This week Gov. Kenneth Mapp signed legislation he initially proposed to permanently increase government salaries to negotiated contract levels, using one-time windfall funding from the Hovensa refinery sale.
Employees at the Bureau of Internal Revenue, V.I. Fire Service, the Division of Personnel and the Departments of Licensing and Consumer Affairs, Tourism and Finance will be the next in line to receive salary increases.
The pay will go up May 26 and workers will get a lump sum in their June 9 paychecks because the raises are retroactive to Jan 1, according to Government House.
“This bill provides funding to implement step increases for nine of the first 11 agencies of our government,” Mapp wrote in his approval message to Senate President Neville James.
“The total sum of the increases has been verified by the Division of Personnel, the Office of Collective Bargaining and the Office of Management and Budget. Step increases within the Department of Finance and the Department of Agriculture were provided for in their Fiscal Year 2016 budgets.”
“We are completing step increases verification for the remaining departments and agencies and I will make the appropriate request for appropriations to meet those obligations," Mapp said.
During committee hearings on the raises, Budget Director Nellon Bowry said the $20 million for the raises in 2016 were covered by Hovensa sale funds and 2017 could be covered by reducing the reserve amount for tax refunds by $20 million. But Bowry also testified the territory was facing an overall budget shortfall of $100 million for 2017 and another $100 million for every year after that.
In that context, Bowry said of the raises, "I am confident that what we could say about this is that it does not worsen our fiscal situation." He said the "structural deficit" would "be addressed as part of a five-year plan going forward."
"I can tell you right now the first draft (of the plan) is going to say we have a $100 million deficit or so going out five years, so we will have a $500 million gap … That gap can’t be filled by cutting. We can’t cut $500 million out of the budget without some kind of anarchy," Bowry said during committee hearings on the pay raises.
The bill also provides $125,000 in funding for the JROTC program at the St. Croix Educational Complex and $600,000 to support a literacy and math intervention program.
Mapp also signed a bill he proposed to pay $8.1 million towards the $21 million the territory’s two hospitals owe the V.I. Water and Power Authority for utilities. While a significant step, Mapp said the hospitals will need more support.
“As I previously noted, I will request additional financial assistance for our hospitals as these institutions owe WAPA more than $20 million after these payments and many million more to vendors and suppliers,” Mapp said.
WAPA’s bond rating was recently downgraded, in part due to liquidity problems caused by massive and growing unpaid government utility bills. (See Related Links below.)