THE V.I. PRESS ROOM
The Press Room
WHAT ARE WE WAITING FOR?
October 13,2017
WHAT ARE WE WAITING FOR?
By: Haley E. Allick
How we stay afloat.
The U.S. Virgin Islands economy has been facing significant challenges since 2000. There are only four key industries; advanced manufacturing, financial services, information and technology and tourism and hospitality (United States Virgin Islands Economic Development Authority, 2017). Therefore, the scarce natural resources, small domestic markets, limited infrastructure, shortages of skilled labor, and reliance on federal grants to fund basic services result in an economy with very little opportunity for growth. These challenges are exacerbated by our inflated and disorganized government. The U.S.V.I. government consistently receives funding from various federal agencies and yet basic government responsibilities are not carried out. For instance, in March 2016, the Department of Interior awarded the U.S.V.I. $5 million for the Fiscal Year, in May 2016 the EPA provided $8 million for water infrastructure projects and $6 million for hurricane relief last week. In addition, on September 8 the U.S. Interior Secretary Ryan Zinke expedited the rum-cover over advance payment of $223,925,000 for estimated FY 2018 collections in the U.S. Virgin Islands. (US Department of Interior, 2017). These funds will be used to rebuild after Hurricanes Irma & Maria devastated the islands within two weeks of each other.
“High-risk” government.
The larger problem is not that our economic challenges are impossible to overcome, but that there is little to no oversight of our government spending. The people of the USVI have no guarantee that the funds allocated for specific purposes are indeed used for those purposes. According to the U.S. Government Accountability Office, “After fiscal year 2001, government spending in the CNMI, Guam, and USVI exceeded revenues through fiscal year 2004 (the most recent year for which there is complete data on all four areas). As a result, their fiscal conditions weakened further during this period. CNMI and USVI ended fiscal year 2004 with negative net government assets.” In addition, the USGAO reports that the USVI provides late and incomplete financial reports that cannot be used for effective decision making in Washington. They explain, “The insular area governments have had long-standing financial accountability problems, including the late submission of required single audits, the receipt of disclaimer or qualified audit opinions, and the reporting of many serious internal control weaknesses. These problems have resulted in numerous federal agencies designating these governments as “high-risk” grantees. The Department of the Interior and the federal agencies are working to help these governments improve their financial accountability, but greater coordination among the agencies would increase the effectiveness of their efforts.” This shows that although the federal government has been doing its best to help revive the USVI economy, its efforts are mitigated by the lack of organization among government officials. The fact that this has been going on for almost two decades exposes the absurd lack of concern both constituents and elected officials have for trying to improve our financial situation.
Snowball effect.
The impending collapse of our economy brought in the New Year. In January 2017 Governor Mapp declared that the USVI government could not afford to fulfill basic government responsibilities again. Immediately, the governor tried to offer a bond deal that would generate enough cash for the coming months. However, that measure was unsuccessful. The New York Times article, “After Puerto Rico’s Debt Crisis, Worries Shift to Virgin Islands” reported, “The failed bond deal meant there was not enough cash to pay for basic government operations in February or March. As a stopgap, the territory diverted its workers’ pension contributions.” (New York Times, 2017). In another attempt to secure cash quickly Governor Mapp pushed through legislation that increased taxes on alcohol, cigarettes and soda. Airbnb struck a deal and created the U.S. Virgin Islands Hotel Room Tax in which 12.5% of the listing price including any cleaning fee for reservations 89 nights and shorter in the U.S. Virgin Islands goes to the U.S.V.I. Bureau of Internal Revenue.
The desperation hit an all-time high when the government made risky investments and participated in illegal business practices. The Times explained, “Until recently, the pension system was chasing high returns by investing in high-risk assets, like a $50 million placement in life viaticals — an insurance play that is, in effect, a bet that a selected group of elderly people will die soon. It also made loans to an insolvent inter-island airline, a resort that went bankrupt, and a major franchisee of KFC restaurants. The territory’s inspector general has declared the loans illegal.” (NYT, 2017). It is clear why the federal government continues to determine that our government is “high-risk” and why our suffering will not be remedied unless there is a change in the political climate. There is and has not been organized leadership in the USVI and it is hurting the future generations who will inherit this mess. There is no magic bullet and there is no savior who will fix our problems for us. We must hold our elected officials accountable and demand that there is more transparency between the government and the press. Above all, we must have legal oversight of our government’s spending.
Sources:
https://www.usvieda.org/node/589
https://www.nytimes.com/2017/06/25/business/dealbook/virgin-islands-debt-payment-pensions.html