The Senate Finance Committee on Thursday unanimously approved a bill raising a special annual appropriation of federal rum excise tax revenues to GERS from $7 million to $10 million, after a dispute on how those funds would be used resulted in the committee tabling the bill in an earlier hearing. The government has only sporadically paid the existing $7 million contribution. It is current for the moment, after paying three years of payments in February, according to March 8 Finance Committee testimony from GERS Administrator Austin Nibbs.
Sen. Donna Frett-Gregory, who also chairs the committee, sponsored the legislation that would increase the amount the local government remits annually to the GERS from $7 million to $10 million in an effort to make a dent on the agency’s fiscal woes. The bill would also label the funds a direct contribution to the GERS instead of being designated towards outstanding employer contributions.
The bill was held in committee during the Finance Committee’s March 8 hearing because of a dispute over how the funds were designated, which could mean the difference between spending the funds to pay for outstanding employer contributions. GERS Administrator Austin Nibbs expressed support for the legislation; the direct contribution designation, he said, gives him leeway to invest the funds.
At that time, however, Sen. Kurt Vialet (D-STX) raised concerns, pointing to the fact that some employees end up waiting for more than a year for their annuities that the GERS refuses to release because it is missing the employer contribution from the V.I. government. Jenifer O’Neale, director nominee of the Office of Management and Budget, also leaned towards spending the money on paying off the outstanding employer contributions.
According to O’Neal, the outstanding employer contribution to GERS amounts to $71.8 million. Of that amount, $66.8 million is directly owed for member’s annual benefits and $1 million for delinquency fees. Another $4 million is assumed for lost investment of 6 percent, according to O’Neal.
“While OMB understands the need for funding of some of these unfunded mandates, we are also cognizant of the need to reduce the outstanding employer contributions and not compound the outstanding sum with further charges for delinquency fees and lost investment penalties,” she said at March 8’s hearing.
Vialet’s amendment, co-sponsored by Frett-Gregory, is a compromise, allocating 40 percent of the $10 million annual remittance toward employer contributions, and the remaining 60 percent toward direct contributions that the GERS can use for further investment.
The committee unanimously approved both Vialet’s amendment and Frett-Gregory’s bill.
Money for Public Art
St. Thomas Democratic Sen. Myron Jackson’s bill to reserve one percent of total capital improvement project costs on placing and maintaining works of art in government buildings was tabled by the Senate Finance Committee on Tuesday.
Testifiers came out in support of the idea, but some raised concerns about the bill’s implications on the bond proceeds-funded capital improvement projects.
Tasida Kelch, executive director of the V.I. Council on the Arts, also came out in support of the bill. Kelch talked about the strong presence of artworks in mainland cities and the economic and social benefits tied to it. The 19-day ArtPrize event in Grand Rapids, Michigan, she said, draws more than 100,000 visitors every year to view and judge art pieces, and generated an immediate economic impact of $15.4 million in 2012 alone.
“What we don’t think about is, that cities gain value through public art displays – social, cultural and economic value,” Kelch said. “Art is setting a growing trend by being an important and recognized part of our public history and our evolving culture. It adds meaning to our cities and create uniqueness to our communities and neighborhoods, it reflects who we are and what we like to surround ourselves with.”
Priscilla Hintz-Rivera, curator at St. John’s Bajo El Sol art gallery, fought back against the notion that art is not a major economic force.
“We don’t always realize the economic benefits of a vibrant arts and culture industry, even as we must be careful not to focus solely on what these things can provide the territory financially,” Hintz-Rivera said. “More intangible benefits like a boost in civic pride and an empowered, confident community are incalculable.”
Finance Commissioner Nominee Kirk Callwood, however, is concerned about the implications of allocating the one percent. Callwood said he spoke with Hawkins, Delafield & Wood, bond counsel to the Public Finance Authority, and learned that there could be complications and legal hurdles if the bill were to be applied to previously issued bond proceeds.
Capital projects funded with bond proceeds must first be approved by the authorization of a bond resolution by the Senate, Callwood explained, and that resolution details the allowable uses of the funds, and making amendments like Jackson’s bill after the fact would be “impractical and potentially unfeasible.”
“However, the act could reasonably be applied to projects funded through future bond issuances,” Callwood said. “At that time, the appropriate measures would be taken to
include the one percent appropriation into any applicable bond resolution and then the bonds themselves when issued.”
Lawmakers also raised concerns about the lack of emphasis on local art and artists. All members of the Finance Committee voted to hold the bill in committee until amendments have been offered.