ST. THOMAS – The Committee on Budget, Appropriations, and Finance, under the leadership of Senator Donna A. Frett-Gregory met in the Earle B. Ottley Legislative Hall. Lawmakers received testimony from the Government’s Financial Team, on the FY 2024 mid-year review of the Government of the Virgin Islands financials. This includes, but is not limited to, Fiscal Year 2024 budget appropriations vs revenue collections to date; total allotments to date; projected revenues through September 30, 2024, and proposed adjustments for FY 2024 due to revenue shortfall, if any; status of union negotiations; and status of outstanding payments due to vendors for FY 2023. Additionally, the Committee received testimony on the proposed FY 2025 Budget Overview for the Government of the Virgin Islands.
Jenifer C. O’Neal, the Director of the Office of Management and Budget delivered primary testimony on behalf of the Governor’s Financial Team. For the first seven months of Fiscal Year 2024 through April 30th, 2024, revenue collections inclusive of hotel and non-hotel taxes totaled $537,081,652. This reflects a decrease of just over 4% in comparison for the same period collected in Fiscal Year 2023 of $560,492,159. Revenue collections are lower than projections so far for the year, and it is expected that by the end of FY 2024, revenue collections will be approximately $907,050,304, which is $90.9M below the appropriation level of $998,002,428 for the general and tourism advertising revolving funds.
All major revenue categories, except real property tax, trade & excise and gross receipts are experiencing lower collections year over year than in Fiscal Year 2023. The largest decrease occurred in corporate income tax collections at 32%. Property tax collections have increased from the same time last year from $7.8M to $12.6M or 61%. With more open hotels, the tourism industry continues to succeed with the collection of hotel taxes. However, this has been offset by lower collections for non-hotel taxes by almost the same amount. Year to date collections in Hotel and Non-Hotel Taxes totals $26,316,726, compared to $24,889,886 in fiscal year 2023. The General Fund Allotment release as of April 2024 totaled $499,353,557. This figure is comprised of the operating cost for the Central Government at $349,633,683. Semi-Autonomous Agencies totaling $127,293,046 and the Miscellaneous at $22,426,828. Of the amounts released by OMB, the Department of Finance still has $1.1M outstanding to be paid to the Court. Additionally, OMB has released appropriations of other local funds totaling $23,266,196 bringing the total allotment releases processed through April to $522,619,753. OMB has also processed $658,157,821 in allotment releases through June 2024 and continues to process releases upon request for miscellaneous and other categories as necessary. There have been no allotment reductions to date in this fiscal year.
As of May 3, 2024, the year-to-date paid expenditures for the Central Government was $794 Million, inclusive of salaries, fringe, supplies, other services, and capital projects. Of this, $179M in prior year vendor payments was paid. There was $64.5M in outstanding accounts payable with $12.8M in federal grant obligations and 4M worth of invoices occurred in prior years but entered in the current fiscal year. O’Neal told the body that the expenditures are higher than revenue collections, which has been driven by the cost of inflation. There have been high rates of overtime in public safety agencies, which resulted in net payroll increasing from $195M in 2019 to $239M in 2024. It is anticipated that revenue collections will be $90M less than current appropriations. OMB is prepared to limit the release of some on-time allotments and work with Government House to reduce expenditures as much as possible.
For all insurance coverage combined, there is a decrease from $183.1 million from FY23 to $182.7 Million in FY2024, or about $403,000. There was no increase for Dental in FY 2024. From FY 2019 to the present, the GVI has absorbed increases for employees and retirees. This has shifted the cost share from 65/35 to 73/27 government and employees. 14,345 members are covered on the health insurance, with 7,212 active government enrolled, and 7,133 retirees enrolled. The Office of Collective Bargaining is in negotiations with 11 bargaining units and has offered tentative dates to 80% of the units with expired contracts. OCB also continues to monitor implementation of negotiated salary increases. 65% of the agencies and entities have implemented salary increases for FY 2024.
Additionally, lawmakers received testimony on the Proposed FY 2025 Budget Overview for the Government of the Virgin Islands. The proposed General Fund Fiscal Year 2025 budget totals $896,803,010. The proposed General Fund Fiscal Year 2024 totaled $974,062,924. The proposed 2025 budget represents a reduction from FY2024 by approximately $77 Million. The proposed budget includes 559 vacancies across various departments and included wage adjustments corresponding to current wage agreements scheduled to be finalized and implemented on October 1. There are ongoing negotiations for FY2025 insurance rates, so no rate increase was factored into the budget. As of April 2024, the unemployment rate stands at 3.2%, down from 3.6% in FY2023. The total workforce added 369 people, bringing it to 40,147.
The budget allots for a 9% increase in Personal Income Tax (PIT) to increase from 458.8 million in FY2024 to $502.3 Million in FY 2025. Corporate Income Tax is expected to increase by 23%. This is expected due to the launch of billion-dollar bid packages and an expected increase in construction activity. It is expected to increase to 100.2 million in FY2025 from 81.3 million in FY 2024. Real property tax is expected to decrease slightly by one percent. In FY 2024, revenues for real property tax are estimated at $61 Million. It is expected to decline to $60.3 million in Fiscal Year 2025. Gross Receipts Tax (GRT) is projected to increase to $214 Million in FY 2024. It is expected to increase further in FY 2025 due to increased public bundles and construction activity. It is expected to increase to $234.3 million. Excise Tax is expected to increase by 6% and will continue to increase as the economy grows. The Hotel Tax is expected to increase slightly to $43.7 Million in FY 2025. The General Fund Revenue projections of $897,047,415 for FY2025 have increased by 3% when compared to the projected $872,160,208 for FY 2024. The general fund is expected to collect a net revenue of $897,047,415 and the gross revenue collections are projected at $1,081,505,382.
Lawmakers also voted to approve Bill No. 35-0262, An Act appropriating $1,434,950 in Fiscal Year 2024 from the Community Facilities Trust Fund for the pre-construction soft cost funding to prepare the Charlotte Amalie harbor for dredging. The measure was proposed by Senator Novelle E. Francis Jr., at the request of the Governor. Nathan Simmons, Director of Finance and Administration at the Public Finance Authority stated that the PFA supported the appropriation of the monies for the soft costs associated with the project and stated that the funding was available. The proposed measure was approved and will be sent to the Committee on Rules and Judiciary for further consideration.
Senators present at today’s committee hearing included Donna A. Frett-Gregory, Novelle E. Francis, Jr., Marvin A. Blyden, Angel L. Bolques, Jr., Samuel Carriόn, Diane T. Capehart, Dwayne M. DeGraff, Ray Fonseca, Kenneth L. Gittens, Javan E. James, Sr, Carla J. Joseph, and Milton E. Potter.
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