Fiscal Insanity: If Only You Practiced What You Preached
Without swift, tough action from the Legislature, layoffs will be the least of our problems
Anyone remember these words?
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“I cannot support the further issuance of debt under the allusion that this will solve our problems. We must develop a comprehensive solution.” – Gov. John P. deJongh, Jr., 2007 State of the Territory Address
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We remembered this week when the governor’s financial team told the Senate that without another $100 million in borrowing that the government will run out of money by June.
In what has become a familiar tactic, the Senators heard hours of alarmist testimony concluding with a warning that the only answer is to swiftly approve the additional borrowing when the Governor sends down the bill.
If they don’t, we are told, services will halt and people will lose their jobs.
Let’s put aside for a moment the recent news about the near “junk bond” status of the existing debt. It may be folly to think the markets would extend any more credit even if the request was granted. Let’s not consider the fact that all the viable revenue streams, most visibly property taxes the government has chosen not to collect, are already committed to other expenses and the amount of revenues that are being collected are continuing to fall. And while we’re at it, let’s forget about the fact that for the past three years, appropriations have exceeded available revenue including this year FY 2010, when appropriations were $300 million higher than available resources.
Senators, stop this madness now. Here are the facts and the next steps and please note borrowing more money is nowhere on the list.
- The “hiring freeze” is a myth. We have shown evidence that high priced hiring has continued since the first of this year, into non-essential positions with high salaries. Every day we get reports of more positions being filled while an estimated $272 million in owed retroactive goes unpaid. Stop hiring. Period.
- Millions of dollars in funds are locked in appropriations for projects that have not begun. Release them immediately and apply them to operating expenses. Yes, it is that simple – we’re out of time for posturing about your pet projects.
- Stop playing games with the stimulus money.
- Demand an accounting from department and agency heads on how they are spending their lump sum budgets. Let them prove their departments are “stretched to their limits” as Office of Management and Budget Director Debra Gottlieb told the Senate.
- Quit pretending that the uncollected 2007-2008 property taxes are a factor in solving the financial crisis in this fiscal year. Even if the enormous bureaucracy at Revenue could manage to get the bills issued, the notion of collecting two years of back taxes in this economy is laughable.
- Cancel ALL non-essential (and we mean ALL non-essential) travel, meetings, conferences, catered lunches and other expenses immediately. And based on what we know about where you’re traveling and for what, that should eliminate just about all of it.
And, getting back to the Governor’s reference to “allusions” (should be illusions by the way), let this be the very last year, whoever sits in the Legislature, that a budget based on projections of non-existent, illusive revenues, is ever approved. Gottlieb told senators Monday that DeJongh based the 2010 General Fund budget proposal on anticipated revenues of $854 million – but the revenue projections revised again in January now stand at about $688 million. If this is a surprise, then the negligence in financial planning of this Administration is even worse than the current situation indicates.
The financial future of the Territory has already been mortgaged almost beyond recovery, thanks to the assignment of now uncertain cover-over revenues to Diageo. Should heightened political pressure force any downward revisions of the rebate formula by the US Congress, we can just about close the doors.
Senators, do what you can to salvage the present. Demand some answers on how our money is being spent and make the hard decisions about how to get us out of this mess.
If you don’t, the prospect of layoffs will be the least of our problems.
I’m with you, 1peacelover!