ST. CROIX, VI – The Committee on Budget, Appropriations, and Finance, led by Senator Novelle E. Francis, Jr. met in the Earle B. Ottley Legislative Hall. Lawmakers received testimony from the Governor’s Financial team on the Territory’s financial status. The Committee also received testimony from the Department of Public Works concerning the overview of all Territory Wide capital projects. Furthermore, senators vetted measures that would increase the amount of money that is to remain in the Virgin Islands Insurance Guaranty Fund before any interest can be deposited into the General Fund, an act that would reprogram administrative fees resulting from the bonds issued for the Fortress Investment Group transfer for various projects and initiatives to enhance the economic development of St. Croix and to be deposited in the Budget Stabilization Fund, and measure that would expand benefits under the Hotel Development Program for hotel improvement and expansion projects on St. Croix. Approved items on today’s agenda will be forwarded to the Committee on Rules and Judiciary for further consideration and action.

Kevin McCurdy, Commissioner of Finance delivered testimony on behalf of the financial team, stating that the Virgin Islands economy is showing remarkable stability and resilience, even in the face of structural challenges. Civilian employment levels have remained stable. The unemployment rate has remained low at 3.6%. McCurdy mentioned that while inflation is at 7.6%, primarily due to housing costs and global price pressures, the territory is well positioned to address the issues. McCurdy said that the territory must remain vigilant about long term risks, including high energy costs, labor shortages from population decline and vulnerability to natural disasters.  

McCurdy stated that healthcare costs continue to be a major concern for the budget. The Government’s group insurance now supports over 25,000 individuals, including dependents with coverage including dental, vision and life insurance. Premiums increased from $198.9 million in Fiscal Year 2025 to $226.1 Million in Fiscal Year 2026. The government also reports year to date revenues of $270.5 million. General Fund revenue is expected to be about $25.3 million below the FY 2026 budget. However, McCurdy states that they are committed to implementing strategies to improve. As of January 30, 2026, there is an available cash balance of $40.1 Million, which is about 10.7 days of cash on hand.

Rueben Jennings, Assistant Commissioner of the Department of Public Works stated that the Department has experienced an extraordinary year of infrastructure delivery in territory. Within the past year, multiple structures in St. Croix were rebuilt under the Federal Highway Administration Emergency Relief Program which were rebuilt to modern engineering standards. Paving initiatives were done throughout the territory. Multiple roads in the territory, such as the Ethel McIntosh Memorial Drive and the Raphune Hill Expansion Project are set to be completed. The Clifton Hill Connector Project in St. Croix has streamlined traffic flow on St. Croix, which has added a dedicated turning lane at the Container Port intersection on the Melvin Evans Highway. The project is expected to be completed in May 2026.

Other projects include the construction of the Leonardo Trotman Drive Phase 2, which would tie into the Charles W Turnbull Regional Library and the Tutu Park Pathway. Additionally, new drainage and road rehabilitation projects have been undertaken in Downtown Charlotte Amalie. Several residential community roadway improvement have been completed throughout in St. Croix neighborhoods such as Diamond Ruby and Williams Delight. They will be also be undertaken in St. Thomas neighborhoods such as Contant, Estate Thomas, Hospital Ground, Caret Bay and Bovoni. Major transportation and capital improvement investments in the territory have been funded largely through GARVEE bond programs, such as the rehabilitation of the Spring Gut Bridge on St. Croix, flood mitigation and multimodal upgrades of Veterans Drive Phase 2A, major corridor improvements to South Side Road, Praxides Nieves Ridge Road and Sidney Lee Road, as well as development of a new interisland ferry. The department has also advanced several major projects such as upgrades of Head Start Centers, major library renovations, parking and cemetery improvements as well as the 99 Steps renovation and new DPW and VITRAN operations facilities on St. John.

Vincent Roberts, Commissioner of the Virgin Islands Department of Sports, Parks and Recreation delivered testimony regarding the $5 Million reprogrammed under act 9052 for completion of the Randall “Doc” James Racetrack on St. Croix. The funds are administered through the Office of Disaster Recovery. Phase 1 includes completion of Track Design, permitting and reconstruction of the running service and cistern, while phase 2 will include renovation of stables, barns and paddocks. As of Mid 2026, topographic as built surveys are complete, construction documents are near completion and build packages are expected to begin in mid-March.  The grand stand design under Phase 3 is nearly complete, which positions the territory for future funding, though construction of that phase is currently unfunded. Permitting efforts are ongoing, pending a coastal zone management permit transfer authorization.

Adrienne Williams Octalien, Director of the Office of Disaster Recovery stated that the department is currently focused on ensuring that all fixed costs projects will be completed by 2035. Under the new Rebuild USVI Initiative, $13.7 Billion in obligated funds will be managed. 38 major facilities in the US Virgin Islands are scheduled for reconstruction.  To date, 13 contracts were executed for 32 facilities with 6 projects pending.  These includes schools, public buildings and utilities, and key infrastructure.

When asked about the financial state of the Virgin Islands, Chair Francis stated that “we are stable but we are still in the ICU”.

Lawmakers then considered Bill No. 36-0236 An act amending title 33 Virgin Islands Code, subtitle 3, chapter 111, section 3061 by increasing the amount of money that is to remain in the Virgin Islands Insurance Guaranty Fund before any interest can be deposited into the General Fund. The measure was sponsored by Senator Kurt A. Vialet.

Julio Rhymer, Sr., Director of the Office of Management and Budget reminded the body that it appropriated $4 Million for territory wide street light improvements through the Water and Power Authority, based in part on the assessment that the Insurance Guarantee Fund has maintained excess capacity. The Insurance Guarantee Fund currently maintains an approximate balance of $62 Million. Current projections state that the Government expects to collect approximately $22 Million annually, with $20 Million allocated to the General Fund to help support budgetary balance. Under the existing statutory framework, the fund maintains a 20 % cushion above the required minimum, providing a valuable buffer for emergencies or unexpected insurer insolvencies.  Rhymer stated that while the proposed increase could seem modest, it encouraged consideration of several fiscal and economic factors.  These include maintain financial flexibility, utilizing capital for greater impact, limited incremental consumer protection, and long term structural rigidity.  Rhymer stated that while well intentioned, it would reduce the government’s financial flexibility, limited capital availability while generating minimal return, provide only marginal additional consumer protection, and introduce unnecessary budget rigidity.

Glendina Matthew, Director of the Division of Banking, Insurance and Financial Regulation delivered testimony supporting the proposed measure. Matthew said that the proposed increase would strengthen and enhance financial protection available to policyholders and claimants in the Virgin Islands in the event of an insurer’s insolvency. Matthew stated that the measure would increase policy holder protection, promote market stability and help with financial stability.  Additionally, Matthew stated that consideration should be given to increase the amount of each covered claim to $75,000. Currently, the maximum a policyholder or claimant can receive is $49,950. The dramatic rise in labor and construction materials has made the statutory caps in many states and territories insufficient. The last update to the Virgin Islands Guaranty Fund was made on September 30, 1985.

Jeremy Austin, President of Keswick Insurance and President of the Virgin Islands Insurance Guaranty Association voiced support for the proposed measure. Austin stated that the measure was fiscally responsible and forward thinking. Austin stated that since the last threshold was established, inflation, increased claim severity and rising reinsurance costs , as well as greater exposure to greater catastrophic risk have changed the financial landscape. Austin states that the measure more accurately reflects today’s risk environment. Citing recent catastrophic events, such as Hurricanes Irma and Maria, the previous statutory cap fell short. Since the last change to the cap in 1985, the US Dollar has experienced a cumulative inflation rate of 200%.

Lawmakers also considered Bill No. 36-0258, An act reprogramming administrative fees resulting from the bonds issued for the Fortress Investment Group transfer for various projects and initiatives to enhance the economic development of St. Croix and to be deposited into the Budget Stabilization Fund. The measure was sponsored by Senator Kurt A. Vialet.

Kevin McCurdy, in his capacity as Executive Director of the Virgin Islands Public Finance Authority, delivered testimony explaining that the bill would appropriate $4.2 Million in administrative fees collected by the Virgin Islands Public Finance Authority in connection with the $448.6 million Series 2025 bond issuance used to finance the acquisition of the Westin Frenchman’s Reef and Morningstar Buoy Haus Hotels. Under this restructuring, the territory will assume ownership of the hotel once the bond debt is retired. The Virgin Islands Hotel Development Corporation was established to facilitate the transaction. McCurdy’s testimony stated that while the VIPFA supported the projects in the bill, it urged the Legislature to carefully weigh the Authority’s operational and financial needs to ensure it remains strong, sustainable, and capable of continuing to provide critical and financial leadership and support to the Government of the Virgin Islands.

Alani Henneman, Assistant Commissioner of the Department of Tourism delivered testimony. Henneman stated that the Department expresses appreciation for the amendment clarifying the funding source from the “Project Fund” to the “ERF Trust Account,” noting that it enhances transparency and administrative alignment. The Department respectfully advised the body that direct development incentives more appropriately fall under the statutory authority of the Virgin Islands Economic Development Authority. Henneman said that if the Legislature’s intent is to support hotel marketing, promotion, or investor engagement, the Department would be well positioned to administer such funds, including promoting St. Croix at major hospitality investment conferences, and supporting campaigns that highlight available incentives. The Department also notes it is finalizing a comprehensive hotel development study to strengthen the Territory’s competitive positioning and guide prospective investors.

Carlton Dowe, Executive Director of the Virgin Islands Port Authority spoke specifically on the proposed $1 Million appropriation from the fund to provide a subsidy for airlift between St. Croix and the Eastern Caribbean.  The authority requests that the proposed measure would have an amendment that would allocate funds to the USVI Department of Tourism to assist in attracting and securing new airlift to the territory. Enhancing airlift to the Eastern Caribbean has been a focus for the Port Authority and the Department of Tourism. There is a growing demand for additional travel options between the US Virgin Islands and neighboring Caribbean islands. Travel to these islands has become expensive due to limited airlift, often require overnight trips to Miami or the British Virgin Islands. St. Thomas has attracted new routes through Cape Air, to Nevis and St. Barts, Contour Airlines to Dominica, and SkyHigh, to the Dominican Republic. This has not been yet successful to St. Croix. Since 2008, the Port Authority has offered an incentive program to any airline that provides new service to the territory. For a period of one year, during the term of the Incentive period, VIPA’s landing fee is waived.

Policymakers considered Bill No. 36-0259, An act amending title 29 Virgin Islands Code, chapter 23, section 1313 by expanding benefits under the Hotel Development Program for hotel improvement and expansion projects on St. Croix. The measure was sponsored by Senator Kurt A. Vialet.

Dwayne M. Benjamin, Assistant Chief Executive Officer of the Virgin Islands Economic Development Authority reminded the body that the Virgin Islands Hotel Development Program was established under the Hotel Development and Finance Program Act of 2011. The program allows approved projects to utilize future revenues from designated hotel occupancy taxes, casino taxes and the ERF, up to 7.5%, for up to 30 years, or until the investment is liquidated. Depending on the project type, developments could receive up to 100% or 50% of certain designated tax revenues deposited into a dedicated project trust fund. This has supported redevelopments at the Ritz Carlton St. Thomas, The Westin St. Thomas Beach Resort & Spa and Buoy Haus resort and the new Hampton by Hilton St. Thomas.

The proposed amendment would allow existing hotels in the St. Croix District to access up to 100% of the Designated Hotel Occupancy Tax for substantial improvement or expansion projects exceeding $25 million and increasing room inventory by at least 25% within five years or 50% for projects exceeding $10 Million within two years. With previous projects being in the St. Thomas-St. John Distict, St. Croix has faced issues with limited airlift affecting hotel development. Rebating occupancy taxes for expansion projects would reduce investor risk, support financing for established operators and increase room inventory and enhance facilities.

Bill No. 36-0236, Bill No. 36-0258, and Bill No. 36-0259 were voted upon favorably and will be forwarded to the Committee on Rules and Judiciary for further consideration.

Senators present at today’s committee hearing included Novelle E. Francis Jr., Marvin A. Blyden, Dwayne M. Degraff, Ray Fonseca, Hubert L. Frederick, Franklin D. Johnson, Avery L. Lewis, Milton E. Potter, and Kurt A. Vialet.

The Division of Public Affairs is committed to providing the community with accurate information on legislative proceedings and other events at the Legislature of the Virgin Islands. Visit legvi.org.                      

####