U.S. Virgin Islands’ leaders argue about borrowing more

The leaders of the United States Virgin Islands are arguing about whether they should borrow an additional $50 million for what the governor describes as “imperative needs.”

Gov. Albert Bryan Jr. asked the legislature to approve an additional $50 million line of credit, but Senate Majority Leader Kenneth Gittens said he had “serious concerns” about the request. Bryan said Gittens’ statement had inaccuracies and either he misunderstood the territory’s finances or offered “a poorly executed attempt at political expediency.”

When Moody’s Ratings last rated the islands in March 2023, it pegged it Caa3, based in part on the islands’ very low level of available cash.

Bryan said Thursday that he asked the legislature in April to approve a $150 million line of credit but instead it approved a $100 million line of credit and restricted its use to hurricane recovery projects.

Gittens’ “concerns about fiscal responsibility ignore the current economic realities we face,” Bryan said. “The federal government’s extension of the corporate income tax filing deadline from October 2024 to February 2025 has created an unforeseen delay in revenue collection.”

The U.S. Virgin Islands government cash flow relies heavily on individual income taxes collected in April and corporate income taxes collected in October, Bryan said.

Bryan said the extra $50 million was needed to pay vendor bills and tax refunds due.

For his part, Gittens said he couldn’t support the expansion of the line of credit without guarantees on how it would be spent. “The territory is already in significant debt and I am very hesitant to move forward with any additional borrowing.”

“I would like to hear what is being done to get the territory on more solid financial ground as continuing to borrow is not the answer,” Gittens said. The territory received federal hurricane recovery and infrastructure improvement funds as well as millions from the Jeffrey Epstein estate settlement, he said. “Yet still our schools and roads are in worse shape than ever, retroactive wages have not been paid out and apparently now the Water and Power Authority cannot even afford diesel to keep the power on.”

As of September 2021, the government had $1.65 billion in bonds and notes payable, excluding WAPA debt. More recent information isn’t available because of the territory’s slowness in releasing annual comprehensive financial reports.

The governor declared an emergency in April so it could transfer the bulk of the territory’s reserve fund to WAPA so the authority could pay bills and make a bond payment.