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DeJongh Delivers Straight Talk to Tourism Meeting

Gov. John deJongh Jr. Speaking Friday to members of the V.I. tourism industry, Gov. John de Jongh Jr. said he is willing to consider tax relief for businesses to get the economy moving again. But he’s looking for something from the private sector: active involvement, innovation and investment.

The governor spoke to about 100 members of the V.I. Hotel and Tourism Association, including hotel managers, retail store owners, and owners and managers from a wide range of tourism-related businesses, gathered for the association’s annual luncheon meeting at the Ritz Carlton Hotel on St. Thomas.

DeJongh opened his remarks with a wry reference to the negative reaction his administration’s layoffs and cutbacks have elicited from much of the community. Saying he was honored to have been asked to speak, he added, “These days if I get invited anywhere, I am honored.”

His audience sat rapt as deJongh enumerated the severity of the financial problems facing the territory. The U.S. recession in 2008 affected the islands too, he noted. It was especially hard on tourism since it is dependent on discretionary spending. About the same time, many of the territory’s EDC (Economic Development Commission) beneficiaries closed their operations and moved away, taking millions of tax dollars with them.

From 2007 to 2009, deJongh said, government revenues plummeted by $225 million.

The second major blow was delivered this January when the Hovensa (Hess Oil Virgin Islands) refinery announced it is closing. Given market conditions, he said the company’s decision is understandable, “But for us what this means is a complete erosion of a very important part of our middle class.

“It also means a 12 percent hit to employment on St. Croix,” he said, and “we are losing 20 percent of our gross territorial product at one time.”

Another direct impact, he noted, is the loss of fuel discounts that Hovensa offered, both at the pump and to the V.I. Water and Power Authority.

DeJongh devoted much of his talk to WAPA and his administration’s efforts to move from oil to less expensive fuel sources.

He also ticked off a number of measures he has taken to mitigate economic woes. The government workforce has dropped from 7,800 to 5,600 and spending on various programs has been cut by $280 million, he said.

Meanwhile, the local government is seeking assistance from the federal government on several fronts. Those include retraining programs for workers who are laid off, assurances of full participation in subsidy programs such as food stamps, and a request for a waiver of any additional administrative costs the V.I. government may incur because of the increased number of people getting such services.

DeJongh said he wants to revitalize the tourism sector and is looking for help from those in the industry.

“We can’t continue to do it as we have the last 45 years,” he said. Changes under consideration include a parking garage at Fort Christian, more inter-island ferry service, zip line tourist attractions, theme parks, and “marine transportation within Charlotte Amalie Harbor.” Carefully avoiding the hot-button term “water taxi,” he said the marine transportation would not be run by the government, but would be “in the context of the (subsidized bus) Vitran structure.”

DeJongh gently chided the tourism leaders for failing to invest in their properties or in the industry, saying there has been little investment in the last 10 years, and it is desperately needed. Some hoteliers said the high cost of living in general and the high cost of electricity in particular is preventing them from investing. Some complained of having to use back-up generators, yet being discouraged from actually getting off the WAPA grid.

DeJongh said he faces the same problem of short funds, but despite expenses, he has to invest. And he reiterated efforts are under way to decrease the territory’s dependence on oil. It will take a few years, but, he said, “We will get there.”

Responding to a question criticizing the Legislature, the governor said, “We have to get people in there who can make decisions.” As an example, he said he had been proposing an increase in the gross receipts tax in numerous forums over two years but the Legislature didn’t act until the Hovensa crisis.

“I don’t like being the only one out there making the unpopular decisions,” he said, but added he will continue to do so.

The reference to gross receipts brought another question: What’s being done to collect from those who underpay or don’t pay at all?

DeJongh said he has created a special task force to look at delinquent taxes in virtually all categories prior to 2009. They are cross-referencing with the Licensing Department and using auditors to ferret out delinquent taxpayers.

He complimented audience members on their community involvement and encouraged them to increase it. Association members should serve on government boards and commissions, he said. Reminding them that the Tourism Department is holding a conference next week at UVI to seek public input on ways to improve the industry, he said, “We recognize that it is your ideas that will get us to where we want to go.”

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