In Mapp Administration, A Search For Truth

ST. CROIX — During a press conference held on January 13 at Government House here, Governor Kenneth Mapp spoke in blunt terms about the state of the territory, and the urgency to pass his sin tax measure if the territory were to avert a financial crisis.

The governor’s own words: “A rejection of the identification of new and immediate revenues to the territory, particularly to satisfy the financial markets that we’re moving out of structural deficits, would be a decision equal to saying that we would be cutting 11 to 14 percent of the budget for the Government of the Virgin Islands,” the governor said in a response to a question posed by a Consortium reporter. “That $110 million removal from the current budget of $787 million, I am not prepared to stand before the community and say this is exactly what that means, but I do not believe that there could be any person in this territory that believes that the removal of $110 million from the operating budget of the Government of the Virgin Islands, would not be an action that is painless.”

The governor went even further during the same press conference, stating that refusal to pass the measure or failure to replace it with something comparable would mean, “the curtailing of hours, it would mean furloughing employees, it would mean cutting services, in some areas completely to a halt — it would mean closing offices of the Government of the Virgin Islands in some areas. It would be a drastic impact to the operations of the Government of the Virgin Islands,” Mr. Mapp said.

But yesterday, following a Wednesday night interview that Mapp’s Dept. of Finance Commissioner and Public Finance Authority Director Valdamier Collens conducted with The Consortium, in which Mr. Collens said that because the territory’s access to the market was no longer an option, the governor — keeping in line with his January 13 statement — was getting ready to furlough and layoff government employees while considering shorter work weeks and also deep cuts at government departments and agencies.

But on Thursday, during a stop at the Mario Moorhead radio show, Mr. Mapp flatly denied Mr. Collens’s words. He said on radio that he was not getting ready to layoff of furlough anyone. His statements yesterday are a flat denial of Mr. Mapp’s own words, and aside from embarrassing his Finance commissioner, Mr. Mapp’s comments on local radio yesterday came off as disingenuous.

According to Mr. Collens, the government has no access to the bond market and there would be no change trajectory for up to a year. Mr. Mapp did not deny that the bond market was no longer lending to the USVI, but he denied preparing to take the very actions he said he would in January.

The governor spoke in rosy terms about the territory on the talk show, stating that the economy had experienced growth by citing a U.S. Bureau of Analysis report that said the USVI’s gross domestic product had experienced marginal growth of 0.2 percent in 2015, after decreasing by 1 percent in 2014. But the governor glossed over the $110 million structural deficit, which was the main focus of his January 13 press conference, where he pressed the the Senate to pass his sin tax measure.

From the onset of the wide-ranging interview, Mr. Collens was straightforward, as he’s always been with this publication, about the territory’s financial condition. “The days cash on hand is approximately 6 at this point,” he said. He reiterated that the Government of the Virgin Islands could no longer access the bond market because of the territory’s junk-status bond rating, a structural deficit that has lingered for over a decade, and the market’s lack of confidence in the government’s ability to reform itself.

“It’s not even an assumption anymore, we have to act in a way in which we don’t have access until we demonstrate to ourselves — not to the bond market — that we want to fix our structural deficit. So for starters we know $110 million is out of the budget, and so we have to act accordingly to adjust and revise our budget,” Mr. Collens said.

Mr. Collens said the territory would not even attempt to access the market anytime soon, whether or not the 32nd Legislature passed the governor’s proposed five-year economic recovery sin tax measure. And even if the measure were to become law, both the bond market and the government would wait up to a full year or more before restarting negotiations, he said. The commissioner’s words were a blunt and sobering acknowledgement that the financial collapse was no longer going to happen, but is now in play.

This means, Mr. Collens acknowledged, the furloughing of government employees, cutting back on government services, deep cuts in the budgets of all government departments and agencies, assessing positions within the government and searching for areas where excess and positions could be eliminated.

“We have to show investors that we are willing to look at new revenue enhancement measures, as well as [moderating] our expenditures.  The thing is we have to realign and right-fit our budgets to ensure that this misalignment doesn’t occur — because if you don’t have access, well then you have to fix your budget,” Mr. Collens said.

“If we are able to pass measures that investors will view as we are addressing our structural deficit, that would bode well to the investors, but they’re not going to jump out tomorrow and say, ‘Oh, come back to the market.’ They’re not going to do that,” he added.

But Mr. Mapp undercut the commissioner on Thursday, leaving residents in a search for truth as to how the government will offset the $110 million budget deficit.