COMMITTEE RECEIVES FISCAL YEAR 2024 and 2025 BUDGET OVERVIEW 

Published: Jun 6, 2023

ST. THOMAS – The 35th Legislature of the Virgin Islands’ Committee on Budget, Appropriations and Finance, led by Senator Donna A. Frett-Gregory began budget hearings. The Committee received testimony from the Governor’s Financial Team on the proposed Fiscal Year 2024 and 2025 Executive Budget for the Government of the Virgin Islands of the United States.

The overall proposed budget for Fiscal Year 2024 totals $1,423,604,413. This is inclusive of general funds of $969,086,891, other appropriated funds of $ 84,386,078, federal funds of $334,913,897, and other non-appropriated funds of $ 35,217,548.

The overall proposed budget for Fiscal Year 2025 totals $1,420,836,334. This includes general funds of $967,953,221, other appropriated funds of $ 85,648,502, federal Funds of $332,393,574, and other non-appropriated Funds of $ 34,841,037.

Jenifer 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, the economy of the US Virgin Islands is proving to be resilient, and the Government is remaining engaged in enacting policy measures geared towards improving the economy as well as ensuring that projected funded through federal dollars continue. The Bureau of Economic Analysis indicated that the USVI real Gross Domestic Product (GDP) is showing a healthy economy. The GDP increased by 2.8% at an annual rate, or to a level of $4 Billion in 2021. The growth in GDP is attributed to personal consumption expenditure and exports, which grew by 94.9%, reflected in a surge in crude oil and petroleum productions, and increased visitor spending. The GDP is expected to grow throughout 2023.

The tourism industry in the US Virgin Islands continues to grow. Approximately 1.8 million visitors traveled to the territory in 2022. This represents a solid twelve months of visitor growth from 2021, when 749,251 visitors traveled to the territory. In the first quarter of 2023, cruise ship arrivals increased by approximately 128%, and air arrivals increased by .1%. Trends suggest that this growth will continue throughout 2023. It is expected that the surge of cruise travel will allow the territory to close the gap with pre-pandemic visitor volume and transition from recovery to expansion. Revenues have increased every year since 2019, and the Administration has been able to pay long standing debts, including $40 Million in retroactive wages, and beginning to pay calendar year 2021 tax refunds. Since January 2019, the administration has budgeted and paid for in excess of $313.2 Million in tax refunds to become up to date with debts.

Currently, there are 6,550 employees at the Government of the Virgin Islands. 3,418 are in the St. Thomas-St. John District and 3,132 are in the St. Croix district. This includes 1,417 unclassified employees, 4,922 classified employees, sixty-three part time, and 148 per diem employees. In Fiscal Year 2023 to date, the Division of Personnel has processed 596 new hires. The Division of Personnel has begun to track Personnel requisition Forms as they leave OMB to help agencies streamline posting vacancies. As of June 1, 2023, 658 PRFS have left OMB for posting not inclusive of salary changes. In Fiscal Year 2023, the Division of Personnel has processed over $38 Million in Retroactive Wages. Batch processing of survivor payments has begun, with 73% of payments completed, totaling $2.4 Million. Health Insurance coverage combined, inclusive of medical, dental, vision and life for Fiscal Year 2023 increased from $177.3 Million to $184.3 Million, an overall increase of about $7 Million, or 4%. There was no increase to the dental plan for Fiscal Year 2023. The Government has absorbed the health insurance increases for 2019, 2020, 2021, and 2022. This shifted the cost share from 65% (government) 35% (employee) to a current rate of 72/28.

Currently, 14,165 members are covered by the health insurance eligibility system Bentek. Active employee enrollment is 7,099, Retiree Enrollment is 7,066. In total, over 25,000 individuals, including dependents, are covered under the insurance plan. Total payments made to all carriers for Fiscal Year 2023 to date is $107,130,895.65. The GESC Board is currently in negotiations for the best and final offers with the carriers for new contracts for CIGNA, UHC, Standard Vision and Life, and Cigna Supplement. This will take effect on October 1, 2023.

The submitted budget includes over 658 vacancies in most departments for Fiscal Year 2024 and 2025, as well as providing for wage adjustments of 3% in Fiscal Year 2024 and 2025. Six negotiations have been completed with four unions to date for Fiscal Year 2023. Negotiations are ongoing with the Registered Nurses Leadership Union (RNLU), International Association of Machinists and Aerospace Workers (IAMAW) – non-supervisory employees and enforcement officers, Association of Firefighters (AFF) – Support Staff and the United Steelworkers (USW) – Virgin Islands Waste Management Authority’s Supervisors. Sixteen other collective bargaining agreements are currently expired.

Per the Office of Management and Budget, the five-year outlook indicates that the General Fund will continue to grow. This has been afforded to the continued federal funding associated with the 2017 hurricanes, and COVID19 relief. Year over year, total operating revenue has increased approximately 7% for FY 2021 and FY 2022, with an increase of 6% between Q2 FY 2023 and Q2 FY 2022. An increase in four of the major revenue categories is expected for the Fiscal Years 2024 and 2025. The most significant increase is expected in Corporate Income Tax, with an expected increase of 15%. Gross receipt tax is also expected to increase by 15%. Real property tax is expected to increase by 5%. Excise tax is expected to increase moderately by .4%, Personal income tax is the only category that is expected to decrease, by 2.7%. General Fund Revenue is projected overall to increase by 3.4%.

It is anticipated by the Office of Disaster Recovery that $566 Million for Fiscal Year 2024 and $574 Million for Fiscal Year 2025 will be spent on disaster recovery projects in the territory. The largest spends include the rebuild of the territory’s public schools, including the rebuild of the Arthur Richards K-8 School, the St. Croix Central High School, The Charlotte Amalie High School, and rebuild of six head starts on all three islands. Reconstruction of the Charlotte Kimmelman Cancer Center, the Myrah Keating Smith Clinic, and the Charles Harwood Medical Complex, and repairs to the Queen Louise Home for the Aged will mark improvements to healthcare infrastructure. Construction on thirteen parks across the Territory and public facilities, to include Emile Griffith Ball Park, Charles Seales Fire Station, Enid Baa and Charles Turnbull Libraries, are anticipated to generate significant spend. Additionally, infrastructure work is expected on WAPA undergrounding projects in the St. Thomas District and road and drainage improvements in Fish Bay, Botany Bay, and the Altona Lagoon Bridge area.

The cost of operations has increased by about 9.6%, Some agencies will see significant funding increases, such as the Department of Agriculture, increasing 41% from FY 2023, the Department of Public Works, increasing 10% from FY 2023, the Department of Agriculture, increasing almost 9%, the Virgin Islands Police Department, increasing 4% from FY 2023, and the Department of Education, increasing 3% from FY 2023. However, it was mentioned that challenges remain, such as the lack of timely payments, funding to commence scoping and design, and procurement of materials, which in turn affects the pace of the recovery projects. The Government of the Virgin Islands also continues to expend COVID19 funding spanning both fiscal years. Expected expenditures are approximately $100 Million for Fiscal Year 2024, and slightly less for Fiscal Year 2024, which will assist the territory with the pandemic response. The funds will be fully obligated by December 2024 and will be fully expended by December 2026.

Chairperson Donna A. Frett Gregory voiced concern over the fact that the Governor’s Financial Team submitted a two-year budget, something that she was unsure that the Legislature could consider based on interpretation of the Revised Organic Act. Per Chief Legal Counsel Amos Carty Jr., it was determined that the Legislature could not consider a biennial budget unless the Executive Appropriations Act was amended to allow for a biennial budget. Chairperson Frett-Gregory also voiced additional concern that numbers presented in FY 2022 were significantly higher than what we see today. Director O’Neal stated that these numbers were perpetually being revised based on actual numbers. Senator Alma Francis Heyliger inquired about austerity measures that could be taken. Director O’ Neal mentioned that there were times the Department would reprogram or realign things to see what would make sense.

Major highlights of the budget include $18,373,306 for employee wage increases calculated at 3% of total personnel cost inclusive of fringe, $150,000 for the Commission on Aging, pursuant to Acts 8590, 8403 and 7351, $225,000 for continued support of the Office of Gun Violence Prevention, $275,000 for the Office of Health Information Exchange within the Office of the Governor, $5,716,068 in Capital Outlays to fund various departmental upgrades, $2,602,512 GVI Fellows cohort expansion, $2,100,000 transfer from the Health Revolving Fund to the VIFEMS fund, $25,000,000 provided for retroactive wages owed to current and former employees, $2,607,966 budgeted to the Virgin Islands Police Department to support the Shot Spotter gunshot detection system, $1,600,000 for the Department of Public Works cemetery wall project, $500,000 budgeted for DPNR’s Office Building Repairs, and $250,000 budgeted to VITEMA to support emergency sheltering.

Senators present at today’s committee hearing included Donna A. Frett-Gregory, Novelle E. Francis, Jr, Marvin A. Blyden, Angel L. Bolques, Jr., Dwayne M. DeGraff, Alma Francis Heyliger, Ray Fonseca, Kenneth L. Gittens, Javan E. James, Sr., Carla J. Joseph, and Milton E. Potter.
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