With an anticipated decrease in General Fund revenue projections of approximately $18 million, members of the governor’s financial team presented a pared-back Fiscal Year ’23 budget Wednesday, opting to cut back in other categories to offer flexibility while they wait to see how other funding streams – including anticipated rum cover-over dollars – play out.
At the beginning of the summer, the financial team proposed a total appropriated and non-appropriated budget of $1.4 billion for FY ’23, including $963 million from the General Fund, $210.1 million in other appropriated funds, and $253.9 million in non-disaster-related federal funds. Meeting with the Senate’s Finance Committee Wednesday for the final budget hearing before the start of mark-up, however, Office of Management and Budget Director Jenifer O’Neal said the total overall recommended had been scaled back to $1.37 billion, inclusive of a decreased $945 million in General Funds, along with $119.8 million in other appropriated funds and $58 million in other non-appropriated funds.
In her testimony, O’Neal offered a range of factors, including the closure of the Limetree Bay refinery, which she said consequently led to an 11-12 percent decline in monthly income tax collections as employees were “terminated” and the payment in lieu of taxes from the refinery to the government lost. In fact, the final $945 million in projections also factors in $18 million in American Recovery Plan Act (ARPA) funds that were used to offset the deficit, though increases in excise tax and corporate franchise taxes have shielded the territory from a larger blow, O’Neal said.
“One significant downward adjustment is the budgeting of vacancies at a reduced 50 percent. While all vacancies for all departments will still be included, these vacancies have been funded at 50 percent to account for a realistic timeline of when individuals may be hired and come on board,” she explained Wednesday. “As informed by historical performance, some individuals may be hired closer to the onset of the fiscal year, while many will not be hired until closer to the end of the fiscal year. As such, 50 percent funding of these vacancies presents a more realistic funding approach that will be monitored closely throughout the year to ensure agencies are able to hire as intended.”
Other major budget adjustments include:
• $60,000 for recruitment and retention as well as $250,000 for repairs to the Guirty House
for the Board of Education;
• $220,000 for the Bureau of Internal Revenue for training and equipment;
• $1.2 million for 2020 and 2021 audits under the Department of Finance;
• $560,900 for 10 new vehicles and an excavator and digger for the Department of Sports
• $1 million for CrimeStoppers in the miscellaneous section of the budget; and
• $4.5 million to cover the cost of health insurance increases for government employees.
Under questioning from Sen. Novelle Francis, O’Neal said there is currently $11 million in the government’s “Rainy Day Fund” in case of emergency, though it should have $16 million by the end of the year.
Despite the revised projections, O’Neal also said the outlook for the remainder of FY ’23 is expected to gradually become more stable, bolstered by increased economic activity from disaster recovery projects and new ventures – such as the rebuilt Frenchman’s Reef Hotel – coming online.
“The territory is well poised for economic growth through the completion of all disaster recovery projects, improvements, and upgrades to the information technology and physical infrastructure and strengthening our workforce for high-paying and in-demand jobs,” she said. “With the initiatives and activities set forth in this budget, as well as other plans and implementations within the Government’s agencies and departments, we have much to look forward to.”
Bureau of Economic Research Director Allison DeGazon echoed the sentiments, adding that while the most recently released gross domestic product report revealed a 2.2 percent contraction in 2020 due to the pandemic, the territory was still able to rebound well, using federal funds to cover expected losses. Data suggests 2022 will be stronger, particularly as the territory’s unemployment rate has continued to decrease, private sector hiring has improved, and tourism is expected to expand, she said.
Senators present at Wednesday’s committee hearing included Kurt Vialet, Donna A. Frett-Gregory, Marvin A. Blyden, Samuel Carrión, Dwayne M. Degraff, Javan E. James Sr., Janelle K. Sarauw, Angel L. Bolques Jr., Novelle E. Francis Jr., Kenneth L. Gittens, and Carla J. Joseph.