The V.I. Government only has about 16 days of cash on hand – less than a tenth what it should, Acting Finance Commissioner Valdamier Collens told the Senate Judiciary Committee during his nomination hearing Thursday. The territory should consider enhancing revenue wherever possible, Collens said, suggesting that an income surtax might be one helpful measure.
His dire assessment echoes the warnings of Gov. Kenneth Mapp in his recent state of the territory address, and those made by the previous administration for the past several years.
The government’s ability to meet its short term obligations can only be summed up as day to day, he said, adding that the government has 16 days of cash on hand, while he said normally should be "at least 180 days or six months."
The Finance Department will work with the Office of Management and Budget and Internal Revenue Bureau to "micromanage the funds" and streamline activities such as federal grants monitoring to try to manage the cash crisis, he said.
Despite the cash situation, bond revenues are coming in soon and tax revenue streams are still flowing, Collens said, and there is no immediate threat of payless paydays,.
"This is my way of saying we are teetering on the brink of insolvency and we really need to come together to really look at the long term viability of the government of the Virgin Islands from a diversified standpoint and in terms of revenue enhancement," he said.
"Are you anticipating any delayed paydays?" asked Sen. Jean Forde.
"Not at this time," Collens said, elaborating that tax revenues are coming in at higher levels than last year, helping a little, and the situation will improve somewhat as annual collections pick up.
But there are several structural deficits, including a roughly $26 million actuarial shortfall in the government insurance fund that pays for workers’ compensation and the billion-dollar shortfall in the Government Employee Retirement System, he said, adding that the government has already cut all departments to the bone.
"It’s going to be painful no matter which way we look at it," Collens said. "There will have to be revenue generating. … The income tax surcharge is something we can look at which cuts across all constituencies," he said.
Another area to focus on is delinquent collections, he said. Senate President Neville James recalled that Mapp said in the state of the territory address that $125 million is collectible in the short and medium term. (See Related Links below)
"You are aware that is not realistic? That not everybody who owes actually has the cash and is being negligent?" James said.
"We have to make it realistic," Collens said, but agreed the figure would be unrealistic without more resources for collections.
Several senators, including James, asked Collens about his pay. Collens said he negotiated a salary of $125,000; a $25,000 or 25 percent increase over his predecessor’s salary.
James said he had long had a problem with an excess of unclassified employees, especially in Finance, getting substantial pay increases compared to the rank and file employees. He said the previous Finance commissioner was paid $97,000 annually, so the increase was more like $28,000.
"You do understand the public has a problem processing the governor saying we don’t have any money and on the other hand seeing you get a $25,000 raise, not that you aren’t worth it," James said.
Collens, a certified public accountant, was chief financial officer of the V.I. Port Authority from 2013 until his appointment to Finance. Before that, he was executive assistant commissioner of Finance, from 2009 to 2013.
The Rules and Judiciary Committee voted unanimously to send Collens’ nomination on for a final vote on the Senate floor. Voting yes were James, Forde, Sens. Novelle Francis, Justin Harrigan, Nereida "Nellie" Rivera-O’Reilly and Kenneth Gittens.
Rules also sent forward Tourism Commissioner Beverly Nicholson-Doty’s re-nomination. Nicholson-Doty has served as commissioner since 2006 and is the sole cabinet member of the previous administration to remain on. In 2012, she was elected chairwoman of the Caribbean Tourism Association.
Before serving at Tourism, Nicholson-Doty spent almost 14 years at the helm of the St. Thomas-St. John Hotel & Tourism Association, where she served many of those years as executive director.
She was approved and sent on for a final vote without opposition. Rivera-O’Reilly was absent at the time of the vote.
The committee also heard from Lawrence Olive, acting director of the Bureau of Motor Vehicles. While senators were broadly supportive of the nomination, the hearing was cut short before the vote due to the loss of a quorum. Several senators left in order to catch the final flight back to St. Croix.