The Public Finance Authority board voted Monday to borrow $13 million from the Government Employees’ Retirement System (GERS) to cover the cost of early retirement incentives offered to government employees.
The $10,000 retirement incentive was included in the Senate’s recent Economic Stability Act and offered to government employees with 30 or more years of service. The act allows for the government to cover the cost by borrowing money from public funds, or from a private institution such as GERS, according to PFA bond counsel Patricia Goins.
The opportunity was meant to be an economic boost for the territory, but the PFA now has to use delinquent property taxes to pay back the millions needed to complete this transaction. At Monday’s meeting, PFA Executive Director Angel Dawson said that property tax collections from fiscal year 2005 and prior will be used, while gross receipts taxes have been pledged as a backup on the interest.
According to Office of Management and Budget Director Debra Gottlieb, approximately 375 employees were eligible for the incentive, which would make the payout for the government $3 million to $4 million. Board members said Monday that the up to $13 million authorized would give the government some leeway, also allowing for the payment of certain lump-sum money, including accrued annual leave for retiring employees.
The loan note is for five years, and whatever balance is left after that will convert into a two-year term loan. However, Dawson said he anticipates there will be enough property tax revenues available to pay off the loan in two to three years.
“We’re looking at $39-$40 million in delinquencies, so there’s more than a sufficient margin there in terms of what is outstanding in delinquent real property taxes, which we expect to collect in the normal course of events and also through the attachment and possible sale of properties,” he said Monday.
Dawson said the PFA is in the final stages of negotiations with GERS and expects to close on the loan note this week or next week. The resolution authorizing the loan was approved unanimously by the PFA board.
The board also authorized:
-$150,000 for V.I. Fire Service to build a steel frame building for their fire trucks in Estate Tutu; the money will be reprogrammed from $1.3 million remaining for the repair of the Toro Building on St. Croix
-$275,000 for the Office of the Governor to renovate 19A and 20 Kongens Gade, which is vacant and sits between Government House and the Lieutenant Governor’s Office on St. Thomas. Board members said the purpose of buying the property in January was to shore up security on Government Hill and provide another cistern to use. The purchase of the building was authorized by the Senate and will be paid for by the 2003 gross receipts bond proceeds.
Board members attending the meeting were: Gov. John deJongh Jr. , Gottlieb, Keith O’Neale and Pablo O’Neill.