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HomeNewsLocal newsGreat News: Feds Forgive $300 Million in Community Disaster Loans

Great News: Feds Forgive $300 Million in Community Disaster Loans

U.S. Capitol (Shutterstock image)
U.S. Capitol (Shutterstock image)

On Thursday Congress forgave billions of dollars in disaster recovery loans, including about $300 million for the U.S. Virgin Islands and $4 billion for Puerto Rico, given in 2017 after the devastating hurricanes that year.

The move cuts total USVI government debt by about 10 percent, reducing future debt service substantially, freeing up government revenues for other purposes. It also provides similar relief to semi-autonomous entities like the territory’s hospitals and the Water and Power Authority.

Congress included the provision in a budget continuing resolution funding the federal government through mid-December, approved by both houses and signed by President Joseph Biden Thursday.

Delegate Stacey Plaskett, a member of the House Ways and Means Committee, sponsored the provision aimed at ensuring the USVI is included in any forgiveness. Gov. Albert Bryan also lobbied for its forgiveness, with his administration repeatedly writing members of Congress and the current and previous presidential administrations.

Plaskett was also on hand when Congress approved the funding in 2017 when she expressed optimism that Thursday’s action was likely. “Everyone in D.C. is of the opinion these loans will be forgiven,” Plaskett said at the time.

On Thursday, Plaskett released a statement concerning the loan forgiveness, stating, “The territory’s continuing financial difficulties have been exacerbated by the CDLs — not only because of their repayment obligations, but also because of their impact on the territory’s ability to access other forms of needed financing. The terms of the CDL promissory notes give FEMA and the U.S. Treasury the ability to preempt any further borrowing by the Virgin Islands and encumbers a major revenue stream,” said Plaskett.

“The [Continuing Resolution] also extends the current enhanced rate of federal matching funds (89.2 percent) for Medicaid in the Virgin Islands through December 3, 2021 (the life of the continued federal government funding), averting a sharp decline in the rate of federal Medicaid funding to the Virgin Islands,” said Plaskett.

“My office, working with the local government and other members of Congress representing the territories, was able to change the rate of federal matching funds in 2017 on a temporary basis which we have been able to continue. That change in the federal match for Medicaid, along with raising the amount paid by Medicaid has allowed the Government of the Virgin Islands to enroll over 20,000 additional Virgin Islanders in Medicaid, providing vital healthcare to our community,” said Plaskett.

Bryan also issued a statement saying getting the Community Disaster Loans forgiven has been a top priority.

“While this certainly is a financial relief for the local economy and strengthens the foundation the Bryan-Roach Administration has been building to stabilize the government’s finances, it is even more important for our two hospitals and WAPA, which have been overly burdened by the debt they incurred when Irma and Maria ravaged our islands,” Bryan said.

“The waiver of the debt for Juan F. Luis Hospital, Schneider Regional Medical Center and the V.I. Water and Power Authority will relieve some of the financial strain they have been struggling under and push those entities further down the road to total recovery much more quickly and greatly assist them in delivering complete and high-quality service to the community,” he said.

The forgiveness of the $300 million debt from the Community Disaster Loans affects:
relief of:
$94.5 million for the Water and Power Authority;
$42 million for Gov. Juan F. Luis Hospital;
$19.3 million for Schneider Regional Medical center;
$145 million for the Government of the Virgin Islands.

Editor’s Note: This story has been updated to include comments from V.I. Delegate to Congress Stacey Plaskett.

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