Gov. Albert Bryan Jr. on Tuesday sent down a legislative proposal developed through collaboration between his office and the 34th Legislature to restore solvency to the Government Employees’ Retirement System, Government House reported.
The legislation will allow for the refinancing and restructuring of a significant portion of the debt of the government of the Virgin Islands at current market interest rates, to free up critically needed revenues to stabilize the GERS, according to a news release that Government House issued Tuesday evening announcing the proposal.
It is the third time the governor has floated a bailout plan.
In September 2020, the Senate narrowly passed in an 8-6 vote a heavily amended bill from the governor that sought to refinance the government’s bond debt at today’s lower interest rates, secured by the roughly $200 million it receives each year in federal alcohol excise tax revenues.
Those revenues, from rum produced in the territory and sold on the mainland, would have been placed under the control of a separate entity known as a Special Purpose Vehicle, or SPV, which would have been charged with selling the rights to the rum monies.
However, the measure was derailed when an action for preliminary injunction was filed in V.I. Superior Court on Sept. 22, 2020, by The Russell Law Firm of St. Croix on behalf of the Government Retirees United for Fairness, or GRUFF, and government retiree Hugh Clarke. The plaintiffs claimed that an amendment to Bryan’s bill violated the Revised Organic Act of 1954.
The injunction was dismissed with prejudice on Sept. 28, 2020, by Judge Douglas Brady, meaning the plaintiffs may not file again on the same merits, but it was too late to salvage the bond deal.
In December 2020, senators voted 10-5 against a bill to refinance the debt through a Matching Fund Securitization Corporation. Some senators at the time compared it to a homeowner refinancing their home at a lower interest rate, while others did not like that analogy for the complicated government financial procedure.
This time around, the Bryan administration has taken an admittedly more collaborative approach.
The GERS is forecast to become insolvent within the next few years, and the proposed legislation should finally address a problem that has vexed the territory for years, Tuesday’s release stated.