GUEST EDITORIAL: People of The Virgin Islands Owed More Than Just The Truth
By GARY POKORNY
On January 28, 2019 Governor Albert Bryan, Jr. was clear: The General Fund had virtually no cash, and the people of the Virgin Islands were owed $600 million in short term accounts payable. He used words like “In distress” and this phase: “We are confronted with the truth that our territory is still very much mired in a financial and economic crisis.” He summed the situation up this way: “The window to restart our private-sector economy to avert fiscal collapse is very small, and it is closing rapidly.”
He was truthful when he admitted the General Fund has and continues to experience an on-going structural deficit. It is likely that deficit will be $450 million or more in 2019. Read my previous report published on February 21 for the gory financial details.
One month later on February 27, the governor testified before the U. S. Senate Committee on Energy and Natural Resources and expressed happiness in the financial picture of the territory, “For us I would like to say I’m happy to report that we’re looking at a bright future because of the help of the federal government.”
Wow, that is a far cry from the line in his SOTT Address: “The federal recovery dollars have masked the true weakness of our economy.”
So which is it? The financial future is bright so long as the territory depends on Federal funding? Or does the territory need to “Change Course Now and grow an independent private economy?”
Let’s consider the argument for the second camp. Let’s start by reviewing the course the territory was on under Governor Mapp. Early on in the term they tried to increase revenues by raising taxes (Sin) and increasing enforcement (tax payments to BIR) and open the refinery. After the hurricanes he changed the course by paying bills with reduced tax revenue but drew down the $212 million Community Disaster loan. But that money ran out. During the campaign, Mapp hide how bad the finances were and we were told at the SOTTA he did not pay anybody but government employees and bondholders.
Who was not paid during this time? The hard-working people of the Virgin Islands (owed $130 million in tax refunds); small business owners and their employees (Vendors owed $270 million). GERS contributions of $150 million rang up, and agencies like WAPA weren’t paid. The same thing is happening right now, to this day.
So what are Bryan’s course choices? Cut government spending by $450 million or grow the economy by $2 billion dollars to drive enough new tax dollars into the coffers.
As I have already stated in the last article, growing the economy enough to offset the deficit is not realistic. Shockingly, there is no economic growth “change in course” plan to navigate from. In a townhall meeting held in St. Croix on February 16th, Rep. Plaskett said the following, “I’ve talked to senators and I’ve talked to the governor and they agree. How do we get additional revenues?” That is comforting! They all agree with the question, but no one has an answer or plan.
His tagline: Change Course Now should be Changed to “Change Course in Oct When an Economic Growth Course Plan is Set Through the EDA Led Initiative: “U. S. Virgin Islands Vision 2040”. Nah, way too long…..
There is a third choice too. The politicians can stay the course and keep sticking it to the hard-working people of the Virgin Islands. But I offer an idea to help discourage this unacceptable continuance. It is an idea that has been considered off and on for a long time: A senator should sponsor a Bill called Stop Stiffing the People Tax Credit. In short, if you are owed money by the government (non-payment of contracted services, or a tax refund, or if you’re a GERS pensioner and they cut your benefits) you can use the tax credit to the amount the GVI owes you.
They would never pass this bill because tax revenue into the general fund would go to virtually zero. But keep this truth in mind, each day the government digs a deeper hole to the tune of more than a $1,000,000 a day. In the time it took to write this article, about one hour, $41,600 in new account payables were rung up. And the people are the one’s getting stiffed.
The reality maybe the territory is already on the reef and the only real option is to balance the budget by slashing spending. You can not keep stiffing small businesses forever. They will leave or go-out of-business eventually. And if you say they can’t (afford to) leave and that they have no choice to keep providing goods and services (with the hope of being paid) to the government I say they have a name for that and it is the economic, modern-day equivalent to slavery.
My only encouraging thought is this: You won’t find $450 million to cut in one place. Rather, you may find a million dollars in 450 places. They had better start looking. It is the first step to getting off the reef.