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More Revenue Needed Badly, Says Governor's Financial Team

While the territory already faces a $27.1 million 2012 budget shortfall, millions more than budgeted are still needed for prisons, hospitals, and police. That’s according to Gov. John deJongh Jr.’s financial team, which testified Monday before the Senate Finance Committee.

The government continues to ramp up delinquent tax collections, but realistic estimates of likely collections are already included in the budget projections, according to Management and Budget Director Debra Gottlieb.

Gottlieb said the Legislature’s $720 million budget was unbalanced, in part because it left out the administration’s proposal to create nine unpaid government holidays and increase gross receipts taxes from 4.5 to 5 percent.

The administration now projects about $692.7 million in revenues, leaving a shortfall of $27.1 million compared to the Legislature’s $720 million budget, Gottlieb said.

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Gottlieb provided the government’s latest projections, showing some revenue sources increasing and others decreasing. Gross receipts tax projections decreased $14.4 million from $177.3 million to $162.9 million "due mainly to the Legislature not approving" the gross receipts tax increase, she said. Projections for individual income tax collections decreased by $11.9 million from $386.5 million to $374.6 million. Projected corporate income tax increased by $1.3 million, and several other sources either went down slightly or remained unchanged, according to Gottlieb.

Meanwhile, the Bureau of Corrections and several other agencies need more funding than currently budgeted in order to meet "mandated levels of service," she said. In particular, the administration wants
$2.5 million for the Bureau of Corrections for health care, increased safety to inmates and to help meet federal consent decrees.

"We made a commitment under the consent decree … that we can provide all the services," she said. The BOC budget is $2.4 million less than last year; and with the federal government suing to take the prison system into receivership, "it makes it a bit harder for us to convince the federal government we can properly run this facility with $2.4 million less funding," Gottlieb said.

The administration also wants additional appropriations of:

— $2.5 million for Enterprise Resource Planning digitized accounting and personnel management system hardware upgrades, support services, and another $600,00 for upgrading software;
–$1.7 million to Schneider Regional Medical Center;
— $1.5 million for V.I. Fire Services to fill some positions and cut down on overtime;
— $1.2 million to the V.I. Police Department for additional officers and other personnel;
–$1 million for the OMB Third Party Fiduciary to comply with monitoring requirements for receipt of federal grants;
— $1 million to Human Services for local salary matches and program costs;
— $880,000 to Gov. Juan F. Luis Hospital;
— $640,673 for the annual subsidy to the St. Croix ferry boat operator;
— $393,000 to the Department of Justice to hire more prosecutors and;
— several smaller items.

Sen. Janette Millin-Young pressed Gottlieb on whether hundreds of millions of dollars in long-delinquent taxes could fill the gap if the government pushed harder to collect. Gottlieb said as much as $200 million may be delinquent.

"If [the $200 million] were collectible, I think it would already have been collected," Gottlieb responded. "We would rather work with a taxpayer to collect something rather than close their doors and collect nothing," Gottlieb continued.

"How much is feasible?" Millin-Young asked. Until debt is 10 years old or older, it is considered collectible still, and the government is successfully pushing to collect more, Gottlieb said.

For 2007-09, delinquent collections represented 7 percent of total revenues, which was a "big improvement" over previous years, and with a new task force, they hope to increase that to 10 percent, she said.

No budget-balancing measures were before the committee Monday as it took testimony from the governor’s financial team.

After the financial team left, the committee voted to table a bill, sponsored by Sen. Sammuel Sanes, to rescind this year’s 8 percent across-the-board government employee pay cuts. Several union representatives testified in support of the measure, arguing their members were struggling under the pay cuts.

During her budget update, Gottlieb testified the cut was projected to save $27.3 million in 2012, so repealing the pay cuts would add that amount to the budget shortfall. However, despite repeated prodding, Gottlieb and the rest of the governor’s financial team declined to testify on the repeal measure, saying it was the Legislature’s proposal and not the administration’s.

Voting to table the repeal bill were Millin-Young, Sens. Carlton "Ital" Dowe, Louis Hill and Celestino White. Sanes voted nay. Absent were Sens. Shawn-Michael Malone and Nereida "Nellie" Rivera-O’Reilly.

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While the territory already faces a $27.1 million 2012 budget shortfall, millions more than budgeted are still needed for prisons, hospitals, and police. That’s according to Gov. John deJongh Jr.'s financial team, which testified Monday before the Senate Finance Committee.

The government continues to ramp up delinquent tax collections, but realistic estimates of likely collections are already included in the budget projections, according to Management and Budget Director Debra Gottlieb.

Gottlieb said the Legislature's $720 million budget was unbalanced, in part because it left out the administration's proposal to create nine unpaid government holidays and increase gross receipts taxes from 4.5 to 5 percent.

The administration now projects about $692.7 million in revenues, leaving a shortfall of $27.1 million compared to the Legislature's $720 million budget, Gottlieb said.

Gottlieb provided the government's latest projections, showing some revenue sources increasing and others decreasing. Gross receipts tax projections decreased $14.4 million from $177.3 million to $162.9 million "due mainly to the Legislature not approving" the gross receipts tax increase, she said. Projections for individual income tax collections decreased by $11.9 million from $386.5 million to $374.6 million. Projected corporate income tax increased by $1.3 million, and several other sources either went down slightly or remained unchanged, according to Gottlieb.

Meanwhile, the Bureau of Corrections and several other agencies need more funding than currently budgeted in order to meet "mandated levels of service," she said. In particular, the administration wants
$2.5 million for the Bureau of Corrections for health care, increased safety to inmates and to help meet federal consent decrees.

"We made a commitment under the consent decree ... that we can provide all the services," she said. The BOC budget is $2.4 million less than last year; and with the federal government suing to take the prison system into receivership, "it makes it a bit harder for us to convince the federal government we can properly run this facility with $2.4 million less funding," Gottlieb said.

The administration also wants additional appropriations of:

-- $2.5 million for Enterprise Resource Planning digitized accounting and personnel management system hardware upgrades, support services, and another $600,00 for upgrading software;
--$1.7 million to Schneider Regional Medical Center;
-- $1.5 million for V.I. Fire Services to fill some positions and cut down on overtime;
-- $1.2 million to the V.I. Police Department for additional officers and other personnel;
--$1 million for the OMB Third Party Fiduciary to comply with monitoring requirements for receipt of federal grants;
-- $1 million to Human Services for local salary matches and program costs;
-- $880,000 to Gov. Juan F. Luis Hospital;
-- $640,673 for the annual subsidy to the St. Croix ferry boat operator;
-- $393,000 to the Department of Justice to hire more prosecutors and;
-- several smaller items.


Sen. Janette Millin-Young pressed Gottlieb on whether hundreds of millions of dollars in long-delinquent taxes could fill the gap if the government pushed harder to collect. Gottlieb said as much as $200 million may be delinquent.

"If [the $200 million] were collectible, I think it would already have been collected," Gottlieb responded. "We would rather work with a taxpayer to collect something rather than close their doors and collect nothing," Gottlieb continued.

"How much is feasible?" Millin-Young asked. Until debt is 10 years old or older, it is considered collectible still, and the government is successfully pushing to collect more, Gottlieb said.

For 2007-09, delinquent collections represented 7 percent of total revenues, which was a "big improvement" over previous years, and with a new task force, they hope to increase that to 10 percent, she said.

No budget-balancing measures were before the committee Monday as it took testimony from the governor's financial team.

After the financial team left, the committee voted to table a bill, sponsored by Sen. Sammuel Sanes, to rescind this year's 8 percent across-the-board government employee pay cuts. Several union representatives testified in support of the measure, arguing their members were struggling under the pay cuts.

During her budget update, Gottlieb testified the cut was projected to save $27.3 million in 2012, so repealing the pay cuts would add that amount to the budget shortfall. However, despite repeated prodding, Gottlieb and the rest of the governor's financial team declined to testify on the repeal measure, saying it was the Legislature's proposal and not the administration's.

Voting to table the repeal bill were Millin-Young, Sens. Carlton "Ital" Dowe, Louis Hill and Celestino White. Sanes voted nay. Absent were Sens. Shawn-Michael Malone and Nereida "Nellie" Rivera-O'Reilly.