Solid fiscal management, government downsizing, federal assistance, and increased investment are keys to the resurgence of the Virgin Islands economy, says a "confidential" draft of the Five Year Fiscal and Financial Recovery Plan obtained by St. Thomas Source.
The report was prepared under the supervision of the White House Office of Management and Budget and the V.I. government by CORE International Inc., with input from other consultants.
It was delivered to the V.I. government March 31, 1999, and Gov. Charles Turnbull's administration has already begun implementing several of its cost-cutting and revenue-generating recommendations.
The report warns that "business as usual" will destroy the territory's economy, and that only sweeping reforms can avert financial ruin.
"The new administration in the U.S. Virgin Islands has inherited a fiscal state of affairs of enormous and alarming proportions," the report says. "This serious fiscal crisis is primarily a result of an ever-expanding public sector payroll and a series of three hurricanes which caused massive destruction to the territory's economy."
The government's failure to attract private investors has compounded the problem, according to the report.
"A fundamental change is necessary in (government) policies to make the current economic climate more friendly to outside and domestic investors," the document said.
The report suggested, and the administration is now planning, an investor conference to take place in fall 1999; its goal is to "solicit investor and other stakeholder input in the design of an investors incentive package."
Before recommending reforms, however, the report recognized the stifling impact the territory's divisive political interests will have on instituting economic recovery policies.
"It should be noted, however, that no matter how well-intentioned the (government) commitment to implement reform actions to reduce the government's budget deficit is, the reality is that many actions will require VI Legislature's approval and/or difficult labor negotiations, which may slow the process down and even make certain actions infeasible."
The Turnbull administration has instituted a few of the report's cost-cutting recommendations, including a hiring freeze for all employees except those hired under federal grants, layoffs through attrition, and reducing overtime pay.
The administration has also announced it is developing some of the report's other suggestions, such as a government reorganization plan, which is expected to be presented to the Legislature in late August during the Senate's Committee on Finance budget hearings.
Reorganization proposals already released include combining the V.I. Housing Authority, the V.I. Housing Finance Authority and the Department of Housing, Parks and Recreation, and merging the Division of Personnel and the Office of Collective Bargaining into a Human Resources division.
Government House officials have also said that almost every government department will undergo some degree of internal restructuring.
The report, however, made several cost-cutting recommendations the administration has yet to address.
The plan suggests leasing out VITRAN and landfill management to private operators, and privatizing airport, port and landfill operations, the V.I. Lottery and the retirement system. The government could then collect gross receipts taxes from these privatized entities, the report says.
The report also recommends reducing printing costs, letting private sponsors fund Carnival, and reducing the government's contributions to the Department of Planning and Natural Resources by $400,000 while letting DPNR raise certain fees to compensate.
Converting the territory's hospitals into non-profit institutions, phasing employees of semi-autonomous agencies out of the Government Employees Retirement System, and increasing government leases to reflect market rates also are recommended.
By revamping its leases, the government could earn another $500,000 a year, and by moving out of some rental spaces it could save $2 million.
To generate revenue, the report recommends something senators and other government officials have discussed, promised and urged for years—improving tax collections at the Bureau of Internal Revenue.
According to the report, the Turnbull administration has already beefed up the IRB and has estimated $6 million in additional revenues.
Two ways the federal government could boost the territory's revenues are to eliminate $183 million in FEMA loans and return 100 percent of the excise taxes collected on rum, which could generate an additional $12 million.
The federal government currently returns $43 million to $46 million in rum taxes annually.
The report also suggests the federal government consider developing a debt-relief program for the territory. Under such a program, the territory would have to adhere to performance standards "which would assure the elimination of the… structural deficit within a reasonable period of time."
The report also suggests increasing the annual fee for business licenses to $400 from $300 and instituting a $100 fee for new applicants. This could raise $6.3 million, the report projects.
The report also urges the government to assess replacing the gross receipts tax and to implement a road-use tax for commercial truck traffic.
The report expressed some concerns about the V.I. government's Y2K compliance program, for which it recently received a $16 million grant from the federal government. The report, however, was more concerned with the progress of the project than the funds available.
"Some efforts have been made, but the late start at Y2K remediation and lack of detailed impact assessments make identifying, remediating and thoroughly testing all systems and systems interactions very difficult," the report says. "The new administration has been analyzing the proposed use of funds and notes the general lack of detailed impact assessments which should support the requests."
The report projected that by implementing the above-mentioned self-help measures, the government could balance its budget by 2004, achieving a $2.7 million budget surplus and a $13 million general fund surplus.
Business as usual, however, will double the government's debt, the report says. Between 1999 and 2010, it projects, revenues will rise from $436 million to $588 million, but won't compensate for ballooning expenditures, which will rise from $493 million to $672 million.
"In the absence of any government actions to control costs and enhance revenues, the… operating budget deficit grows from $58 million in FY 1999 to $84 million in FY 2010 alone," the report says. "The new cumulative deficit during the period FY 1999-2010 is projected to reach $954.5 million above and beyond the current total cumulative deficit of $1.008 billion, putting the territory in close to $2 billion debt at the end of the first decade of the new century."
If the government manages its finances better, however, the report makes some bright projections.
"As long as the U.S. economy continues to grow at its current rate of 2-3 percent annually, it is reasonable to expect that the performance of the VI economy, driven largely by tourism, will proceed in a like manner," the report says.

The name of Michael Bornn surfaced this week as a candidate for the post of Commissioner of Tourism.
Bornn, a financial advisor and principal of Seslia Securities, an investment firm with offices in the Virgin Islands and Philadelphia, is also the president of the V.I. America's Cup Challenge.
Sources say Bornn is being considered along with Hotel Association Executive Director Beverly Nicholson.
"I understand I am being considered," Bornn told St. Thomas Source. "However, I have not been contacted by the governor."
"I would consider serving if it is the desire of the governor, "he said.
Nicholson has remained mum on the subject of her consideration, but has been endorsed publicly by the Hotel Association.
Central Labor Council President Luis "Tito" Morales Friday endorsed Bornn saying, "I think Michael Bornn would make an excellent choice. He knows the outside investments. He knows the outside world. The job requires a marketer and that he is."
Morales added that with Bornn's experience in business and finance he could do the job well.
"I have nothing against Beverly Nicholson, but if I had to choose, I would pick Michael Bornn."
In addition to running the Tourism Department, the commissioner serves as chairman of the V.I. Port Authority Board and the Industrial Development Commission.
Eric Matthews, president of Carifest and former director of the Film Promotion Office, a division of Tourism said, "Both of those people are eminently qualified. Those are two great names to consider. I wouldn't feel badly with either one."
Two other names have been mentioned as candidates in recent weeks; businessman Mel Plaskett and more recently, James O'Bryan, assistant to the governor for public information.

"We're Working on It" is what the members of Reichhold's Youth Theatre are doing. That's the title of their summer production that takes to the stage Saturday and Sunday (July 24/25) with performances at 3 and 7 p.m. both days in the Little Theatre on the University of the Virgin Islands St. Thomas campus.
Oriented for kids but enjoyable for all ages, this is the fourth show produced and presented by the young people's repertory group that got its start as a summer activity last year and evolved into a year-round program.
Don't think that the title means a performance that's not ready for prime time. What it refers to is the process of acting. The monologues, skits and stories they young thespians are offering this weekend are keyed to demonstrating the "skills that acting has taught them and that acting requires of them," program director Andrew Heller says.
The RYT members, 10 to 17 years of age, handle all aspects of their productions — from creating the scripts to constructing the sets to operating the sound and light systems to appearing onstage. In this show, they will step out of their parts at times and explain to the audience what techniques they are employing, such as "using focus as an anchor." In a "mirror image" routine, sets of actors mime reflections of each others' motions and expressions. In improvisation exercises, they are provided basic props but must make up their own action and/or dialogue.
According to Heller, show-goers can expect a lot of the humor and audience involvement that characterized the group's first show, "What If… ," a year ago. The offerings include a version of "The Dating Game," "The Wolf Who Cried Boy" (yes, that's right) and the Dr. Seuss classic "Horton Hatches the Egg." (No one who attended "What If…" can forget last year's Seuss spectacular, "Green Eggs and Ham.")
This summer, Heller has offered a separate course in acting to the older, experienced students. Those youth are helping to direct and stage manage "We're Working on It" and will star in their own presentation the following weekend of two one-act plays. In addition to Heller, the RYT staff consists of instructor Denise Humphrey and program coordinator Jennifer Heller.
Tickets are $5 for adults as well as young people. They're available at the Reichhold box office and will be sold at the door before each show. Those needing group seating should make reservations in advance. To do so or to learn more, call 693-1559.

Twenty-three persons ranging in age from 8 to 40-plus took part in the 2nd annual summer camp sponsored by The Blades Fencing Club — but word about the sport is going out to virtually every young person in the Virgin Islands.
At the closing ceremonies of the camp on Saturday, July 17, The Blades presented to Education Commissioner Ruby Simmonds copies for all of the territory's public school libraries of a book by Peter Westbrook, the most acclaimed U.S. fencer of African descent.
In addition, club president Joyce Bolanos said, The Blades will be donating copies of the book, "Harnessing Anger," to all other school and public libraries in the Virgin Islands.
The contribution has been made possible by a grant from the Peter Gruber Foundation. Gruber is the president of Globalvest Management Corp, an investment services firm with offices on St. Thomas.
Westbrook "was the first American of color to become a world champion fencer, about two decades ago," Bolanos said. He fenced competitively for two decades, retiring after the 1996 Summer Olympics, and started the Peter Westbrook Foundation, which trains young inner-city fencers in New York City.
"He grew up in a New Jersey project," she added, "and by his own admission would probably be dead by now due to violence if he had not found in fencing a sport at which he was adept as well as a channel for harnessing anger into a positive force for personal and collective good."
The book, which should be on library shelves when school resumes this fall, is "secondarily about the sport of competitive fencing," Bolanos added. "It's primarily a motivational testimony for young black males."
That's not to say that fencing is only for males, Bolanos — a former Pan American Games fencer herself — noted. In fact, the Blades camp attracted six females: two adults and four youth fencers. Five members of The Knights Fencing Club on St. Croix came to St. Thomas for the week and were hosted in the homes of Blades members. Three members of The St. John Fencing Club also took part.
Camp director/coach Rudy Volkmann said he saw "a complete change-around" in the fencing techniques of several of the young people with whom he worked. He was of the opinion that some of the youngsters "definitely have the potential to become fine competitive fencers, if they decide that this is what they want to work at doing."
Over and over, Volkmann exhorted camp participants to do two things: "sit down" and " move your hand before you move your foot." The first referred not to taking a seat, but to keeping one's legs bent in anticipation of making a move; the second is the proper way to take the offensive and advance on an opponent.
Along with conducting five days of classes in foil fencing for beginners and those with experience, Volkmann shared ideas with Blades coaches about how to upgrade the local fencing program. He also provided introductory lessons in the use of the heavier epee and sabre blades.
At the concluding event, the beginners demonstrated the sword and stance positions they had learned, and the experienced fencers competed in a mini-tournament. In foil, medalists were Bolanos (gold), Mark Hansen (silver) and H. Drumheller and Jared Etsinger (bronze). In epee, the winners were David Pritchard (gold), Erik Pattison (silver) and Bolanos (bronze).
The Blades will be initiating a new 10-week fencing course for beginners on Saturday at 2 p.m. at the clubhouse behind the Herman E. Moore Golf Course on the University of the Virgin Islands St. Thomas campus. Anyone interested in joining the class is welcome to come out. For further information, call 777- 8708 or 776-4812.

I am a Virgin Islander located up north in a small town called Charlottesville, Virginia. I do the majority of my work for the federal government by searching the web. I was in awe when I found this web site!
I feel up-to-date when I can simply get on The Source and find out the local news/headlines of St.Croix. This saves me some of the long-distance cost that I usually accumulate when I call my mom for the weekly updates.
Thanks a million for putting Virgin Islanders who are far away in touch with their home and people. Excellent job!
Sondra Alexis
Chemist and St. Croix native

The family of the late Frank Wiesner is supporting Beal Aerospace’s proposal to exchange property with the V.I. government that Wiesner had deeded to the people of the territory for park land 25 years ago.
A press release Thursday afternoon from The Wiesner Development Company stated that Frank Wiesner’s intention was for the government to develop the nearly 15-acre parcel, which is home to historical buildings and Indian artifacts, into a park.
But because the financially troubled government hasn’t done anything with the property in nearly 25 years, "it is clear that things will not improve if this property continues to be owned by a government that is so cash poor that it can barely provide the most basic of services to the people of the Virgin Islands," the release said.
If Beal does acquire the land, the statement said, the company has the potential to provide a "desperately needed boost to the economy of St. Croix."
The land swap involves 14.5 acres at the site now occupied by Camp Arawak for approximately 15 acres of land Beal owns in Estates Whim and Grange Hill. Beal needs the Camp Arawak land for a portion of a parking lot that will accompany its proposed world headquarters and rocket assembly plant near Great Pond Bay on St. Croix’s sparsely populated southeast shore.
In a press conference Thursday, opponents of Beal locating at Great Pond, including Sen. Alicia "Chucky" Hansen, said the covenants, codes and restrictions at the Grange Hill subdivision restrict uses of the plots to single family homes.
Within the land exchange agreement is language that would allow Beal to gain needed rezoning for almost 300 acres of property adjacent to the Camp Arawak site. That land is currently zoned for waterfront hotel development, but Beal needs it rezoned for industrial use.
Company representatives, however, maintain that most of the acreage would be used as a buffer surrounding the seven-acre headquarters/assembly building. If built, the 320,000 square foot building would be the largest single structure in the Eastern Caribbean.
Meanwhile, the Wiesner Company release also said that the government’s leasing of the 14.8 parcel to the privately run Camp Arawak "constituted a clear violation of the provisions of the deed."
It added that up to 1986, Frank Wiesner had "complained" about the lease and the "deplorable" conditions of the site to the government without success. After Frank Wiesner’s death, his widow, Margaret Wiesner, had St. Croix attorney Joel Holt write a letter to former Gov. Alexander Farrelly decrying the government’s management of the Wiesner’s donation.
The Wiesner release said that if Beal is successful, the local economy will benefit and "the Virgin Islands will finally begin to receive some benefit from Frank Wiesner’s gift, a possibility that will not exist if things are allowed to continue as they are."
However, it also said that the family’s endorsement of the swap doesn’t mean there isn’t a concern about the potential environmental impact of Beal’s proposal.
"We are certain that both the Coastal Zone Commission and the Army Corps of Engineers are capable of meeting this responsibility," the release said, without listing names of family members.
Neighboring residents and local environmental groups are adamantly opposed to the project. The Great Pond Residents Association fears that the Beal project will attract additional industrial businesses to set up shop on Beal’s remaining acreage. Such a possibility was voiced by Brad Oates, a Beal lawyer, when the company was applying for Industrial Development Commission benefits last year.
Just one of the concerns the St. Croix Environmental Association has is that Beal’s plan to use barges in a shallow lagoon will adversely affect a nearby barrier reef.

Delegate Donna Christian-Christensen, along with Puerto Rico Congressman Carlos Romero-Barcelo, recently submitted the Caribbean Drug Interdiction Enhancement Initiative to the House Appropriations' Subcommittee on Commerce, Justice, State and Judiciary.
The initiative would require federal law enforcement entities in the Caribbean to report to Congress what federal resources are needed to combat drug trafficking in the region.
"The Caribbean continues to be the primary transshipment point for the cocaine entering the United States," Christensen said. "Greater federal resources are needed to combat the continuing threat. We are convinced that a significant increase in the allocation of federal resources to the Caribbean will change the tide in the Caribbean drug war."

Acting Tourism Commissioner Monique Sibilly-Hodge announced Thursday that effective July 26 the U.S. Virgin Islands Department of Tourism’s Puerto Rico office is moving from Hato Rey to the Condado area.
"Nayda Cumpiano, a 30-year veteran in the tourism industry, is heading up the marketing efforts in Puerto Rico," said Sibilly-Hodge.
The new address is 60 Washington Street, Suite 1102, San Juan, Puerto Rico 00907. The new phone and fax is currently 787-722-8023, and the e-mail address is ncumpiano@usa.net

The Editor
St. Thomas Source
Dear Editor;
I just read Jean Etsinger's Op-Ed column, June 29, 1999 and I am compelled to respond.
She makes a good point by noting that the Commissioner of Tourism should not have to chair meetings of the Port Authority nor the Industrial Development Commission. However, I did not hear a peep from her when Roy Schneider made this dumb reorganization move. But the tourism industry was so hung up on getting its own department that it accepted it and is now hoisted by its own petard.
Etsinger's comments, however, degrade into so much drivel when she launches her personal attacks against past and present commissioners and the current acting commissioner of the department.
She begins by giving praise, and rightfully so, to Leona Bryant for her role in growing the tourism industry in the US Virgin Islands. But Leona, to the best of my knowledge, was not born into the job of director of Tourism. She got the job because of her political connections at the time (as did many others) and learned on the job using her beauty, a great personality, lots of energy and intelligence which she parlayed into the success she enjoyed. The current acting commissioner has these same characteristics.
Leona also had one other important weapon. She never had a governor who used the tourism advertising budget for the central government's obligations and she therefore could wage a fairly active advertising campaign on behalf of the territory.
Etsinger next excoriates David Edgell and Wylie Whisonant, dismissing them as "just- comes." Presumably, her seventeen-year residence makes her an expert on the sociology of migrants but it may just make her a just-come, as well! The irony, of course, is that both Edgell and Whisonant were touted as "professionals" who had the credentials and expertise to take tourism to the next level. It was not to be, perhaps proving that the "professionals" often cannot run organizations.
Etsinger then attacks Cain Magras as being nothing more than an old pol who brought no marketing, hospitality or management background to the job. She cleverly and fraudulently tries to give the credit for the Sinbad festival to Judy Watson, former assistant commissioner of Tourism, but the truth is that Cain Magras, with the able assistance of Manny Centeno, was the person who made that event the success that it was. Etsinger also conveniently forgets, in her zeal to discredit Magras, that within six months of his tenure, he had brought two major airlines to the territory and a couple more commuter airlines had expressed a commitment to fly out of the US Virgin Islands.
In addition, he had begun the process of paying some of the vendors who produced the advertising and other necessary services for the department. Indeed, a fair analysis of Magras' potential would reveal that the tourism industry had a captain who would make a positive difference.
Finally, Etsinger continues her diatribe with a personal attack on Monique Sibilly-Hodge, my wife and current the acting commissioner of Tourism. (I will ignore the stupidity of her remarks regarding my decision not to run for reelection as they are irrelevant to the point she is trying and failing to make.)
Again, she conveniently forgets to check her facts using a non-event as proof of Sibilly-Hodge's inability to perform. It is simply not true that "[Sibilly-Hodge's] first high-visibility act [was] flying to San Antonio on behalf of the people to praise Tim Duncan." She did not make the decision to go and no one went to San Antonio!
Etsinger, like so many other wannabe critics, does not take the time to inquire whether there are any institutional problems which make it difficult for anyone to perform well in this job. She does not know the efforts being made to find the funds for the advertising campaign; she knows nothing about the improvement in employee morale in the department; she knows nothing about an attempt to bring tourists from Denmark to St. Croix using a new strategy or the other matters Sibilly-Hodge is working on to improve our tourism product; she ignores the difficulties in reducing the department's workforce by 15%. In short, Etsinger knows nothing!
Derek M. Hodge

The Landmark Society House Tours will be held on Wednesday, Feb. 16.
For information contact Chris Goodier, Director of Special Events & Fundraising 772-0598.