Gov. John deJongh Jr. submitted the administration’s 2014 budget proposal Friday evening, calling for $743.8 million in expenditures – up 5.4 percent from the extremely austere Fiscal Year 2013 budget, due in part to the expiration of unpopular 8 percent government pay cuts legislated in 2011.
“Over the past year, our community has continued to face economic and financial challenges unlike any we have witnessed in recent decades, as we continue to adjust to the impact of the Great Recession and the damage to our economy and community from the closure of the Hovensa refinery,” deJongh wrote in a letter to Senate President Shawn-Michael Malone accompanying the budget.
The budget calls for $253.8 million for wages and salaries; $136.9 million for benefits; $148.7 million in the miscellaneous category; $172.2 million in "other services and charges"; and $33.3 million for utilities, among its larger individual categories.
Education, by far the largest single department and budgetary expense, has a recommended 2014 General Fund budget of $157.9 million – down $4.6 million from FY13. Including federal and nonappropriated funds, the budget projects $210 million for Education this coming year.
Human Services, which has seen a large increase in clients since the recession began, is a rare budget item showing back-to-back increases for 2013 and 2014, with a recommended FY14 General Fund budget of $65 million – roughly $7.7 million more than last year.
The V.I. Police Department has a proposed 2014 General Fund budget of $57.2 million – roughly $5.9 million more than last year and a little more than the 2012 budget.
The Bureau of Corrections is allotted $26.4 million – a half-million dollar increase from last year.
The Health Department is facing particularly sharp cuts for the second year in a row, with a recommended 2014 General Fund budget of $16.4 million – down $5.7 million from FY13.
The budget is normally supposed to be submitted at the end of May and the governor apologized for the delay, saying more time was necessary to ensure “the development of a budget that meets the needs of our community and our best interests.”
The budget’s key elements include a continued focus on collecting past-due taxes, restructuring bonds to achieve debt service savings, funding staff and costs of the new Charles Wesley Turnbull Regional Library, funding higher health insurance premiums, reinstating government salaries previously reduced by 8 percent, funding reforms in the Police Department and the territory’s correctional system mandated by legal agreements, and ensuring investments in early childhood education.
“There are no simple solutions to the profound challenges that we face, and I have made some difficult and unpopular decisions in the last several years to ensure our financial viability and economic stability that I know have caused pain and hardship across our community,” deJongh wrote in his letter accompanying the budget.
“We have taken extreme measures in developing the leanest possible budget for Fiscal Year 2014,” deJongh wrote. Those measures involve not filling General Fund positions unless absolutely critical, eliminating programs and services that could not be justified, streamlining processes and shifting costs to federal and special funds, deJongh said. But because of the reinstatement of government salaries, the increasing costs of health insurance, and disbursements associated with the earned income credit, the government still needs additional revenue, deJongh said.
“Accordingly we have no recourse but to discuss new revenue measures, further expenditure reductions or some combination of the two to achieve a balanced budget,” deJongh wrote, adding his team has outlined some revenue options for the Legislature to consider.
The governor said the government pension system’s unfunded liability needs to be addressed and he anticipates negotiations on a legislative package to address it.
“I stand prepared to go the extra mile to work with you to achieve the goals that you have rightly put forward to fully fund GERS and to avoid continued pay cuts to our employees,” deJongh wrote, pledging that if the Senate brings him a budget that achieves those objectives through the combination of revenue actions and expenditure reductions, he would "work diligently to make that a reality."
DeJongh also called for immediately addressing the shortfall that affects the remainder of the current fiscal year, now estimated at $23.6 million. The increase in the Fiscal Year 2013 budget shortfall is “primarily as a result of the U.S. Department of Education’s decision to cease allowing the V.I. Department of Education to utilize grant funds for reimbursement of the third party fiduciary costs," deJongh said.
