The governor’s proposed bill that aims to bail out the Government Employees’ Retirement System was passed by the Legislature at a Friday special session, the culmination of Thursday’s Finance Committee hearing that moved into special session before being recessed.
After deciding to discharge the vote from the Rules and Judiciary Committee, the Senate reviewed amendments circulated at Thursday’s hearing. They then voted in favor of both adopting the amendments, which were in the nature of a substitute, and the bill as amended.
The bill creates a special-purpose entity charged with the responsibility of selling the rights to as much as $200 million per year in federal alcohol excise tax revenues. Amendments proposed Thursday sought to address the board make-up of the special-purpose entity. The amendment in the nature of a substitute calls for a five-member board, of which four members must be private citizens with at least seven years executive or board experience in banking, accounting or finance. The members cannot be current officers, employees or directors of any government entity unless three years removed.
Though the heavily amended legislation passed, the Legislature appeared as divided as it was on Thursday. Sens. Alicia Barnes, Marvin Blyden, Allison DeGazon, Novelle Francis Jr., Donna Frett-Gregory, Stedmann Hodge Jr., Myron Jackson, and Athneil Thomas all voted in favor of the bill. Sens. Oakland Benta, Dwayne DeGraff, Javan James, Janelle Sarauw, and Kurt Vialet all opposed the bill. Sens. Steven Payne and Kenneth Gittens were absent.
Sarauw said her opposition was rooted in her opinion that the GERS fiscal problem is far more complex than the proposed solution. “You can put lipstick on a pig, but the pig is still a pig,” she said.
“This bill, even though we added caveats to oversight, still dissolves the reserve fund. And the reserve fund is our present structure to save us from ourselves … There is no way the SPV (special-purpose vehicle) structure will get us a higher rating than the one assigned to us, because the revenue source is still the same,” Sarauw said.
But DeGazon argued that the amendments provided ensure the corporation the bill forms, also referred to as a special-purpose vehicle, can do nothing without the authorization of the Senate. “Let it be known and understood that the Legislature determines how each penny is spent, not the Executive Branch,” DeGazon said.
Vialet, chairman of the Finance Committee, said the numbers presented and the ones testifiers failed to provide were of most concern to him. He accused the proponent testifiers of not being forthcoming with the numbers, saying, “They have not told the truth.”
“They failed to be honest and disclose exactly what is happening,” Vialet said. “The numbers we are seeing clearly say they are taking all the savings, putting it on the first three years, and then on the back end this Government of the Virgin Islands from 33, 34, 35, 36 is going to lose $50 to $60 million. That is what the numbers are saying.”
“The numbers say there is a net, a net savings of $52.5 million. Tell me how that is possible when they are already cashing out $130 million that belongs to the Government of the Virgin Islands, but there is only a net savings of $52.5 million. When they are going to reduce the principal payment and the interest is reduced to 3.5 percent, but yet the savings is less than what they are cashing out,” he added.
Senate President Francis beseeched his colleagues to vote favorably on the bill, which he said will allow the governor to do something for the retirees. “At the end of the day you have to vote with your conscience and be comfortable with it.”