In its first order of business on Wednesday, the Public Finance Authority Board transferred and approved $20.8 million in excess rum revenues to complete various road projects across the territory.
The federal government remits most of the 13.25-cents-per proof-gallon federal excise tax collected on hard liquor produced in the U.S. Virgin Islands. A major part of PFA’s mission is overseeing the use of these funds as a revenue stream for V.I. government debt. Because the revenue stream is predictable, lenders have in the past given better interest rates and been more willing to lend when this is the source of revenue. (See: The V.I. Budget Crisis: Part 15, Rum and Congress)
In any given recent year, the actual amount of these federal tax dollars remitted is usually in excess of $200 million. For 2020, the federal government projected the amount would be around $258 million, according to PFA budget testimony in 2020.
The territorial government has contracts with Diageo and Cruzan Rum requiring it to give about 50 percent of the federal tax dollars to the distilleries as cash subsidies, or in excess of $100 million per year. Gov. Albert Bryan Jr.’s 2021 budget proposal anticipated using another $108 million for debt service on just more than $1 billion in bonds. It projected having $43.2 million remaining available to the government and $5 million to pay for PFA operations.
This $20.8 million is excess “from the satisfaction of the debt service requirement associated with certain revenue and refunding bonds, approval of various contractual engagements and adopting policies to guide,” board members said at the Wednesday meeting. The board established an endowment, authorized the deposit of the excess money and directed that it be used for the following projects:
– $4 million for the Leonardo “Nardo” Trotman Road on St. Thomas;
– $7 million for road paving on St. Thomas-St. John;
– $7 million for road paving on St. Croix; and
– $2 million for the Hull Bay boat and fishing ramp and to create a parking area for the fishermen.
Gov. Bryan, who chairs the PFA, said the government has already invested at least $5 million into the Trotman Road project, which has been delayed for years due to a lack of funding. The road projects also include neighborhood pavings, for which the government hasn’t allocated federal or other money.
In other news, the board also approved the payment of $137,431 in outstanding invoices – from Oct. 2019 through Dec. 2020 – for Pennsylvania-based law firm Duane Morris. According to Bryan, the government, in the submission of different pieces of legislation, has been looking at the potential legalization of adult-use cannabis in the territory and how branded cannabis products coming from the territory could create revenues. Entities like Kentucky Fried Chicken are an example of this, he said, paying a commission to the state from which its trademarked or patented products originated.
The board also approved:
– a memorandum of understanding between the V.I. Housing Finance Authority, PFA and the Office of Disaster Recovery, which will assist with the review and issuance of task orders for disaster recovery projects funded through the Community Development Block Grant-Disaster Recovery program;
– a record retention (how long documents are kept, what documents are kept and how they can or will be disposed of for business purposes, along with who maintains them) policy;
– a corporate credit card policy for PFA employees that sets limits on how cards are used, who they can be used by and systems set up to avoid misuse;
– a corporate travel policy;
– a contract with Gaffney-Cline and Associates to provide technical and commercial support to the V.I. government for the operations of the Limetree Bay Refinery and its compliance with its agreements with the government; and
– a lease agreement for the PFA St. Croix office.
According to a PFA news release, the board also met behind closed doors in an executive session to review and consider “proprietary information and strategic plans presented by the V.I. Next Generation Network and the West Indian Company Limited, which public disclosure of such information and programs would frustrate implementation of proposed agency actions.”
That language in the PFA release mirrors the language in V.I. law permitting government entities to meet behind closed doors in limited circumstances.
The board also received a status update regarding the resolution of previously pending litigation against PFA. The next PFA meeting is scheduled for May 5.