaid holiday schedule included under the "enabling legislation" section of the budget. Gottlieb said corporate income taxes are expected to total $56.5 million for FY 2012, while gross receipts taxes are projected at $177.3 million.

The gross receipts tax increase was a sore spot for senators who said that they already approved a .5 percent increase a few months ago as a compromise to the governor's initial request of 1 percent, which was submitted as part of an austerity package that ended up being amended by the Senate. The loss in projected revenues anticipated by cutting the rate was tempered, according to senators, by an alternative plan submitted by the Legislature, but the governor subsequently said it still left a $17 million hole in the coffers.

Also factored into the projections is $95.5 million in real property tax collections, which Tax Assessor Bernadette Williams said includes a portion of the money for FY 2008, along with bills from FYs 2009 and 2010, which have not yet been issued.

Asked if the government expects to collect all of the money, Williams said yes, and added that generally, 75 percent of payments usually come in by the time the bills become delinquent.

In her testimony to the Senate, Gottlieb also described government efforts to ramp up collections by using technology that would allow officials to "track filers from monthly reporting to annual tax return filings, increase the speed and efficiency of tax audits and utilize collection tools at their disposal to file levies, liens and garnishments to collect more efficiently and effectively."

And to generate new income, the territory is partnering with the U.S. Internal Revenue Service to beef up current collections, while reviewing 1099's filed by local employees to see if they are correctly classified or should be switched to full time status, she said.

Transfers-in from other funds are also contributors to the budget, and in response to questions from senators about local rum revenue projections, the governor's Senior Policy Advisor Nathan Simmonds said revenues from St. Croix's Diageo refinery are factored in at $99 million, while Cruzan rum revenues are projected to total $103.9 million.

Gottlieb also gave an overview of the territory's current economic conditions, which includes an FY 2011 budget shortfall of $20.3 million and an average 8.6 percent unemployment rate in the second quarter.

"Employment growth slowed in the wake of job reductions in the manufacturing, accommodation and other services industries," she said. "Other sectors followed, as jobs in the trade, education and health, and construction sectors decreased in the second quarter from the same quarter last year."

On a more positive note, Gottlieb said that there was consistent growth in tourism, with visitor arrival numbers increasing "consistently" since 2010, but she added that those numbers were tempered by a decline in air passenger numbers. Hotel occupancy rates also declined 8.8 percent in the second quarter and 6.2 percent in the first months of the fiscal year, while cruise ship arrival numbers "turned negative in March 2011," she said.

"Hopefully, this is an anomalous event, but it may be a forewarning of things to come," Gottlieb added. "And an additional drop in cruise passengers is anticipated this summer."

It will be "some time" before the unemployment rate gets back down to 5 or 6 percent, Gottlieb said.

Looking to the future, she added that the same economic conditions are expected for FY 2012, which will keep the government under pressure with spending and growth in the economy "slow and uneven."

"The unemployment rate will remain elevated near 8 percent in 2011, before yielding to greater improvement in 2012," Gottlieb said.