Nathan Simmonds, Director of Finance and Administration for the Public Treasury, at the Finance Committee's budget hearing on Tuesday. (Photo by Alvin Burke and Barry Leerdam, Legislative of the Virgin Islands)
The Disaster Recovery Office, established after the devastating Twin Hurricanes of 2017, has spent $ 1.94 billion and committed $ 4.45 billion, or more than 56 percent of the expected $ 8 billion in federal funding for the disaster relief that will be provided to the area, Director Adrienne Williams-Octalien told Senators during the budget hearings on Tuesday.
Meanwhile, the Public Finance Authority has raised $ 127 million of the $ 207.6 million for V.I. Treasury bond funds still to spend $ 80 million from government bonds dating back to 2003.
Williams said federal spending on disaster recovery is and will continue to circulate throughout the U.S. Virgin Islands economy. She said the Territory's office projects will spend around $ 521 million on all recovery programs in 2022 alone. The recovery spending should generate about $ 26 million in gross income taxes directly for fiscal 2022 and about $ 20 million more in 2023, she said.
The Director of the Internal Revenue Bureau, Joel Lee, later reported on the territory's tax revenue, raised by spending on hurricane recovery, COVID-19 pandemic relief, and growing federal alcohol tax remittances. Income tax and gross revenue tax revenues increased in 2018, 2019 and 2020, and declined only marginally in 2020, despite the pandemic dealing a severe blow to local tourism.
In the coming year, Disaster Recovery plans to complete the Federal Emergency Management Agency's commitments on 205 projects and begin construction on 58 projects, including Arthur A. Richards Junior High School, Charlotte Kimmelman Cancer Institute, Myrah Keating Clinic, Gallows Bay and other road projects, the Vincent Mason Pool and 35 parks and recreational facilities among others, Williams said. It also assumes 135 remediation projects will help generate gross revenue from tax revenues in 2022.
The PFA was created to help V.I. Financing through government bonds, with the local gross income tax and federal alcohol excise income that pays the bonds being separated from the regular approval process. The Office of Disaster Recovery was created to monitor the flow of disaster relief, fund projects, and ensure that they are carried out in accordance with the rules and regulations of all federal programs. It monitors and reports on the obligations and expenditures of the federal funds.
PFA Administrative Director Nathan Simmonds introduced V.I. National debt totaling nearly $ 2 billion, of which about $ 206 million is community disaster loans. Other officials have said in the past that they hope these federal government loans will eventually be granted. Another $ 708 million is V.I. Government debt backed by federal excise remittances, which amounted to $ 273 million for 2021.
Another $ 240.6 million secured by federal excise tax revenues is for loans to the Cruzan rum and Diageo distilleries. These loans are set up so that the government is not on the hook if excise revenue does not materialize.
There is about $ 71 million in Federal Highway Grant Anticipation Revenue Bonds. These "GARVEE" bonds are exclusively secured by future federal road funds.
The PFA is also the sponsor of a $ 42 million bank loan to the West Indian Company, and there are several other minor debts under its jurisdiction.
Simmonds said the PFA currently has about $ 80.6 million.
"Despite the COVID-19 pandemic, approximately $ 20 million in capital project funding from bond proceeds was spent in 2020," said Simmonds.
It manages $ 318.3 million and its investment income for 2020 was approximately $ 6.5 million.
Public construction projects make up most of the $ 80 million the PFA has yet to spend. Of the $ 128.5 million allocated to public works, $ 54 million remains, mostly for road works.
Much of the undone work is on St. Croix. There is still $ 8 million in GARVEE loan funds left to work on Mahogany Road; $ 7 million for Hams Bluff Road; $ 5 million for Spring Gut Road; $ 3 million for Rattan Road; $ 3 million for Prince Street in Frederiksted and $ 2.5 million for street work in Christiansted.
Senator Kurt Vialet (D-STX) asked whether money had been spent on the planned renovation of the Paul E. Joseph Stadium last year. Simmonds said no, but there is still $ 8.2 million available. His detailed project list also states that previously $ 16.8 million was spent on the project.
The internal budget of the PFA is separate from the overall budget process and is financed directly from gross tax receipts and alcohol consumption tax receipts in accordance with the terms of the loan agreements. This year it has a budget of $ 11 million, of which $ 9 million for PFA, of which $ 5 million from gross income and $ 4 million from alcohol excise taxes. It is calling for an additional $ 2 million from the Territory's General Fund as a budget for the Office of Disaster Recovery. The Disaster Recovery Office was originally funded by a federal grant, but that funding has expired, Simmonds said.
The PFA budget is $ 2.56 million for administration, a 5 percent decrease from last year. The remaining $ 6.3 million will be used for professional services such as accounting, auditing, and financial advice.
Internal Revenue Bureau director Joel Lee presented the agency's proposed budgets of just over $ 14.15 million for 2022 and $ 14.19 million in 2023. The 2022 budget is 13.59 percent more as the Bureau's 2021 budget. Fiscal year 2022 budget request includes $ 7.24 million for staff costs; $ 3.94 million for related fringe benefits and $ 2.12 million for other services. The budget for fiscal 2023 is very similar.
No vote was taken at the information gathering hearing. Present were: Blyden, Frett-Gregory, Sarauw, Vialet, Sens. Samuel Carrion, Dwayne DeGraff, Javan James, Kenneth Gittens, Novelle Francis, Carla Joseph and Genevieve Whitaker. No committee members were missing.