The territory will allow companies applying for V.I. tax breaks to count investments made in the 12 months before their application is complete as part of their contracted investment in the territory, if a bill headed to the Senate floor is enacted into law.
The bill, proposed by Sen. Novelle Francis (D-STX,) says in its summary that it “seeks to correct an inadvertent error in the qualification requirements” because the law currently “penalizes an investor for making any of the required investments prior to the activation of the certificate.”
At a Rules and Judiciary Committee hearing Wednesday, Francis said there is growing competition across the Caribbean for investment and the USVI needs to do what it can to attract potential developers.
“This spells jobs,” Francis said.
Voting to send the bill on to the floor were Francis, Sens. Jean Forde (D-STT,) Janette Millin Young (D-STT,) Sammuel Sanes (D-STX) and Janelle Sarauw (D-STT). Sens. Myron Jackson (D-STT) and Positive Nelson (ICM-STX) were absent.
The committee also sent on a bill from Sen. Neville James (D-STX) aiming to spend $500,000 to retrofit the Elmo Roebuck Industrial Park on St. Croix to make it more energy efficient.
Several senators said lowering energy costs would attract more investment at the industrial park.
Sanes said a few weeks ago a developer approached the industrial park for information, found rents comparable to Florida but was scared off by the high cost of electricity.
“He said he was willing to come back once those rates come down,” Sanes said.
“Energy is of the utmost importance when it comes to bringing development to the Virgin Islands,” he said.
The funding is uncertain. The bill appropriates from the “St. Croix Capital Improvement Fund,” which on paper is regularly replenished with a portion of net proceeds to the territory of federal alcohol excise tax revenues given to the territory according to a formula related to the amount of rum produced in the territory.
But the USVI has a substantial budget shortfall that it has no clear way of filling. Another statute requires the V.I. government to turn over $7 million per year of those same funds to help shore up the failing V.I. government pension system, yet the government has not done so. Due to the chaos after last year’s hurricanes, fiscal uncertainty and the budget shortfall, the Legislature recently punted on passing a budget, leaving in place the previous year’s appropriations. Since actual revenues are lower than those appropriations, in effect Gov. Kenneth Mapp’s financial team is deciding what to spend where, with the appropriation levels acting as caps or maximum spending amounts. There was already a history of legislative appropriations, before the current crisis, that were never acted upon by the current or previous governors. It is not clear that passing an appropriation while not passing an actual budget and without clear revenue figures will mean the money will actually be allocated.
The government is more than a year behind in paying for sewage treatment and facing the shutdown of its sewage treatment plants if it does not pay. It owes millions to the Water and Power Authority; millions to pay contracting nurses to care for the elderly at two publicly funded homes for the elderly, substantial sums to keep the territory’s trash collection and landfill systems running. The V.I. government’s finances are in a state of flux, with funds being shifted around to address the most pressing priorities and neglecting less immediate needs.
But bringing in development is a high priority, which could play a role whether the spending occurs.
“How does savings to the EDA, how does that help the central government’s budget,” Nelson asked, rhetorically.
“At some point with these entities we call semi-autonomous there has to be a trickle coming back to the central government in some kind of way,” he said.
Voting to send the measure on to the floor for a final vote were: Forde, Young, Sanes, Sarauw and Francis. Nelson and Jackson were absent at the time of the vote.
The committee also sent on a bill affecting how life insurance companies handle repayment of premiums when someone stops paying into their insurance. The bill applies standards recommended by the National Association of Insurance Commissioners.