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INTRODUCTION 1 Welcome Message I am pleased to present to you, the United States Virgin Islands’ first Budget in Brief! The Budget in Brief is designed to give all citizens a brief overview of the Fiscal Year 2021 Proposed Budget and is provided to highlight the Government’s operating budget, revenue projections, and Federal grant budgets as well. This Budget in Brief continues Governor Bryan’s and Lt. Governor Roach’s commitment to transparency for the residents of the territory. This proposed budget has been developed by considering the mandatory costs for the Government’s day to day operations, the reduced revenues related to the COVID-19 Pandemic, and a commitment to providing efficient and effective services to the People of the Virgin Islands. The proposed total General Fund expenditures and reserves are $742.8 Million and is being supplemented by Non-Disaster Federal grants funding of $290.9 Million. In total however, the territory has access to over $5 Billion in Federal Funds to continue to address disaster related projects. The Government is committed to continuing to provide you with the services required and ensuring Public Safety and Capital Projects continue. Regards, Jenifer C. O’Neal U.S. Virgin Islands Fast Facts An unincorporated Territory of the United States. Governed by the Honorable Albert Bryan Jr., Governor and the Honorable Tregenza Roach, Esq., Lt. Governor The Territory is 133.6 square miles. Annual Budget Process Governor’s Cabinet Joss Springette Chief Negotiator Office of Collective Bargaining Steven G. Van Beverhoudt Inspector General, Office of The Inspector General Denise George Attorney General Department of Justice Col. Kodjo Knox-Limbacker Adjutant General National Guard Directors Commissioners Jenifer O’Neal Director, Office of Management and Budget Rupert Ross Director, Bureau of Information Technology Kyle Fleming Director, Energy Office Daryl Jaschen Director, Virgin Islands Territorial Emergency Management Agency Patrick Farrell Director, Office of Veterans Affairs Barbara McIntosh Director, Bureau of Motor Vehicles Wynnie Testamark Director Bureau of Corrections Daryl George Sr. Director Virgin Islands Fire Department Joel Lee Director, Bureau of Internal Revenue Dayna Clendinen Director, Division of Personnel Raymond Williams Director, Virgin Islands Lottery Ray Martinez Director, Law Enforcement & Planning Commission Kirk Callwood Commissioner, Department of Finance Anthony D. Thomas Commissioner, Department of Property & Procurement Joseph Boschulte Commissioner, Department of Tourism Gary Molloy Commissioner, Department of Labor Kimberly Causey-Gomez Commissioner, Department of Human Services Justa Encarnacion Commissioner, Department of Health Calvert White Commissioner, Department of Sports, Parks & Recreation Trevor Velinor Commissioner, Virgin Islands Police Department Nelson Petty, Jr. Commissioner, Department of Public Works Racquel Berry Benjamin Commissioner, Department of Education Richard Evangelista Commissioner, Dept. Of Licensing & Consumer Affairs Positive T.A. Nelson Commissioner, Department of Agriculture Jean Pierre Oriol Commissioner, Department of Planning & Natural Resources 2 DEMOGRAPHICS POPULATION Population's age structure is becoming more barrel-shaped than the typical pyramid shape in most societies, implying higher dependence ratios. According to 2018 estimates, 31% of the population is aged between 0 and 24, 32% of the population are in the cohort of 55 years and above, and only 36.87% is in the 24-54 years old cohort, the prime work-life group. The median age of the Territory, at 42.6 years, is one of the highest in the Caribbean, surpassed only by Puerto Rico. EMPLOYMENT STATISTICS The Territory had a labor force of 45,570 as of March 31, 2020, with 43,409 employed and 2,161 unemployed. In the month of April, unemployment applications soared due to the COVID induced shutdown of the economy starting in the latter part of March. The estimated number of unemployed in April is approximately 3,664. As can be seen, rates in both jurisdictions spiked in April. The US rate jumped to 14.7 percent, up from 4.4% in March, and the USVI rate increased from 4.7% to 8.4%. USVI STT STJ STX 2015 VIC Survey 100,768 48,425 3,841 48,502 DER Estimate 2018 96,211 46,321 3,910 45,980 0 20,000 40,000 60,000 80,000 100,000 120,000 BUDGET OVERVIEW 3 Proposed Budget FY2021 - $1.2 Billion FY2021 Proposed Federal Budget by Category Personnel Services, 43,050,163 Fringe Benefits, 20,851,605 Supplies, 11,488,083 Other Services, 205,723,367 Utilities, 911,991 Capital Outlays, 6,709,425 Miscellaneous, 2,171,916 FY2021 General Fund by Budget Category Within Fiscal Year 2021, even in light of significantly reduced revenue projections, highlights of the budget include the following: • $5 Million contribution to the budget Stabilization Fund • $1.5 Million in scholarships to local students pursuing secondary education • $1.475 Million in General Fund Capital Projects for the Department of Education • $7.2 Million in funding for Mental Health Services in the Department of Health for individuals with mental illness and those who are in, or at risk of entering, the justice system • $1.4 Million for VIPD for consent decree monitoring, use of force analysis, and other related expenses • $180,000 for Grove Place Weed & Seed Program (STX) and Bovoni Weed and Seed Program (STT) aimed at reduced gang activity in targeted communities • $400,000 to provide relief for veterans for medical expenses and death benefits payments • $290 Million in Non-disaster Federal Funds FY 2021 revenue projection is down 14.52% or a decreased by $126,140,188 from FY 2020’s Revenue projection. 742,779,823 44,219,112 2,893,437 8,500,000 4,515,000 - 2,386,390 7,220,174 11,000,000 14,168,392 - 500,000,000 1,000,000,000 General Fund Internal Revenue Matching Fund Government Insureance Fund Caribbean Basin Initiative Fund Tourism Revolving Fund Interest Earned on Debt Service Reserves Indirect Cost Fund Business Commercial Property Fund Transportation Trust Fund Other Funds Summary of Appropriations Personnel Services, 264,651,830 Fringe Benefits, 123,506,355 Supplies 11,508,122 Other Services, 173,637,291 Utilities, 450,000 Capital Outlays, 1,714,756 Miscellaneous, 167,311,469 $742,779,823 $290,906,550 REVENUES 4 In accordance with Title 33 Virgin Islands Code, chapter 81, section 2301, All real property of the Virgin Islands subject to taxation must be assessed at 100 percent of its fair market value as calculated by using the assessment methods. The Tax Assessor shall levy and collect on real property a tax at the mil rates for each classification of real property specified: Unimproved Non-Commercial Real Property (Land) 4.946 Residential Real Property 3.77 Commercial Real Property 7.11 Timeshare Real Property 14.07 Income Taxes 411,100,000 45.88% Other Taxes 258,776,617 28.88% Other Revenues 60,193,803 6.72% Transfers In 61,798,072 6.90% Transfers Out (76,634,649) -8.55% Other Financing Sources 27,545,980 3.07% Income Taxes Other Taxes Other Revenues Transfers In Transfers Out Other Financing Sources Residential, 3.77 Commercial, 7.11 Timeshare, 14.07 Land, 4.946 PROPERTY MILLAGE RATE REVENUE 379,800 199,200 4,800 51,300 43,000 - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Individual Income Gross Receipts Trade & Excise Corporate Income Real Property Top Five Revenue Categories (in millions) EXPENDITURES 5 No vacancies have been budgeted on the General Fund, effectively maintaining the GVI’s limited hiring for the foreseeable future. All personnel have been transferred from the Indirect Cost Fund and placed on the General Fund, with other Operating Expenses now being funded on the Indirect Cost Fund for relevant departments. PERSONNEL 205 Federally Funded Vacant Positions Filled Vacant FY 2020 5,920 792 FY 2021 5,793 205 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Total Personnel for Central Government Departments General Fund, 388,158,185 , 80% Federal Fund, 63,901,768 , 13% Other Local Funds, 33,371,228 , 7% PERSONNEL COST BY FUND 718,681,659 28,864,149 57,975,063 214,794,034 24,158,372 108,528,675 892,995,369 42,686,229 17,947,090 288,388,680 54,804,513 108,504,447 742,779,823 33,104,434 6,391,280 290,906,550 41,942,043 108,408,089 - 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000 General Fund Other Appropriated Funds Adj. Appropriation Federal Funds Non-Appropriated Funds Non-Appropriated Debt Service Three Year Expenditure Report 2021 2020 2019 6 FEDERAL GRANTS SUMMARY FEDERAL GRANTS 9,121,286 7,995,910 910,866 522,544 5,316,512 6,726,996 24,434,164 3,602,575 2,710,315 1,390,198 19,253,076 154,795,580 54,038,788 87,740 - 50,000,000 100,000,000 150,000,000 200,000,000 Department of Justice VITEMA V.I. Fire Service V.I. Energy Office Office of the Adjutant General Department of Labor Department of education V.I. Ploice Department Law Enforcement Planning Commission Department of Public Works Department of Health Department of Human Services Dept. of Planning & Natural Resources Department of Agriculture $290,906,550 COVID - 19 Funding Matrix Federal Agency Amount Allocated Federal Agency Amount Allocated Department of Interior - Office of Insular Affairs (DOI-OIA) $7,863,776 US Department of Health & Human Services (HHS) $9,045,889 FEMA Public Assistance $75,000,000 US Department of Labor (DOL) $1,822,007 FEMA DFA $0 US Department of Education (USDOE) $28,868,750 US Treasury $74,809,978 US Department of Homeland Security $275,913 Donations $1,100,000 US Department of Agriculture (USDA) $1,017,660 US Department of Homeland Security $269,282 US Department of Transportation (DOT) $43,018,681 US Department of Health & Human Services (HHS) $15,997,929 Independent Agencies $971,599 US Department of Justice $2,932,867 Housing and Urban Development (HUD) $3,958,937 Housing and Urban Development (HUD) $2,265,370 US Department of Commerce $1,000,000 Health Related Funding $180,239,201 Non-Health Related Funding $90,025,438 TOTAL COVID - 19 FUNDING MATRIX $270,264,639 COVID RELIEF • CORONA VIRUS RELIEF FUNDS: Received $74,809,978 • Continued distribution of $84 million in Stimulus Checks. • $270 Million in federal funds to battle the COVID-19 Pandemic to be expended by the end of the first quarter. • The Virgin Islands Department of Education received $19.9 million dollars from the CARES Act to address distance learning and other needs due to COVID-19. Capital 7 CAPITAL PROJECTS WHAT IS A CAPITAL IMPROVEMENT PROJECT? A capital improvement project is a physical asset that is constructed or purchased to provide, improve, or replace a public facility which is typically large in size and cost. The requirement for a project to be classified as a capital project is $100,000 or more. Budget Obligation Total Disbursed Available Funds Administration 12,134,200 9,874,068 4,174,246 7,959,953 Housing 72,000,000 6,214,833 488,548 71,511,450 Infrastructure 120,549,800 - - 120,549,800 Economic Revitalization 33,000,000 - - 33,000,000 Planning 5,000,000 5,000,000 1,940,438 3,059,651 - 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 Community Development Block Grant-Disaster Recovery MF BONDS, 10,110,929 , 3.14% GARVEE Projects, 91,000,000 , 28.23% GRT Bonds, 11,925,000 , 3.70% Community Facility Trust Fund, 1,192,500 , 0.37% VIPFA Schedule of Capital Projects, 185,405,356 , 57.53% Combined Capital Projects VIDE, 22,661,721 , 7.03% PFA Capital Projects $42.7 Million in Garvee Bonds projects for the following highways: Mahogany Road, Hams Bluff Road, Melvin Evans Highway, and Veterans Drive Capital DEBT SERVICE 8 PRINCIPAL ON DEBT SERVICE The Virgin Islands Public Finance Authority, on behalf of the Government of the United States Virgin Islands, through authorization from the Legislature of the United States Virgin Islands, has secured funding for the following working capital and long-term projects. Outstanding as of 4/30/2020 Principal Interest Total Internal Revenue Matching Fund 1,004,910,000 55,435,000 52,889,122 108,324,122 General Fund 842,825,950 33,235,228 30,899,421 64,134,649 1,004,910,000 55,435,000 52,889,122 108,324,122 842,825,950 33,235,228 30,899,421 64,134,649 Schedule Of Principal On Long -term Debt Internal Revenue Matching Fund General Fund 1,004,910,000 , 54% 842,825,950 , 46% Outstanding as of 4/30/2020 Internal Revenue Matching Fund General Fund 55,435,000 , 63% 33,235,228 , 37% Principal Internal Revenue Matching Fund General Fund 52,889,122 , 63% 30,899,421 , 37% Interest Internal Revenue Matching Fund General Fund 9 Acknowledgement Honorable Albert Bryan Jr. Governor Honorable Tregenza Roach, Esq. Lt. Governor Jenifer C. O’Neal Director, Office of Management and Budget The Office of Management and Budget Staff