ST. THOMAS – The Committee on Finance, chaired by Senator Kurt Vialet, convened in a meeting at the Earle B. Ottley Legislative Hall. The Committee received updated testimony from the Governor’s Financial Team on the proposed Fiscal Year 2023 Executive Budget.
Jennifer O’Neal, the Director of the Office of Management and Budget delivered primary testimony on behalf of the Governor’s Financial Team. Per O’Neal’s testimony, on June 13, 2022, a proposed total appropriated and non-appropriated budget of $1,353,646,169 for Fiscal Year 2023. This amount reflected $919,493,992 for the General Fund, $85,098,019 for Other Appropriated Funds, and $311,963,890 for non-disaster related federal funds. An updated budget of $934,216,545 has been delivered, with a net positive difference of $14,722,552, $72,791,463 in other appropriated funds, $37,090,268 in other non-appropriated funds, and no change to Federal Grants for a total proposed budget of $1,356,062,166.
According to O’Neal’s testimony, the economic landscape of the US Virgin Islands softened from the shock of the COVID-19 pandemic. The most recently released GDP data revealed a 2.2% contraction in 2020. The territory’s economic recovery from the global pandemic exceeded expectations last year, with almost all sectors of the economy rebounding, with data suggesting that 2022 will be stronger. The territory’s economic and physical recovery from the 2017 hurricanes as well as the pandemic has continued to improve. The economy has seen an improvement, with employment up 2% during the first half of 2022, compared to its 2021 average in January to June. Private sector hiring has improved, particularly in tourism related industries such accommodation, food services, retail, trade, and professional, scientific, and technical services sector.  The unemployment rate in the territory decreased to 6.1% in July compared to 10.3% last year. Initial unemployment claims are the lowest in years at 135, down from a peak of 2,727 in April 2020.  The unemployment rate is expected to decline further.
Revenue projections have been updated for Fiscal Year 2023 to $934,228,386. The transfer from the Insurance Guarantee Fund to the General Fund has been reduced from $6 Million from $16.3 Million, eliminating the transfer of $2 Million from the Internal Revenue Matching Fund to the General Fund, and increasing the amounts expected from disaster related capital projects. Revenue collections have exceeded projections, and financial models project that strong collections can be expected to continue into the next fiscal year, and for the foreseeable future. One major driver of this is the expected reopening of the Wyndham Frenchman’s Reef Hotel and other hotels by the first quarter of Fiscal Year 2023.  Tourism is expected to expand in 2023. In the first 3 quarters of Fiscal Year 2022, tourism arrivals exploded by 139% from Fiscal Year 2021. Air arrivals increased by 21%, and cruise ship passengers returned from zero from Fiscal Year 2021. Construction activity is also being boosted by work on roads, airports, and residential housing, though this work is slower than 2021.
Although negative impacts were expected by the closure of the Limetree Bay Terminals with a higher unemployment percentage, ongoing recovery projects and the gains from pandemic disaster funding have dampened those impacts.  However, excise tax collection is not as high as preferred, but has been attributed to global supply chain issues.  The projected expenditure budget for all agencies and departments is $934, 216,525. Some adjustments include $6.95 Million for the projected health insurance increase under the Division of Personnel, $3.1 Million to the VI Fire and EMS to provide for hazardous pay to qualified employees, $1Million as a transfer to the General Fund to the Crisis intervention Fund under the Department of Finance, and $471,000 to allow the Department of Health to move out of the Charles Harwood Complex temporarily.  Overall, the territory is expected to see major economic growth through the completion of all recovery projects, improvements, and upgrades to IT and physical infrastructure.
Senators present at today’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., and Kenneth L. Gittens. and Carla J. Joseph,
