Easing concerns a little over how much revenue the territory will receive, the U.S. Senate Finance Committee on Thursday passed legislation to extend the $13.25 Virgin Islands rum cover rate as part of the usual biannual package of tax extenders, according to Delegate Donna M. Christensen.
The cover over provides $13.25 per proof gallon of rum made in and exported from the territory to the United States. Most of that per-gallon charge is set in the legislation that created the program but Congress must approve the final $2.75 every two years in tax extender legislation that includes a wide array of nominally temporary tax provisions.
The Expiring Provisions Improvement Reform and Efficiency Act of 2014 passed the committee on a voice vote. Christensen said it will also have to pass the full Senate and then be passed by the House.
“There may still be a long way to go before final passage,” she said.
The cover over legislation passed without amendment but, as he has in the past, Sen. Robert Menendez (D-NJ) submitted one to limit how the territories use this funding.
“I am pleased that so far we have a clean extension,” Christensen said in a statement Thursday.
“I would especially like to thank Senate Finance Committee Chairman Ron Wyden (D-Oregon) and ranking member Orrin Hatch (R-Utah), who I wrote to last week and spoke to yesterday to emphasize the importance of a clean extension,” Christensen said.
Gov. John deJongh Jr. also hailed the action Thursday, saying it is a result of his administration’s efforts on this issue.
“During our meetings in Washington, we pressed not only for reconsideration of the decision taken by the Department of the Interior that reduced the advance payment of rum cover-over revenues to $10.50 per gallon, rather than the $13.25 extender rate which had been in place up until Dec. 31, 2013, but for Congressional action to make the higher rate permanent," deJongh said in a statement.
"Our hard work on this issue resulted in the reversal of the Department of Interior’s original decision and the release of some $30 million dollars to the territory at the $13.25 rate," he added. DeJongh also thanked Wyden, Hatch and other senators.
DeJongh said he would keep lobbying to have the extenders approved permanently at the higher rate. While this is good news, deJongh said it does not help the government’s current budget shortfall because the 2014 fiscal year budget was passed by the Legislature based on the assumption that the rum cover-over would be at the higher $13.25 rate. The $30 million released by the Department of Interior in February moved the territory $30 million closer to meeting the budgeted revenue assumption but there remains an expected budget shortfall to $40.5 million that still must be addressed, deJongh said.
