V.I. is Not Only ‘Surviving,’ It is ‘Thriving,’ Bryan Says in Fourth SOT Address

Laying bare his administration’s accomplishments over the past three and a half years and setting the stage for the next four, Gov. Albert Bryan Jr. said the territory is not only “surviving,” in the aftermath of two hurricanes and an ongoing national pandemic, it “is thriving,” and plans are in the works to further deliver: solutions for the ailing Government Employees’ Retirement System, a fortified local medical workforce, crimefighting strategies and infrastructure developments to support a competitive economy.

“We have gained greater momentum each year we have been in office,” Bryan said in his fourth State of the Territory address before the V.I. Legislature Monday. “We have paid $96 million in income tax refunds. We have repaid the 8 percent payroll cut to the tune of $41.5 million. We have paid $10 million in retroactive wages owed to former public sector employees. We paid over $1 million to correct the pay owed to the National Guardsmen for their service following the 2017 storms. This is a total of almost $150 million in the past due to obligations, all paid from the Treasury of the U.S. Virgin Islands, without borrowing a dime. And that is what has been done only within the last 12 months, despite COVID-19.”

The governor also committed Monday to paying down within the current fiscal year at least 15 percent – or approximately $25 million – in retroactive wages owed to government employees since 1990. Working in conjunction with the Division of Personnel, Bryan said annual installments of $25 million will be made until the full debt is repaid.

Despite predictions of an economic downfall in 2020 as the pandemic hit its peak, the distribution of COVID-19 vaccines and implementation of local health protocols put the territory on a “narrow path” to recovery, with almost 95 percent of jobs lost regained, the unemployment rate falling from 13 to 8 percent, overnight tourism booming, and several capital and road projects either coming online or being completed, he added. In addition, the territory has received “sufficient” federal funds to “buttress” the pandemic-related revenue losses and expenditures over the next four years.

“Yes, we have challenges,” Bryan said. “But for the first time in a long time, we have the plans in place to address our challenges and, most importantly, the resources to implement those plans.”

Government Employees’ Retirement System

A bond restructuring and refinancing proposal rejected three times by the Senate is now in its fourth iteration, with the governor describing this latest attempt as a “great opportunity” to refinance the government’s debt at historically low-interest rates. The savings are meant to help stabilize the ailing Government Employees’ Retirement System, whose unfunded liability has surpassed $2 billion and is, as warned by its actuary, on the verge of collapsing on or before October 2024.

“If we continue the status quo until then, it is projected that employer and employee contributions will cover less than half of the projected benefits to be paid out. At that time, the shortfall will either have to be paid annually from the General Fund, or the pensions of the retirees in the System will be reduced,” the governor said.

The core elements of the proposal, which was submitted to the Senate at the end of December, are similar to the first three, using revenues generated by rum cover over receipts as the base of the transaction. The government would refund and restructure the outstanding Matching Fund bonds, resulting in reduced debt service payments and a dedicated stream of funds for GERS to meet its pension needs.

“We know that this issue keeps all of us up at night,” Bryan said. “Under the proposed scenario, financial stability would be returned to the GERS without any reductions to the pensions of retirees. Our success in this endeavor will also send a powerful signal to the financial markets that the U.S. Virgin Islands is getting its financial house in order. It does not ‘kick the can down the road,’ it crushes the can. It solves the GERS crisis for decades.”