Gov. John deJongh Jr. submitted legislation Monday that would authorize the V.I. Public Finance Authority to issue over $100 million in new bond debt, to plug a roughly $30 million budget hole, stave off a crisis at Gov. Juan F. Luis Hospital, pay utility bills and repair some roads.
Senate President Shawn-Michael Malone said Monday evening that senators would look over the bill and address it and other legislation during session scheduled later this month.
DeJongh projected a substantial Fiscal Year 2014 deficit early in the year, urging legislative action to raise revenue and cut spending beginning in January. Initially Government House projected a $70.5 million due to tax revenues coming in lower than expected and to federal withholding of a portion of rum excise tax revenues from the territory due to congressional inaction on annual "tax extender" legislation.
The federal government later reversed course, giving the territory those funds, cutting that deficit in half. (See Related Links Below) Since then, the Legislature and the governor’s financial team have met on the record and informally, seeking budget fixes, but there has been no legislative fix to date.
In a statement, deJongh said he was proposing to borrow about $30 million to fill the current year budget deficit. Another $30 million of borrowing would be used for working capital for the JFL Hospital on St. Croix and Schneider Regional Medical Center on St. Thomas. Another $10 million would pay past-due hospital electric and water bills. And a final $1.5 million would pay utilities for the Bureau of Corrections.
“It is important to note that an equal part of our working capital request at $40 million is intended to put our hospitals on a much firmer financial foundation in the near term in order to allow them to pay some critical past-due obligations, re-establish credit access with vendors, lower their utility costs and provide time for them to strengthen their revenue cycles,” deJongh said in a statement Monday.
DeJongh said his administration has tried to limit borrowing for operating needs, "but the lingering impact of the Great Recession, further exacerbated by the closure of the Hovensa refinery, continues to severely limit the government’s financial flexibility."
The governor’s proposed bond legislation also includes over $4.1 million for roads and Public Works projects.
It authorizes:
– $905,614 for the conclusion of the White Lady White Bay Road project on St. Croix, the Smith Bay Cemetery project, and removal of Hurricane Earl debris;
– $1.2 million to the Department of Public Works to complete the Ivanna Eudora Kean High School track;
– and $2 million to augment Federal Highway Administration funding to relocate the existing fire station from the western side of Fort Christian.
The legislation would also authorize $23.8 million to help with closing the territory’s landfills, bringing the proposed new bond debt to more than $98 million.
The V.I. Waste Management Authority expects closing the landfills to meet Environmental Protection Agency consent decrees to cost about $67 million in total.
“This proposal would also authorize funding of a design/build contract for the Paul E. Joseph Stadium Project … for which negotiations with a contractor are in process," deJongh said. It allows the government the flexibility to pledge either matching fund revenues or gross receipts taxes to secure the bonds.
The legislation also authorizes $70,000,000 for transportation projects on St. Croix’s Melvin Evans Highway and St. Thomas’ Veterans Drive. But this would be funded with Grant Anticipation Revenue Bonds, in advance of future federal funding, and would not affect the annual budget.
About $30 million would go to work on a portion of the Melvin Evans Highway, from West Airport Road to Hannah’s Rest on St Croix. And $40 million would go to work on a portion of the Veterans Drive Project from the Long Bay Road/Lover’s Lane Intersection to Vendors’ Plaza on St. Thomas.
The grant anticipation GARVEE bonds would be repaid using about half of anticipated federal highway revenues.
"The territory has been working with the Federal Highway Administration on these projects for decades," deJongh said, adding that studies and approvals are in place and ready to go as soon as the Legislature approves the bill. "The Veterans Drive project has been in various stages of movement since long before the advent of my administration, and no major work has been done on the Melvin Evans Highway since it was opened to traffic in 1980,” deJongh said.
In the same proposed bill, deJongh said he is seeking approval for several projects funded from the Community Facilities Trust account. A portion of V.I.-sourced alcohol excise tax revenues funds that account.
“These projects are geared towards roadwork, improved security measures, camera surveillance and harbor dredging. All these projects have as the central core a focus on our historic areas and housing communities to improve activity in each accordingly,” deJongh said Monday.
Reached Monday evening, Malone said the Legislature’s post auditor was analyzing the bill and senators were beginning to look it over and see where the governor’s and the Legislature’s priorities align.
"We had a meeting of the members of the majority caucus and are looking through it, but we have not arrived at a determination on it yet," Malone said.
While the Legislature and executive branch have had an often contentious relationship in recent years, Malone’s top legislative priorities are very similar to those laid out by deJongh, possibly leaving room for cooperation on this bonding measure.
"Our main focus is the operating deficit and the hospitals," Malone said. "We need to deal with the hospitals and the deficit. WAPA needs to get paid. … and we need road repairs," Malone continued.
Malone said senators would consider the governor’s proposal and possibly amend it, depending on the bill’s content and legislative priorities, during session scheduled for June 18.
