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Monday, August 15, 2022
HomeNewsArchivesSenate Begins Grappling With 2014 Budget Dilemmas

Senate Begins Grappling With 2014 Budget Dilemmas

Senators and Gov. John deJongh Jr.’s financial team took turns assigning principle responsibility for any budget cuts or tax increases that might be necessary to avoid layoffs, during the first day of budget hearings before the Finance Committee.

The executive budget was submitted June 14. The Fiscal Year 2014 budget totals $1.1 billion with $743.8 million from the General Fund; $167.7 million in federal operating grants, $50,000 in federal stimulus dollars; $150.9 million in other appropriated funds; $63.2 million in other non-appropriated funds and $108 million of non-governmental funds, like the revolving funds generated by the territory’s hospitals.

In her testimony Monday, Director of Management and Budget Debra Gottlieb outlined the budget and two shortfalls that need to be addressed: For the current, 2013 Fiscal Year, there is a projected cash shortfall, which Government House projected at about $19 million earlier in June.

The projected cash shortfall has been revised and is currently $23.6 million, Gottlieb said. She reiterated that Gov. John deJongh Jr. had offered legislation to address the cash shortfall, urging the Legislature to act soon.

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The governor’s proposals would extend the unpopular 8 percent government pay cut; authorize bank funding to bridge the shortfall; and funding health insurance premiums to the end of the fiscal year.

For the upcoming 2014 Fiscal Year, Government House has submitted a balanced budget, Gottlieb said. But it assumes the Legislature will choose cuts or tax increases to meet a $28.6 million budget deficit, she testified, saying the 2014 budget "anticipates that $14.3 million will be realized from legislative revenue generating initiatives and that $14.3 million will be realized from legislative expenditure reduction initiatives or some other combination."

Gottlieb listed nine potential courses of action the Legislature could take to meet the gap, but declined to endorse any of them, saying "at the end of the day the budget will be balanced or not balanced as a result of what this body chooses to do or not to do," and pledging "we are willing to work with you on whatever the plan is."

The nine potential cost cutting and revenue increasing options Gottlieb suggested on behalf of Government House were:

  • reducing the cost of government health insurance premiums by changing the cost share to have employees pay 40 instead of 35 percent of the premium;
  • an income tax surcharge;
  • unpaid holidays or furlough days;
  • extending the 8 percent salary reduction;
  • a vehicle mileage tax;
  • reducing the gross receipts tax exemption from the current $9,000 to the former $5,000;
  • eliminating the exemption of excise taxes on certain products;
  • increasing real property and other taxes;
  • reducing other fringe benefits offered to government employees.

Monday’s Finance Committee hearing was the beginning of the Legislature’s role in the governmental budget process. The Legislature will be holding budget hearings all summer, getting testimony from each governmental agency and department, before amending and voting on the budget bills submitted by Government House.

No votes were taken. Present weree Chairman Clifford Graham, Sens. Donald Cole, Myron Jackson, Nereida "Nellie" Rivera O’Reilly, Clarence Payne III, Terrence “Positive”Nelson and Judi Buckley. No one was absent. Senate President Shawn-Michael Malone, Sens. Kenneth Gittens, Tregenza Roach and Janette Millin Young also attended the hearing, but are not members of the committee.

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Senators and Gov. John deJongh Jr.'s financial team took turns assigning principle responsibility for any budget cuts or tax increases that might be necessary to avoid layoffs, during the first day of budget hearings before the Finance Committee.

The executive budget was submitted June 14. The Fiscal Year 2014 budget totals $1.1 billion with $743.8 million from the General Fund; $167.7 million in federal operating grants, $50,000 in federal stimulus dollars; $150.9 million in other appropriated funds; $63.2 million in other non-appropriated funds and $108 million of non-governmental funds, like the revolving funds generated by the territory's hospitals.

In her testimony Monday, Director of Management and Budget Debra Gottlieb outlined the budget and two shortfalls that need to be addressed: For the current, 2013 Fiscal Year, there is a projected cash shortfall, which Government House projected at about $19 million earlier in June.

The projected cash shortfall has been revised and is currently $23.6 million, Gottlieb said. She reiterated that Gov. John deJongh Jr. had offered legislation to address the cash shortfall, urging the Legislature to act soon.

The governor's proposals would extend the unpopular 8 percent government pay cut; authorize bank funding to bridge the shortfall; and funding health insurance premiums to the end of the fiscal year.

For the upcoming 2014 Fiscal Year, Government House has submitted a balanced budget, Gottlieb said. But it assumes the Legislature will choose cuts or tax increases to meet a $28.6 million budget deficit, she testified, saying the 2014 budget "anticipates that $14.3 million will be realized from legislative revenue generating initiatives and that $14.3 million will be realized from legislative expenditure reduction initiatives or some other combination."

Gottlieb listed nine potential courses of action the Legislature could take to meet the gap, but declined to endorse any of them, saying "at the end of the day the budget will be balanced or not balanced as a result of what this body chooses to do or not to do," and pledging "we are willing to work with you on whatever the plan is."

The nine potential cost cutting and revenue increasing options Gottlieb suggested on behalf of Government House were:

  • reducing the cost of government health insurance premiums by changing the cost share to have employees pay 40 instead of 35 percent of the premium;
  • an income tax surcharge;
  • unpaid holidays or furlough days;
  • extending the 8 percent salary reduction;
  • a vehicle mileage tax;
  • reducing the gross receipts tax exemption from the current $9,000 to the former $5,000;
  • eliminating the exemption of excise taxes on certain products;
  • increasing real property and other taxes;
  • reducing other fringe benefits offered to government employees.

Monday's Finance Committee hearing was the beginning of the Legislature's role in the governmental budget process. The Legislature will be holding budget hearings all summer, getting testimony from each governmental agency and department, before amending and voting on the budget bills submitted by Government House.

No votes were taken. Present weree Chairman Clifford Graham, Sens. Donald Cole, Myron Jackson, Nereida "Nellie" Rivera O’Reilly, Clarence Payne III, Terrence “Positive”Nelson and Judi Buckley. No one was absent. Senate President Shawn-Michael Malone, Sens. Kenneth Gittens, Tregenza Roach and Janette Millin Young also attended the hearing, but are not members of the committee.