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The original documents are located in Box 54, folder “8/19/76 HR13359 Financial Assistance for the Virgin Islands” of the White House Records Office: Legislation Case Files at the Gerald R. Ford Presidential Library Copyright Notice The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United States of America his copyrights in all of his unpublished writings in National Archives collections. Works prepared by U.S. Government employees as part of their official duties are in the public domain. The copyrights to materials written by other individuals or organizations are presumed to remain with them. If you think any of the information displayed in the PDF is subject to a valid copyright claim, please contact the Gerald R. Ford Presidential Library. Exact duplicates within this folder were not digitized. MEMORANDUM FOR FROM: SUBJECT: THE WHITE HOUSE ACTION WASHINGTON Last Day: August 23 August 17, 1976 THE PRESIDENT JIM CANNON~ H.R. 13359 - Financial Assistance for the Virgin Islands Attached for your consideration is H.R. 13359, sponsored by Delegate de Lugo and thirteen others. The enrolled bill provides for the United States to guarantee not to exceed $61 million in bonds issued by the government of the Virgin Islands over the next three to five years to bring the Virgin Islands capital improvement program up-to-date; directs the Secretary of the Interior to grant the government of the Virgin Islands $8.5 million for operations; and authorizes the Virgin Islands Legislature to levy a 10% income tax surcharge. Additional discussion of the provisions of the enrolled bill is provided in OMB's enrolled bill report at Tab A. OMB, Max Friedersdorf, Counsel's Office (Lazarus), Bill Seidman and I recommend approval of the enrolled bill. RECO:l>1MENDATION That you sign H.R. 13359 at Tab B. Digitized from Box 54 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503 AUG 16 1976 MEMORANDUM FOR THE PRESIDENT Subject: Enrolled Bill H.R. 13359 - Financial assistance for the Virgin Islands Sponsors - Del. de Lugo (D) Virgin Islands and 13 others Last Day for Action August 23, 1976 - Monday Purpose Provides for the United States to guarantee not to exceed $61 million in bonds issued by the government of the Virgin Islands; directs the Secretary of the Interior to grant the government of the Virgin Islands not more than $8.5 million; and, authorizes the Virgin Islands Legislature to levy a 10 percent income tax surcharge. Agency Recommendations Office of Management and Budget Department of the Interior Department of the Treasury Department of Justice Discussion Approval Approval No objection Defers to Interior The Virgin Islands, an unincorporated territory of the United States, is comprised of three main islands covering 132 square miles plus some 50 smaller islands, and it has -2- a population of about 100,000. Other pertinent facts con- cerning the Virgin Islands are that: - it has a locally elected Governor and legislature (Congress can nullify laws passed by the legislature); - its citizens hold U.S. citizenship, elect a non- voting representative to the House, but cannot vote for the President; - its residents pay income taxes based on the Internal Revenue Code which are not covered into the u.s. Treasury, but go directly to the Virgin Islands govern- ment as a territorial tax; - its economy depends primarily on tourism, although several other industries, including one of the largest oil refineries (Hess) in the world, are present; and, - compared to the United States, it has a higher cost of living (by 25-30 percent), higher rate of infla- tion (about double), and a somewhat worse unemploy- ment rate (9 percent). A reduction in tourism of 25-30 percent, the reduced attractiveness of the Virgin Islands' free port status, a decline in revenues resulting from the Tax Reduction Act of 1975 and its extension, and an increasing demand for public services (school enrollment is up 65 percent since 1970, primarily due to a court ruling requiring that children of non-permanent alien residents be admitted to the public schools) , have all combined to place severe financial stress on the government of the Virgin Islands. With respect to the Virgin Islands' fiscal year 1976 and 1977 budgets, this has been translated by necessity into substantial tax increases, a serious curtailment of serv- ices including the dismissal of some 350 employees (3.6 per- cent of public work force), a hiring and wage freeze, and the transfer of almost all capital improvement funds into the operating budget. -3- Notwithstanding the drastic measures cited above, the fiscal year 1977 budget continues to carry a projected $8.5 million deficit under the government's $118.6 mil- lion austerity program (about a 20 percent reduction in real terms from the 1975 budget) . Because existing debt equals the statutory limit there is a bar to the govern- ment of the Virgin Islands seeking additional deficit financing. Consequently, earlier this year the Governor of the Virgin Islands sought financial assistance from the Federal Government. Subsequently, the Department of the Interior, with your approval, submitted a draft bill to the Congress which was designed to provide essential funds to the Virgin Islands until approximately $100 million annually in additional revenues becomes available to that government upon the termination of certain industrial tax exemptions between 1978 and 1981. Briefly, the key features of the Administration proposal included authorization for: - the government of the Virgin Islands to levy a sur- charge, not to exceed 10 percent, on future income taxes; $15 million in direct loans to the government of the Virgin Islands to supplement its operating budgets in fiscal years 1977 and 1978; - $61 million in direct loans budgeted over the next three to five years to bring the Virgin Islands long delayed capital improvement program up-to-date; - interest on both loans to equal the average yield of outstanding marketable obligations of the United States of comparable maturities with repayment to begin July 1, 1982 and be completed in 10 years; - the Secretary of the Interior to place any stipula- tions he deems appropriate on the loans; and, - repayment of the loans, if necessary, through deductions from the funds collected by the u.s. Government as excise taxes on goods produced in the Virgin Islands and returned to its government. -4- H.R. 13359, while consistent with the intent of the Admin- istration proposal, would provide financial assistance to the government of the Virgin Islands through somewhat dif- ferent devices. Specifically, the enrolled bill would: - authorize the government of the Virgin Islands to institute up to a 10 percent surcharge on future income taxes; - direct the Secretary of the Interior to make grants for operations to the government of the Virgin Islands not to exceed $8.5 million; - authorize the Virgin Islands Legislature to issue revenue bonds without regard to the present limita- tion that public indebtedness may not exceed 10 per- cent of the aggregate assessed valuation of the tax- able real property in the Virgin Islands; - authorize the Secretary of the Interior, with the approval of the Secretary of the Treasury, to guaran- tee bonds issued by the Virgin Islands Legislature for capital improvements in an amount not to exceed $61 million and subject to certain conditions -- income from bonds so guaranteed would be subject to Federal income taxes; - create a revolving fund within the Treasury for pay- ment of expenses under the Act and authorize the Secretary of the Interior to borrow from the Treasury (without further action by Congress) in the event of default on a guaranteed obligation and subsequently repay such Treasury borrowings from appropriations; - provide that all bonds issued under this Act shall have priority for payment of principal and interest out of excise taxes collected by the U.S. Government for the government of the Virgin Islands with any guaranteed bond having first priority. -5- In reporting on H.R. 13359, the Senate Interior Committee explained its rationale for the grant/loan guarantee approach: "The Committee decided that loans for opera- tions were inappropriate since the operations shortfall being experienced by the Virgin Islands is due, in part, to actions of the federal government. A grant was substituted as being a more equitable form of assistance. "The committee further believed that a loan guarantee approach would reduce direct Federal involvement in the financing of capital improve- ments ·and encourage fiscal responsibility." Although the enrolled bill takes a different approach in providing financial assistance to the Virgin Islands, we believe it would have essentially the same effect as the Administration proposal, and accordingly, we concur in Interior's approval recommendation. In fact, under the enrolled bill, Federal outlays will be limited to the $8.5 million operating grant funds, unless the Virgin Islands unexpectedly defaults on the guaranteed loans. Finally, we note that in order to ensure that the capital improvement funds are used most effectively, the Governor of the Virgin Islands has informally agreed to an Interior proposal for employing the Naval Facilities Engineering Command--Atlantic Division to act as contract administrator for capital improvement projects. Enclosures 9~'>'1.~23 )lssistant Director or Legislative Refere ce THE WHITE H0)JSE ACTION MEMORANDuM WASHlNG'rON LOG NO.: Da.te: t 17 Au gus FOR ACTION: Ma Friedersdorf Lazarus "11 "eidman Steve tcConahey Paul iteach rr FROM THE ST.AIT SECRETARY DUE: Date: l.t.lgU<zt J7 SUBJECT: , Time: Oam cc (for infc;rma.tion): Jack Marsh Jim Cavanauqh Ed Schmults Time: 1100 H.R. 13359-financial assistance for the Virqin Islands ACTION REQUESTED: -- For Necessa.ry Action __ For Your Recommendations -- Prepare Agenda. a.nd Brief __ Draft Reply --X For Your Comments Draft Remarks REMARKS: please return to judy johnston,qround ~loor west wing PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED. If you ha.ve a.ny questions or if you anticipate u delo.y in submitting ihe required material, pleas telephone the Stuff Secretary immediately. K. R. COLE, JR. For the President United States Department of the Interior Dea.r Mr. Lynn: OFFICE OF THE SECRETARY WASHINGTON, D.C. 20240 AUG : 31976 This responds to your request for the views of this Department on H.R. 13359, "To authorize the government of the Virgin Islands to issue bonds in anticipation of revenue receipts a.nd to authorize the guarantee of such bonds by the United States under specified conditions, a.nd for other purposes." We recommend tha.t the President approve the enrolled bill. H.R. 13359 would authorize the legislature of the Virgin Islands to issue new revenue bonds upon which the Virgin Islands may request a. federal guarantee. Section 2 of the bill sets forth certain determinations which must be made by the Secretary of the Interior before there can be a. federal guarantee of a.ny bond issue a.nd pro- vides tha.t the aggregate amount of guaranteed obligations may not exceed $61 million. H.R. 13359 a.lso authorizes a. grant of $8.5 million to compensate the Virgin Islands for the unexpected revenue loss occasioned by the Ta.x Reduction Act of 1975, a.nd it further allows the Virgin Islands to institute up to a. 10 percent surcharge on future income taxes • On April 7, 1976, this Department transmitted a legislative proposal to the Congress which authorized the granting of loans up to $15 million to supplement the operations budget of the Government of the Virgin Islands a.nd the granting of loans up to $61 million to assist in bringing the Virgin Islands' long-delayed ca.pita.l improve- ment program up to da.te. Our proposal a.lso provided authority for the Virgin Islands to levy a. ta.x surcharge of up to 10 percent on future income taxes • Although H.R. 13359 departs from our proposal by authorizing a grant program and a bond guarantee system of assistance to the Government of the Virgin Islands instead of a loan program, this Department has no objection to H.R. 13359 and recommends that the President approve the enrolled bill. Honorable James T. Lynn Director Office of Management and Budget Washington, D. c. 20503 THE GENERAL COUNSEL OF THE TREASURY WASHINGTON, D.C. 20220 Director, Office of Management and Budget Executive Office of the President Washington, D. C. 20503 Attention: Director for Legislative Reference Sir: AUG 1 3 1976 Reference is made to your request for the views of this Depart- ment on the enrolled enactment of H.R. 13359, "To authorize the government of the Virgin Islands to issue bonds in anticipation of revenue receipts and to authorize the guarantee of such bonds by the United States under specified conditions, and for other purposes." The enrolled enactment would authorize the Secretary of the Interior, with the approval of the Secretary of the Treasury, to guarantee up to $61 million of taxable obligations issued by the government of the Virgin Islands to finance public works or other capital projects. The Department would have no objection to a recommendation that the enrolled enactment be approved by the President. Sincerely yours, ( General Counsel .H:l ASSISTANT ATTORNEY GENERAL LEGISLATIVE AFFAIRS iltpurtmtnt nf Justitt 10as~iugtnu,1ll. <!1. 2U53U August 16, 1976 Honorable James T. Lynn Director Office of Management and Budget Washington, D. C. 20503 Dear Mr. Lynn: In compliance with your request, I have examined a facsimile of the enrolled bill H.R. 13359 "To authorize the government of the Virgin Islands to issue bonds in anticipation of revenue receipts and to authorize the guarantee of such bonds by the United States under speci- fied conditions, and for other purposes." The bill would provide for the issuance by the govern- ment of the Virgin Islands of bonds in anticipation of certain tax receipts and for the guaranty of those bonds by the United States. The subject matter of the bill is outside the com- petence of the Department of Justice. We therefore defer to the views of the departments more directly affected by the legislation (Interior and Treasury) as to whether the bill should receive Executive approval. Sincerely, a~~u~.~---:. Michael M. Uhlmann Assistant Attorney General Office of Legislative Affairs ~ I _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ • _ _ . . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ < THE WHITE .'JiO~USE • ACTION MEMORANDUM WASHINGTON',: .LOG NO.:· • Date: August 17 FOR ACTION: Max FrieqersWrf Ken Lazaru~ Bill Seidman Steve McConahey Paul Leach r FROM THE STAFF SECRETARY DUE: Date: August ]7 SUBJECT: Time: 930 am cc (for information): Jack Marsh Jim Cavanaugh Ed Schmults Time: llOOam H.R. 13359-financial assistance for the Virgin Islands ACTION REQUESTED: -· _ For Necessary Action __ . For Your Recommendations -- Prepare Agenda and Brief --Draft Reply --X For Your Comments --Draft Remarks REM'ARKS: . · please return to Judy johnston,ground floor west w~ng No objection -- Ken Lazarus PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED. If you have any qu<'stions or if you anticipate a delay in submitting the required material, please • I ---------------------'--------------·· THE WHITE .-:Ho:usE ' ACTION MEMORANDUM WASJllNOTOJC: .LOG NO.:· ' Dale: August 17 . . . / Time: 930 am FOR ACTION: Max Fried,ersdorf/l~~c (for infdrmalion): Jack Marsh Jim Cavanaugh Ed Schmults Ken Lazarus Bill Seidman Steve McConahey Paul Leach r FROM THE STAFF SECRETARY DUE: Dale: August 17 SUBJECT: Time: llOOam H.R. 13359-financial assistance for the Virgin Islands ACTION REQUESTED: -· - For Necessary Action --· For Your Recommendations -- Prepare Agenda and Brief --Draft Reply __x For Your Comments --Draft Remarks REM1\RKS: please return to judy johnston,ground floor west wing PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED. If you have any qut'stions or i£ you anticipate a delay in. submitting the required material, please ~-........ u t"nnnon ~ I ------------------~--------------- THE WHITE HG.USE ACTION MEMORANDUM WASJIINOTON',: .LOG NO.:· Date: 17 August FOR ACTION: Max Friedersdorf I Ken Lazarus_ ./ Bill Seidmay Steve McConahey Paul Leach r FROM THE STAFF SECRETARY DUE: Date: A11gust 17 SUBJECT: Time: 930 am cc (for information): Jack Marsh Jim Cavanaugh Ed Schmults Time: llOOam H.R. 13359-financial assistance for the Virgin Islands ACTION REQUESTED: -· - For Necessary Action --· For Your Recommendations -- Prepare Agenda and Brie£ -- Draft Reply ___x For Your Comments -- Draft Remarks REMARKS: please return to judy johnston,ground floor west wing PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED. If you havo any qut'stions or if you anticipate a delay in submitting the rttqui.rod material, ploase Cnnnon EXECUTIVE OFFICE; OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHI"!'GTON. O.C:. Z050! AUG 16 1976 I MEMORANDUM FOR THE PRESIDENT Subject: Enrolled Bill H.R. 13359 - Financial assistance for the Virgin Islands Sponsors - Del. de Lugo (D) Virgin Islands and 13 others Last Day for Action August 23, 1976 - Monday Purpose Provides for the United States to guarantee not to exceed $61 million in bonds issued by the government of the Virgin Islands; directs the Secretary of the Interior to gra~t the government of the Virgin Islands not more than $8.5 million; and, authorizes the Virgin Islands Legislature to levy a 10 percent income tax surcharge. Agency Recommendations Office of Management and Budget Department of the Interior Department of the Treasury Department of Justice Discussion Approval Approval No objection Defers to Interior. The Virgin Islands, an unincorporated territory of the United States, is comprised of three main islands covering 132 square miles plus some 50 smaller islands, and it has Attached document was not scanned because it is duplicated elsewhere in the document 94TH CoNGRESS } HOUSE OF REPRESENTATIVES { REPORT ~d Session No. 94-1080 AUTHORIZING LOAN FUNDS FOR THE GOVERNMENT OF THE VIRGIN ISLANDS, AND FOR OTHER PURPOSES APRIL 30, 1976.-Committed to the Committee of the Whole. House on the State of the Union and ordered to be printed Mr. HALEY, from the Committee on Interior and Insular Affairs, submitted the following REPORT [To accompany H.R. 13359] The Committee on Interior and Insular Affairs, to whom was referred the bill (H.R. 13359) To authorize loan funds for the govern- ment of the Virgin Islands, a:nd for other purposes, having considered the same, report favorably thereon without amendment and recom- mend that the bill do pass. PuRPOSE The purpose of H.R. 13359 is to authorize loan funds for the Gov- ernment of the Virgin Islands at a time of fiscal crisis confronting the territorial government. BAyKGROUND AND NEED The economic crisis in the Virgin Islands has been precipitated by a sharp drop in tourism, the Virgin Islands' largest industry, triggered by the worldwide recession and local disturbances. The situation was compoundeed by the Tax Reduction Act of 1975 (and its extension), with numerous tax reduction features which re- duced the revenues available to the Virgin Islands Government. The loss of revenues required a matching reduction in expenditures since the taxing authority and public indebtedness of the Virgin Is- lands is, by law, more greatly restricted than that of many states. It is clear that this legislation is necessary to stimulate the economy of the islands and allow the territorv to balance the operating budget at an acceptable level of services by fiscal year 1979. SECTION-BY-SECTION ANALYSIS Section 1 would amend the Act of July 12, 1921, to authorize the Government of the Virgin Islands to levy a surtax, not to exceed 10%, 57-0060 2 on the future income taxes payable to the Government of the Virgin Islands. Section 2 would authorize loa-ns up to a total of $15 million to sup- plement the operations budgets of the Government of the Virgin Is-. lands for their fiscal years 1977 and 1978. Section 3 would authorize $61 million in loans to bri:qg the Virgin Islands long-delayed capital improvement program up-to-date and allow the funding to be spread out over five years. Section 4 provides the conditions and repayment provisions for the loans authorized pursuant to sections 2 and 3. Amortization of the loans would begin July 1, 1982 and be paid back over 10 years, with interest equal to the average yield of outstanding marketable obliga- tions of the United States of com~rable maturities. These repayments may be made in the form of w1thholdings by the Secretary of the Treasury from U.S. CustoniS duties which would otherwise be return- able to the Virgin Islands. Section 5 provides that the Secretary of the Interior would be able to place any stipulations he deems appropriate on the loans to the U.S. Virgin Islands. Section 6 provides that no portion of the sums to be repaid by the Government of the Virgin Islands to the United States under Sec- tions 2 and 3 of this Act shall be considered to be public indebtedness of the Virgin Islands within the meaning of section 8 (b) of the Revised Organic Act of the Virgin Islands (68 Stat.I>OO; 48 U.S.C.1574(b)). Section 7 authorizes the Legislature of the Virgin Islands to initiate a referendum to approve or disapprove the amount of any loan under provisions of this Act, any item of expenditure for which such loan is requested, the aggregate amount of such loans in any fiscal year, or any combination of the foregoing. It is the intention of the Commit- tee that the Legislature may specify whether the results of such a referendum shall be advisory or binding. CosT AND BUDGET ACT CoMPLIANCE The provisions of H.R. 13359 involve loans to the Territory of the Virgin Islands which are to be repaid to the United States with interest begmning on July 1, 1982. In light of this fact, any budgetary impact will be nominal. INFLATIONARY IMPACT H.R. 13359 was introduced and recommended to meet emergency fi- nancial needs and to enhance the economy of the Territory of the Virgin Islands. No significant inflationary impact is anticipated as a result of the enactment ofthis legislation. ExECUTIVE CoMMUNICATION The favorable recommendation of the Department of the Interior regarding legislation comparable to H.R. 13359 follows: 3 u.s. DEPARTMENT OF THE INTERIOR, OFFICE OF THE SECRETARY' Washington, D.O., April 7, 1976. Hon. CARL B. ALBERT, Speaker of the HmUJe of Representatives, Washington, D.O. DEAR MR. SPEAKER: Enclosed is a, dra,ft bill "To authorize loan funds for the Government of the Virgin Islands and for other :purposes." . 1Ve recommend that the bill be referred to the appropnate Commit- tee for consideration and that it be enacted. At present there is a fiscal crisis confronting the territorial Govern- ment of the Virgin Islands. This crisis is due to the state of the eco- nomy and government revenue collection capability. To~rism-the largest industry and major contributor to the gross domestic produ~t of the Virgin Islands-has decli~ed over .the past tJ:ree years. This decline was caused by the worldw1de recessiOn, local disturbances, and the reduced attraction of the islands' freeport status. The lat~r was the result of the devaluation of the U.S. dollar and the lowering of traiff barriers on the mainland United States. The decline in tourism precipitated the reduction of public revenues from th~s industry. In addition to this revenue decline, the Tax ReductiOn Act of 1975 (and the amendment which extended it) with ~ts rebate provisions, negative income tax, liberalized investment credit:', and other ta;x: ~­ duction features, further reduced the revenues available to the V1rgm Islands Government. The purpose of the Tax Reduction Acts was to sti~ulate the eco- nomy. "\\'bile this was achieved in the continental Umted States, the Acts had the opposite result in the Virgin Islands. In practice, under the Tax Re~uction Acts, people would have more money to ~nd, which would 1m:prove the demand for goods and services. Th1s would have a multiplier effect on the economy, and thus it would improve. Such was true in the United States. However, most of the goods and services in the Virgin. Islands. c~me from the. con- tinental United States. The new money m the V1rgm Islands qmckly went to the mainland without improving the Virgin Islands economy. Estimated losses of Virgin Islands Government revenues as a result of these Acts approximate $15 million. The loss of government reve!lues mean~ a correspon?-ir:g reduction in expenditures. Smce the taxmg authority an~ puibhc mdebtedness of the Virgin Islands is, by law, far more re."!triCted than that of the U.S. Government or many Sta,tes, the Virgin Islands cannot compen- sate for the loss of revenues. At the beginning of fiscal year 1976 the revenues p_rojected for the Government of the Virgin Islands exceeded $132 million. Proposed expenditures for government operating costs . w~re ~qual .t? tha,t amount That revenue ·amount included $20 milhon m antimpated receipt~ from custom duties on petroleum products imported into the United States from the Virgin Islands. However, the Department of Justice has ruled that there is no legal authority in the U.S. to make these payments, and thus, they are not available. Actual receipts for 4 th~ ~rst half of fiscal year 1976 suggest maximum receipts of $92.5 Imlh~n from al~ taxes, fees ~nd fin~, including moneys co1lected from hosp~tal op':'lrattons. Executive actiOn such as reducmg expenditures and I~c~easmg revenues yiel~ed a balanced ~udget of $117~1 million. Tlus mcluded the transfer mto the operatmg budget of capital im- provement funds in exeess of $25 million, a severe curtailing of govern- ment ser~ices, and a personnel reduction of 346 employees. The gov- ernment IS the primary employer in the Virgin Islands and the rate of unemployment prior to the government 1ayoJ}' already exceeded 9% of the work force. . In the areas of health and education these reductions have been most pronounced. The reductions in health personnel required reducing the number of hospital beds and limited the service capwbility of the Virgin Islands' two hospitals. The schools are understaffed and over crowded. In 1970 the school sys~~ a?mitted _all. non-citizen (alien) school-age children legally res1dmg m the V1rgm Islands. The enrollment increase since then has been 58.3%, with a serious im_eact on education services. To m~t ~ts service responsibilities to its citizens, the Government ~f the V1rgm Isla~ds h!"S, from 1971 through 1975, deferred $31 mil- ho~ worth of cap1t~ Improvement projects to make these moneys a:vallable fo~ ~per!l'tmg _expense.s. W1t~out financial relief, an addi- tional $30 nnlhon m cap1tal proJects will have to be deferred in fiscal years 1976 and 1977. This is a total of $61 million for the period fiscal years 1971 through 1977. The ~vernment of the Virgi~ Islands needs legislation and Fed- er!l-1 assistance thr~ugh loans to stimulate the economy. Such assistance will allow the territory to balance the operating budget at an accept- able level of services by fiscal year 1979. The attached draft bill would deal with the effects of the Tax ~eduction Acts and the deferred capital improvements projects. Sec- bon 1 would amend the Act of July 14,1921, to authorize the Govern- ment of th~ Virgin Islands to levy a surtax, not to exceed 10%, on the future mcome taxes payable to the Government of the Virgin Islands. The 1921 Act provides that the income tax laws in force in the United States shall be likewise in force in the U.S. Virgin Islands, e~cei>t that the P,roceeds of Virgin Islands taxes shall be paid into the V1rgm Islands 'lreasury. This amendment would enable the Govern- ment of the Virgin Islands to respond to changes in the income tax laws. of the United States. Along with the present estimated $15 million ~oss m revenues, the Virgin Islands expects to lose $5 million annually m future revenues under the Tax Reduction Acts. Sect4on 2 would authorize loans up to $15 million to supplement the operatiOns budgets of the Government of the Virgin Islands for their fiscal years 1977 and 1978. Their operating expenditures for fiscal year 197~ amounted to $117 million; fiscal year 1976 expenditures are proJected at $117.1 million. The Government of the Virgin Islands has pr~posed an austerity budget of $118.6 million for fiscal year 1977 but estimates revenues at only $110.1 million. There is a shmtfall of $8.5 million. Given the effects of inflation and past cuts in expendi- tures, government services am already at unacceptably low levels. A loan of $15 million would allow the balancing of local 1977 and 1978 budge.ts at a(lCeptabe levels of services. These loans for operations taken together with the economic recovery stimulated by the capital improve- ment program loans proposed in section 3 would result in increased revenue collections by the governmen~. It vmuld then _be capable of balancing its fiscal year 19!9 b,udge~ ~Ith~ut further a~1stance. . . Section 3 would authonze $61 million mloans to brmg the V1rgm Islands long-delayed capital improvement pr?g~am to-date. How quickly these funds are requested for appropr1a~10~ w depend upon review of proposals by the Government of the V1rgm Islands, however the legislation would allow the funding to be spread out over fiye years. The Virgin Islands cannot borrow for non-revenue producmg pur- poses under the Revised Organic Act of th~ Virgin Islands. 'l;'hu~, if the capital improvement program is to be Implemented at th1s time, the Virgin Isl·ands will need a Fede~l loan. . . Section 4 would provide the conditions. and repayment proy1s1?ns for the loans authorized pursuant to sections 2 and 3. Amortization of the loans would begin July 1, 1982 and be paid back over 10 years, with interest equal to the average yield of outstandin~ ~rketable obligations of the United States of cOJ;nparable matu~t1~ In our judgment, since funds will bec?m~ ava1l~ble to the V·I~gin ~slands through the expiration of certam mdustnal tax exemptiOns m 1978 and 1981 the government will be readily able to amortize any debt incurred through this provision. It is anticipated that after 198_1 ~he Government of the Y.irgin Islands will benefit from up to $100 milhon annually in additional revenues due to the expiration of these exemp- tions. Under section 5 of the draft bill, the Secretary would be able to place any stipulations he deems appropriate on the loans to the U.S. Virgin Islands. The Office of Management and Budget has ad vised that there is no objection to the prese~tation of this legislative proposal from the standpoint of the Administration's program. Sincerely yours, JoHNKYL, Assistant Se(ffetary of the Interior. A bill to authorize loan funds for the Government of the Virgin I!llands and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Oongress assemlJled, That Chapter 44, Section 1, of the Act of July 12, 1921 ( 42 Stat. 123 48 U.S.C. 1397) is hereby amended by striking the period at the end thereof and insert- jug in lieu thereof t·he following language: ": Pro-vided further, That notwithstanding any other provision of law, the Legislature of the Virgin Islands is authorized to levy a surtax on all taxpayers in an amount not to exceed ten percentum of ~he~r annual income tax obligation to the Government of the VIrgin Islands." SEc. 2. There is hereby authorized to be appropriated to the Secre- tary of the Interior $15,000,000 to be paid as loans to the Government of the Virgin Islands to be used for operating expenses. SEc. 3. (a) The purpose of this Section is to provide the Virgin Islands with funds for the construction of necessary public works, including the acquisition of real property . 6 (b) There is authorized to be appropriated to ~he Secretary of t~e Interior not to exceed $61,000,000 to carry out .th~ purposes .of this Section to be paid to the Government of the VIrgm Islands m such sums a~ may be requested by the Governor of the Virgin Islands with the concurrence of the territorial legislature and approved ~y the Sec- retary of the Interior, and such moneys as may be appropriated shall be avai-lable until June 30, 1980. Funds appropriated pursuant t~ t~is Section shall also be available for use by the Government of the VIrgm Islands to permit the Virgin Islands to qualify for participation in Federal programs relating to public works and community develop- ment for which the Virgin Islands is otherwise eligible. SEc. 4. Repayment of the loans under Sections 2 and 3 of this Act shall commence no later than .Tune 30, 1982 in such amounts as the Secretary of the Interior estimates will reimburse the United States, with interest as set forth below, over a period of ten years. These re- payments may be made in the form of withholdings by the Secretary of the Treasury from sums collected pursuant to section 7652(b) of Public Law 83-591 (68A Stat. 907, 26 U.S.C. 7652(b)) as amended, before such sums are transferred to the Government of the Virgin Islands. The foregoing amounts, until reimbursed to the United States, shall bear interest beginning on the date when the moneys are ad- vanced, at a rate determined by the Secretary of the Treasury, takirrg into consideration the average yield on outstanding marketable obli- g-ations of the United States of comparable maturities as of the last day of the month preceding the advance, adiusted to the nearest one- eighth of 1 per centum. Adl sums so withheld shall be deposited in the Treasury of the United States as miscellaneous receipts. SEc. 5. The Secretary sh~ll place sueh stipulations as he deems ap- propriate O" any loans to the Virgin Islands pursuant to Sections 2 ann 3 of this Act. SF.c. 6. No portion of the sums to be repaid by the Government of the Virgin Islr>nns to the United States, as provided for in section» 2 and 3 of this Act, shall he considered to be publie indebtedness of the Virgin Islands within the mean in~ of seetion 8 (b) of the Revised Organie Act of the Virgin IPlan(Ji:; (68 Stat. 500, 48 USC 1574(b) ). CHANGES IN ExiSTING LAw In compliance with clause 3 of Rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill. as re- ported, are shown as follows (existing law proposed to be omitted is enclosed in blaek brackets. Pew matter is printed in italies, existing law in which no change is proposed is shown in roman) : AcT OF JuLY 12, 1921 ( 42 STAT. 123; 48 U.S.C. 1397) Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the following sums are appropriated, out of any money in the Treasury not other- wise appropriated, for the naval service of the Government for the year ending June 30, 1922, and for other purposes: 7 GENERAL EXPENSES The Seeretary oi the Navy shall send to Congress at the beginning of its next regular session a complete schedule or list showing the amount of money of all pay and for all allowanees for each grade of officers in the Navy, including retired officers, and for all officers in- cluded in this Act and for all enlisted men so included. PAY, MISCELLANEOUS For commissions and interest; transportation of .funds; exchange; mileage to officers of the Navy and Naval Reserve Force while trav- eling under orders in the United States, and for actual personal expenses of officers of the Navy and Naval Reserve Force while trav- eling abroad under orders, and for traveling expenses of civilian em- ployees; and for mileage, at 5 cents per mile, to midshipmen entering the Naval Academy while proceeding from their homes to the Naval Academy for examination and appointment as midshipmen; .for actual traveling expenses of female nurses; actual expenses of officers while on shore patrol duty; hire of launches or other small boats in Asiatic waters; for rent of buildings and offices not in navy yards; expenses of courts-martial, prisoners and prisons, and courts of in- quiry, boards of inspection, examining boards, with clerks, and wit- nesses' .fees, and traveling expenses and costs; expenses of naval defense districts; stationery and recording; religious books; news- papers and periodicals for the naval service; all advertising for the Navy Department and its bureaus (except advertising for recr~its for the Bureau of Navigation); copying; ferriage; tolls; costs of smts; commissions, warrants, diplomas, and discharges; relief of vessels in distress; recovery of valuables from shipwrecks; quarantine ex- penses; reports; professional investigation; cost of special instruction at home and abroad, including maintenance of students and attache~; information from abroad and at home, and the collection and classi- fication thereof; all charges pertaining to the Navy Department and its bureaus for ice for the cooling of drinking water on shore (except at naval hospitals) , and not to exceed $250,000 for telephone rentals and tolls, telegrams and cablegrams ; postage, .foreign and domestic, and post-office box rentals; and othe_r necessary a:nd incidental e?'-- penses; Provided, That no part of this appropriatiOn shall be avail- able for the expense of any naval district unless the commandant thereof shall be also t~ commandant of a navy yard, naval training station, or naval operating base: Provided further, That the sum to be paid out of this apl?ropr~ation, :under the direction of th.e S~retary of the Navy, for cleriCal, mspectwn, and messenger serviCe m navy yards and naval stations, .for the fiscal year ending June 30, 1922, shall not exceed $750,000, and for necessary expenses for the interned persons and prisoners of war under the jurisdiction of the Navy De- partment, including funeral expenses for such interned persons or prisoners of war as may die while under such jurisdiction, and for payment of claims for damages under Naval Act approved July 11, 1919; in all, $3,500,000. . . CoNTINGENT, NAVY: For all emergenCies and extraordmary ex- penses, exclusive of personal services in the Navy Department or 8 any of its subordinate bureaus or offices at Washington, District of Columbia, arising at home or abroad, but impossible to be anticipated or classified, to be expended on the approval and authority of the Secretary of the Navy, and for such purposes as he may deem proper, $50,000. TEMPoRARY GOVERNMENT FOR WEST INDIAN IsLANDS: For expenses incident to the occupation of the Virgin Islands and to the execution of the provisions of the Act providing a temporary government for the West Indian Islands acquired by the United States from Denmark, and for other purposes, approved March 3, 1917, to be applied under the direction of the President, $343,440 : Provided, That no person owing allegiance to any country other than the United States of Amer- ica shall be eligible to hold office as a member of the colonial councils of the Virgin Islands of the United States nor to hold any public office under the government of said islands: Provided further,·That the in- come tax laws now in force in t:Jhe United States of America and those which may hereafter be enacted shall be held to be likewise in force in the Virgin Islands of the United States, except that the proceeds of such taxes shall be paid into the treasuries of said islands. EXPENSES, CIVILIAN NAVAL CONSULTING BOARD: For actual expenses incurred by and in connection with the civilia.n naval consulting board, inCluding the services of one clerk, at $1,400 per annum, for duty in connection with the board at Washington, District of Columbia., $5,000. AviATION, NAVY: For aviation, to be expended under the direction of the Secretary of the Navy, as follows: For aircraft and accessories in course of construction or manufacture on June 30, 1921, $440,000; for new construction and procurement of aircraft and equipment, $5,323,000; for navigational, photographic, and aerological equip- ment, including repairs thereto, for use with aircraft built or building on June 30, 1921, $49,~50; for maintenance, repair, and operation of aircraft factory, helium plant, air stations, fleet activities, testing laboratories, and for overhauling of planes, $4,534,181; for continuing experiments and development work on all types of aircraft, $1,615,000; for drafting, clerical, inspection, and messenger service for aircraft stations, $275,000; new construction, buildings, and improvements at air stations at a total cost not to exceed $1,177,000, as follows: Coco Solo, $392,000; Hampton Roads, $70,000; Lake- hurst, $280,000; Pearl Harbor, $185,000; Pensacola, $100,000; San Diego, $150,000; in all, $13,413,431, and the money herein specifically appropriated for "Aviation" shall be disbursed and accounted for in accordance with existing laws as "Aviation" and for that purpose shall constitute one fund: Provided furtheT, That the Secretary of the Navy is hereby authorized to consider, ascertain, adjust, determine, and pay out of this appropriation the amounts due on claims for damages which have occurred or may occur to private property grow- ing out of the operations of naval aircraft, where such claim does not exceed the sum of $250: Provided {urtheT, That all claims adjusted under this authority during any fisca year shall be reported in detail to the Congress by the Secretary of the Navy: PTovided, That no part of this appropriation shall be expended for maintenance of more than six heaVIer-than-air stations on the coasts of the continental Unite'd 9 States: Provided further, That no part of this appropriation. shall be used for the construction of a factory for the manufacture of airplanes. STATE MARINE scHOOLS: To reimburse the State of New York, $25 000 the State of Massachusetts, $25,000, the State of Washington~ l;>25'ooo' and the State of Pennsylvania, for the period from April1, 1920 ~ June 30 1921, $31,250, for expenses incurred in the main- tena~ce and support of marine schools in those States in accordance with section 2 of the Act entitled "An Act for the establishment ?f mar~ne schools, and for other purposes," approved March 4, 1911 ; m all, $106,250. . CARE oF LEPERS l!.'TC. ISLAND OF GuAM: Naval station, Island of GQam : Maintenan~e and care of lepers, special patients, and for. other purposes including cost of transfer of lepers from Guam to the Island of Culio~, in the Philippines, and their maintenance, $20,000. BUREAU OF NAVIGATION TRANSPORTATION AND RECRUITING: For travel allowance of enlisted men discharged on account of expiration of enlistm~nt ; transpox:ta- tion of enlisted men and apprentice seamen and applicants for enhst- ment at home and abroad, with sub~istence a~d transfe~ en route, or cash in lieu thereof; transpoxtahon to their hofi;les, If reside~ts of the United States, of enlisted men and apprentice seamen dis- charged on medical survey, with s~bsisten?e and. transfers. en route, or cash in lieu thereof · transportation of SICk or msane enhsted men and apprentice seame~ to hospitals, with subsistence a_nd transfers en route or cash in lieu thereof; transportation of enhsted men of the Nav~l Reserve Force to and from duty, with s'!-bsisten~e. a:nd transfers en route, or cash in lieu thereof; transportatiOn of ClVIhan officers and crews of naval auxiliaries; apprehension and delivery of deserters and strq.gglers, and for railway ~i~es and other expenses incident to transportation; expenses of rec~mt~n~ for the naval serv- ice; rent of rendezvous and expenses of mamtammg the same; adver- tisip.g for and obtaining men ·and apprentice seamen; a:ctual and necessary expenses in lieu of milea.ge to officers on duty w~th travel- ing recruiting parties; transportation of dependents of enhsted men, $W,500,000. . The Bureau of Navigatio.!.b Navy Department, is hereby d~rec!ed to furnish to the prqper:. (jficers in the several States, Terntones, insular possessions, ~tad · tfte District of Columbia, on or before October 31, 1921, statements of the services of all persons from those several places who served in the Navy during the War with Germany, and for that purpose exclusively an additional sum not to ex~d $25,000 is hereby appropriated for obtain!ng the necessary matenal a.nd the e.rhployment of the necessary clencal force. 1h:cRE~TlON FOR ENLISTED MEN: For the recreation, amusement, comfort, contentment, and health of the Navy, to be expende~ in the discretion of the Secretary of the Navy, under such regulations as he rna~ prescribe: Provi..ded, That not more than two persons shall be employed hereunder at a rate of compensation exceeding $1,800 per annum, $800,000. CoNTINGENT: Ferriage, continuous-service certificates, discharges, good-conduct badges, and medals for men and boys; purchase of gym- H. Rept. 94·1080 --· 2 10 nas_tic apparatus; transportation of effects of deceased officers and e~hsted men of the Navy, and of officers and enrolled men of the Nava~ Reserve Force who die while on duty; books for training a - prentice seamen ~~;nd landsmen; packing ·boxes and materials· boob and .mode}~; stationery; !lnd other contingent expenses and emer- genCies arismg under cognizance of the Bureau of Navigation unfore- seen and impossible to classify, $20,000. ' GuNNERY A~D ENGINEERING EXERCISES : Prizes, trophies, and badges for excellen~ m gunnery, tar~t practice, engineering exercises, and for economy m fuel consumptiOn, to be awarded under such rules as ~he Secreta!'Y of the. N ~vy may f?~mulate; for the .Purpose of print- mg, reoordmg, classlfymg, compllmg, and publishmg the rules and results; for the establiShment and maintenance of shooting galleries target houses,. targets_, and ranges; for hiring established ranges, and for transportmg eqmpment to and from ranges, $100,000. INSTRUMENTS AND SUPPLIES: Supplies for seamen's quarters· and for the purchase of all other articles of e9uipage at home and abr~ad ·and for the payment of. labo~ in equippmg vessels therewith and ~ann­ facture of such artwles m the several navy yards· all pilotage and towage of ships of war; canal tolls, wharfage, dock' and port char~ and other necessary incidental expenses of a similar nature· serVI~ and materials in repairing, cor!'ecting, .adjusting, and testing com- passes on shore and on board sfup; nautical and astronomical mstru- ments and .repairs to same; libraries for ships of war professional ~k~, schoolbooks, and papers; maintenance of gunn~ry and other tr!lmmg classes; compasses, compass fittings, including binnacles, tnp~s, and other appendages ?f ship's compasses; logs and other appliances for ~easurmg the ship's way, and leads and other appli- an<;es for ~u!ldmg; photographs,. photographic instruments and ma- t.enal~, prmtmg outfit and matenals; and for the necessary ciVIlian electriciaiiS for gyrocompass testing and inspection, $750,000. OcEAN AND LAKE SURVEYS: Hydrographic surveys, including the pay of the necessary hydrographic surveyors, cartographic draftsmen and recorders, and for the purchase and printing of nautical books' charts, and sailing directions, $105,000. ' NAVAL TRAINING STATION, CALIFORNIA: Maintenance of naval train- ing ~ation, Y erba Buena Island, California: Labor and material; bmldmgs and wharves; general care, repairs, and improvements of grounds, buildings, and wharves; wharfage, ferriage, and street car fare; purchase and maintenance of live stock, and attendance on same; wagons, carts, implements, tools, and repairs to same; fire engines and extinguishers; gymnastic im.Plements; models and other articles nee.ded in instruction of apprentice seamen; printing outfit and ma- terials, and maintenance of same; heating and lighting; stationery, ~ooks, schoolbooks, a~d periodicals; fresh wa~r, and washing; pack- mg boxes and materials; and all other contm~ent expenses; main- tenance of dispensary buildings; lectures and suitable entertainments for apprentice seamen; in all, $125,000. NAVAL TRAINING STATION, RHODE IsLAND: Maintenance of naval training station, Rhode Island, labor and material, buildings and wharves; dredging channels; extending sea walls; repairs to cause- way and sea wall; general care, .repairs, and improvements of grounds, buildings,,_ and wharves; wharfage, ferriage, and street car fare; pur- 11 chase and maintenance of live stock, and attendance on same; wagons, cllil'ts, implements, and tools, .repairs to same, including the mainten- nance, repaiT, and operation of two horse-drawn passenger-carrying vehicles to be used only for official purposes; fire engines and ex- tinguishers; gymnastic implements; models and other articles needed in instruction of apprentice seamen; printing outfit and materials, and maintenance of same; heating and lighting; stationery, books, school- books, and periodicals; fresh water, and washing; packing boxes and materials; and ·all other contingent expeiiSes; lectures and suitable enteltainments for apprentice seamen; in $185,000: Provided, '.Dhat the sum to be paid out af this appropriatioh under the direction of the Secretary of the Navy for clencal, drafttng, inspection, and mes- senger service for the fiscal year ending June 30, 1922, shall not exceed $15,701.60. NAvAL TRAINING STATIAN, GREAT LAKES: Maintenance of naval training ~ation : Labor and material; general care, Tepairs, and improvements of grounds, buildings, and piers; street car fare; purchase and maintenance of live stock, and alttendance on same; • wagons, carts, implements, and tools, and repairs to same, including i • the maintenance, .repair, and operation of one horse-d·rawn passenger- ) carrying vehicle to be used o!}ly for official purposes; fire apparatus and extinguishers; gymnastic implements; models and other articles needed in instruction of apprentice seamen ; printing out fit and material, and maintenance of same; heating and lighting, and repairs to power-plant equipment, distributing mains, tunnel, and conduits; stationery, books, schoolbooks, and periodicals; washing; packing boxes and materials; looj;ures and suitable entertainments for apprentice seamen; and all other contingent expenses: Provided, '.Dhat the sum to be paid out of this appropriation under the direction of t;he Secretary of the Navy fOT clerica1, draftillJr, inspection, and messen~r service for the fiscal year ending J.une 30, 1922, shall not exceed $45,000; in .an, naval training station, Great Lakes, $400,000. To make just compensation for land, title to which was taken over under proclamation of the President, dated November 4, 1918, as an addition to the naval tl'l\ining station, Great Lakes, Illinois, and for damages occasioned by delay in the payment for such land, or fOT 1 the use and occupancy thereof by the United States, $546,805, or so much thereof as may be necessary: Provided, That t!he Secretary of\M'te Navy is authorized, in his discretion, to dispose of, at public or private sale, at a price to be approved by him, any land in the vicinity ef the Navy Mine Depot, Yorktown, Virginia, and the naval tJraining station, Great Lakes, lllitois, and East Camp, Hampton Roads, Virginia, or interes~ th~~' title to, or interest in which has been acquired by the U~ed. l!lates subsequent to April 6, 1917, also any improvements that liave been placed thereon by the Un~ted States that are deemed by 'him to be no longer needed for naval purposes: Provided furtker, That in cases where oompensa.tion has IIJl.1 as yet been made by the United States in accordance with the Jftbvisions of lfl'l, then, and in that event, the Secretary of the Navy is hereby authorized to restore such lands to former owners, and is further authorized to ascertain, determine, ad.iust, and pay the just compensation that such former owners are entitled to receive for tJhe 1 use and oooupa~cy af suoh lands by the United States, such compen- sation to be paid from appropri-ations made for payments for such 12 la!l~: Provided furl~, That the Secretary of the Navy, in deter- nunmg the compensation for the use and occupancy of such lands is authorize?,. in his discretion, to sell and convey, under such te~s and co~d1t1ons as he may deem appropriate, to the parties entitled to rece1ve the lan_d such improvements or any part thereof as may have been placed moron sa1d lands by the United States: Provided further, That the Secretary of the Navy be, and he is hereby author- Ized to ex~ute all necessary instruments to accom~lish the purposes of aforesa1d, and all ~oneys received from the diSposition of suoh lands shall be covered mto the Treasury as "miscellaneous receipts." Report shall be made to the Congress of the final disposition of the lands aforesaid. NAVAL TRAINING STATION, NAVAL OPERATING BASE, HAMPTON RoADS VmGINI~: ~.aintenance of naval ~raining station at naval operatrng base, V1rg~ma: Labor and material, general care, repairs, and im- provements; schoolbooks; and all other incidental expenses: Provided That the sum to be paid out of this app_ropriation. und~r the ~irectio~ of the Secretary of the Navy for clerical, draft1ng, 1nspectw11, and messenger serVlce for the fiscal year ending June 30, 1922, shall not exceed $25,000; in all, $375,000. NAVAL RESERVE FoRCE: For expenses of organizing administering an~ recruiting the Naval Reserve Force and Naval Militia· forth~ -':fial!ltenance and rental of armories, including the pay of ~ecessary Jamtors, and f<!r wh!'rfa~e, $50,000: Provided, That no part of the money appropriated m th1s Act shall ·be used for the tra:ining of any member of the Naval Reserve Force except with his own consent. RECEIVING BARRACKS: Maintenance of receiving barracks, $50,000. NAVAL WAR CoLLIDE, RHoDE IsLAND: For maintenance of the Naval War. College on qoasters Harbor Island, including the maintenance, rep&Ir, a.nd operatiOn of one horse-drawn passenger-carrying vehicle to be used o~y for official purpose~; and care of ground for same, $82,- 750; services of a professor of mternational law $2 000 · services of civili~n lecturers,_ render~ at t~e War College, $i,200; ca're and pres- ervatiOn of the hbrary, mclu_d1~ the purchase, binding, and repair of books of reference and ·periOdiCals, $5,000: Provided That the sum to be paid out of this appropriation under the directio~ of the Secre- tary_ of the Navy for cleric'!-1, inspection, drafting, and messenger serviCe for the fiscal year endmg June 30, 1922 shaH not exceed $50- 000; in all, Naval War College, Rhode Island, '$90,950. ' NAVAL HOME, PHILADELPHIA, PENNSYLVANIA, PAY OF EMPLOYEES: Secretary, $2,200; foreman mechanic, $2,200; superintendent of grounds,_ $1,080; steward, ~1,2~; store laborer, $660:i matron and offi?8 assistant, $720; benefiCiaries' attendant, $480 ; chief cook, $660 ; ass1stant cooks-one $540: one $480; laundresses-chief $420. five at $360 each; scrubbers-chief $420, three at $360 each; waitresseS-head $480, ten at $360 each; kitchen attendant, $540; laborers-two at $840 each, four at $720 each, one $660, five at $600 each, five at $540 each; stable keeper· and driver, $660; master at arms $900 · two house cor- porals, at $600 each; barber, $600; carpenter,'$1,200; painters-one $1,200, one $1,020; engineer, $1,080; chauffeurs-one for ~oal truck $960, one for small truck $840, one for governor's car $840; electrician, $1,400; stenographers and typewriters-two at $1,400 each. one $1,200. one $1,000;. telephone opentor, $900; total for employees, $47,280. · 13 MAINTENANCE: Water rent, heating, and lighting; cemetery, burial expe~, and lleadstones; general care and. improvements of grounds, bm1dmgs, walls, and fences; repairs to power-plant equipment, im- plements, tools, and furniture, and purchase ot the same; music in chapel. and entertainments for beneticiaries; stationery, books, and periodiCals; transportation of indigent and destitute beneficiaries to the Naval Home, and of sick and insane beneficiaries, their attendants, and necessary subsistence for both, to and from other Government hos- pitals; employment of such beneficiaries in and about the Naval Home, as ~ay be authorized by the Secretary of the Navy, on the recommen- datiOn of the governor; support of beneficiaries, and all other contin- gent expenses, including the maintenance, repair, and operation of o~e horse-drawn passenger-carrying vehicle, two motor-propelled ve- hicles, and one motor-propelled passenger-carrying vehicle, to be used only for official purposes, $110,366; In all: Naval Home: $157,646, which sum shall be paid out of the income from the naval pension fund. BUREAU OF ORDNANCE O~NANCE :AND <;JRDNANCE sTORES: ~or procuring, producing, pre- servmg, and haHdhng ordnance material; for the armament of ships, :fpr fuel, material, and labor to be used in the general work of the 6rdnance Department; for furniture at naval ammunition depots, ~orpedo stations, naval ordnance plants, and proving grounds; for mamtenance of proving grounds, powder factory, torpedo stations, gun factory, ammunition depots, and naval ordnance plants, and for target practice; for the mamtenance, repair, or operation of horse- drawn and motor-propelled freight and passenger carrying vehicles, to be used only for official purposes at naval ammunition depots, nav~l proving grounds, naval ordnance plants, and naval torpedo statiOns, and for the pay of chemists, clerical, drafting, inspection, and messenger service in navy yards, naval stations, naval ordnance plants, and navy ammunition depots: Provided, That the sum to be paid out of this appropriation under the direction of the Secretary of the Navy for chemists, clerical, drafting, inspection, watchmen, and messenger service in navy yards, naval stations, naval ordnance plants, and naval ammunition depots for the fiscal year endinu June 30, 1922, shall not exceed $2,000,000; in all, $14,000,000. e Purchase and manufacture of smokeless powder, $200,000. ExPERIMENTs, BuREAU oF ORDNANCE : For experimental work in the develop:qtent of armor-piercing and other projectiles, fuses, powers, and -.\¥gh etplosives, in connection with problems of the attack of armour with direct and inclined fire at various ranges, including the purchase of armour, powder, projectiles, and fuses for the above pur- poses and of all necessary material and labor in connection therewith ; and for other experimental work under the cognizance of the Bureau of Ordnance, in connection with thl) development of ordnance mate- rial for the Navy, $250,000. CoNTINGENT, BuREAU OF ORDNANCES: For miscellaneous items, namely, cartage, expenses of light.and water at ammunition depots and stations, tolls, ferriage, technical books, and incidental expenses attfPding inspecti9n of ordnance material, $20,000. 14 That no pa1t of the appropriations heretofore, herein, or hereafter made for "Increase of the Navy" under the Bureau of Ordnance and no part of allotments of appropriations heretofore or hereafter made to said bureau shall be available for the payment for services or materials used in the construction of any shop, building, living qua1ters, or other structures, except such temporary structures cost- ing not in excess of $5,000 each as may be incident to current work of said bureau, or for additions and betterments to any existing shore station facilities unless the appropriation shall in terms specifically authorize such construction or additions and betterments: Provided, That nothing herein shall be construed as interfering in any way with any existing contract or any work in progress on the date of the approval of this Act: Provided further, That hereafter no money appropriated for ordnance or ordnance material or material purchased therewith shall be used for any other purpose than that for which the appropriation was made: Provided further, That nothing herein shall be construed as preventin~ the allocation of armor, armament, am- munition, ordnance material, equipment, and accessories to ships ac- cording to the requirements of the naval service. BUREAU OF YARDS AND OOCKS MAINTENANCE, BuREAU OF YARDS AND DocKs: For general main- tenance of yards and docks, namely, for books, maps, models, and drawings; purchase and repair of fire engines; fire apparatus and plants; machinery; operation, repair, purchase, maintenance of horses and driving teams, carts, timber wheels, and all vehicles, including motor-propelled and horse-drawn passenger-carrying vehicles to be used only for official purposes, and including motor-propelled vehi- cles for freight-carrying purposes only for use in all navy yards and naval stations; tools and repair of the same; stationery; furniture for Government houses and offices in navy yards and naval stations; coal and other fuel; c-andles, oil, and gas, attendance on light and power plants; cleaning and clearing up yards and care of buildings; attend- ance on fires, lights, fires engines, and fire apparatus and plants; incidental labor at navy yards; water tax, tolls, and ferriage; pay of watchmen in navy yard'S; awnings and packing boxes; ·pay for em- ployees on leave, and for repairs and preservation at navy yards, fuel depots, fuel plants, and stations, $7,500,000: Provided, That the sum to be paid out of this appropriation under the direction of the Secre- tary of the Navy for clerical, inspection, drafting, messenger, and other classified work in the navy yards and naval stations, except similar expenditures in the Bureau of Yards and Docks, for the fiscal year ending June 30, 1922, shall not exceed $1,300,000: Provided fur- ther, That no part of any appropriation contained in this Act shall be used for the purchase of passenger-carrying automobiles: Provided further, That expenditures from appropriations contained in this Act for the maintenance, operation, and repair of motor-propelled passenger-carrying vehicle, includirrg the compensation of operators, shall not exceed $175,000, exclusive of such vehicles owned and oper- ated by the Marine Corps in connection with expeditionary duty without the continental limits of the United States: Provided fur- ther, That,_during the fiscal year ending June 30, 19'22, operators of 15 motor vehicles who were carried on the rolls of other bureaus prior to July 1, 1920, shall be continued to be so carrie-d where their employ- ment shall be found necessary. CoNTINGEN~, BUREAU ?F YARns. AND DocKs: For contingent ex- penses and mmor extensiOns and Improvements of public works at navy yards and stations, $150,000. PUBLIC WORKS, BUREAU OF YARDS AND DOCKS . NA':'Y YARD, NEw YoRK, NEw YonK: Toilet facilities at shipbuild· mg shps, $40,000; dredging, to continue, $100,000; in all, $140,000. . The expenditure of the appropriation of $750,000 for water front Improvements navy yard, New York, New York, contained in the Na':'al Appropriation Act for the fiscal year 1919, is hereby suspended until July 1, 1922. NAvY YARD, PHILADELPHIA, PENNSYLVANIA: Dry Dock Numbered 3, to complete, $200,000. . NAVY YARD, NonFOLK, VIRGINIA: Water-front improvements, to con- tmue, $250,000. NAVY YARD, CHARLESTON, SoUTH CAROLINA: Dredging, to continu~ $40,000. NAvAr, STATION, GuANTANAMo, CURA: Additional distilling facili- letion of a submarine base, $800,000, no part thereof to be expended unless the Secretary of the N a.vy shall first ascertain that the break- water already begun can be successfully completed and made perman- ent with this amount. NAVAL STATION, GuANTANAMo, CuBA: Additional distilling facili- ties, $75,000. NAvY YARD, MARE IsLAND, CALIFORNIA: Maintenance of dikes and dredging, $175,000; improv~ments to central power plant, $150,000; in all, $.325,000. NAVY YAUD. PuoET SouND, 'YASHINGTON: For srrading, filling, and sea-wall construction, $250,000 ; keel blocks for Dry Dock Numbered 2, $6,500; extension of building numbered 178, $13,500; roadways and sidewalks, $25,000; pier five, rebuilding and extending $715,000; telephone improvements, $10,000; pattern shop exteneion, $90,000; fifty-ton dry-'dock crane, $200,000; additional storage facilities, $95,- 000; in all, $1,405,000. NAVAL STATION, PEARL HARBOR. HAWAII: Addition to machine shop, $200,000; electric-system extensions .. $85,000; water-front develop- ment, $450,000; improvements to coaling plant, $75,000; compressed- air system extension, $15,000; additional storage facilities, $200,000; in all, $1,025,000. NAVAL AMMUNITION DEPOT, PL:ol.'T SouNo. WAsHINGTON: Exten· sion, building numbered seven, one hundred and fifty feet, $25,009·. NAVAL AMMUNITION DEPOT, MARl'' IsLAND, CALIFORNIA: Addttion to magazine and shell house, $100,000. NAVAL AMMUNITioN DEPOT, PEARL HARBOR, HAWAII: For additional storage facilities, $177,000. DEPOTs FOR COAL: For depots for coal and other fuel: Contin~tent, $50,000; care and custody of naval petroleum reserves, $10,000; in all, $60,000. NAVAL OPERATING BASE, HAMPTON RoADs, VIRGINIA: Motor gen- erator set, $20,000 . 16 MAIUNE BARRACKs, SAN DIEGo, CAUFORNIAj: Toward the further development of the Marine Corps base, $500,000. NAVAL BAsE, SAN Dmoo, CAUFORNIA: Stonehouse at foot of Broad- way, to complete, $200,000. NAVAL HOSPITAL, SAN DIEGo, CALIFORNIA: Tl;e Secretary of the Navy is hereby authorized and directed to contmue and to enl.arge the construction of the naval hospital being erected at San Drego, California, on land donated to the United.States and ac?epted by the Secretary of the Navy under the authonty conveyed m the Naval Act of July 11, 1919, at a total cost ~ot t~ exceed $1,~75,000, and $500,000 is hereby appropriated to contmue rts co~structron. . Submarine ~ase, Coco Solo, Canal Zone: Gradmg and dramage, $40,000. .. . . . Submarine base, Pearl Harbor, Hawan: Additional prers, $100,000; battery-charging installation, $50,000; in all, $150,000. TRAINING STATION, SAN DrF..Go, CALIFORNIA: To compl~te t~e development of a permanent training station, San Diego, Cahforma, $100,000,000. . . Total public works, $7,032,000, and the amounts herem approprrated therefor shall be available until expended. BUREAU OF MEDICINE AND SURGERY MEDICAL DEPARTMENT: For surgeon's necessaries for vessels in commission, navy yards, naval stations, and Mari~e Corps; and for the civil establishment at the several naval hospitals, nflVY yards, ~, naval medical supply depots, Naval ~fedical School and Dis ensary, 'V ashington, and Naval Academy, $2,920,000 : Provided, the sum to be paid out of this appropriation, under the direction of the Secretary of the Navy, for clerical service in naval hospitals, dispen- saries, medical supply depots, and Naval Medical School, for the fiscal year ending June 30, 192-2, shall not exced $150,000. CoNTINGENT, B-uREAU OF MEDICINE AND SuRGERY: For· tolls and ferriages; care, transportation, and burial of the dead, including. offi- cers who die within the Unite..d States, and supernumerary patients who die in naval hospitals; purchase of cemetery lots; purckase of books and stationery, binding of medical records, unbound books, and pamphlets; hygienic and sanitary investigation and illustration; sanitary, hygienic, and special instruction, including the printing and issuing of naval medical bulletins and supplements; purchase and repairs of nonpassenger-carrying wagons, automobile a:r.:tbulance.<;, nnd harne&.'l; purchase of and feed for hol'Ses and cows; mamtenance, repair, and operation of two passenger-carrying motor .vehicles for naval dispensary, Washington, District of Columbia, and of one motor-propelled vehicle for official use" only for the medical offl.cer on out-patient medical service at the Naval .Academy, and a motor om- nibus for the transportation of convalescent patients and attend- nuts at the Naval Hospital at Las Animas, Colorado, to be used only for official purposes ; trees, plants, care of grounds, aarden tools, and seeds; incidental articles for the Naval Medical School and naval dispensary, Washington, naval medical supply depots, sick quarters at Naval Academy and marine barracks; washing for medical de- partment at Naval Medical School and naval dispensary, Washington, 17 naval medical supJ?lY dep~ts, sick quarters at Naval Acad~my and "' marine barracks dispensaries at navy yards and naval statiOn~, ~~d ships· and for rrrlnor repairs on buildings an~ grounds of the Uruted ' Sta~ Naval Medical School and naval med1~l ~upply depot~; rent of rooms for naval dispensary Washington, District of Columbia, not to exceed $1,200; for the ~~·e, maintenance, an~ treatme~t of ~he insane of the Navy and Manne Corps on th~ Pacific coast, m?luding supernumeraries held for transfer to the Go~ernment Hospital for the Insane · for dental outfits and dental matenal, and all other neces- sary conti~gent expenses; in all, $500,000. . C • .utE oF HOSPITAL PA'riENTS: For the care, mamtenance, and treat- ment of patients, including supernumeraries, in naval and other than naval hospitals, $100,000. BUREAU OF SUPPLIES AND ACCOUNTS PAY oF THE NAVY : Pay and allowances pr~s~ribed by law of officers on sea duty and other duty, and officers on. wa1tmg orders, $37,02:?,8?9: Provided That hereafiter each new midshipman shall, upon adnnssron to the N ~val Academy, be credited with the sum of $250 to cover the cost of his initial clothing and equipment issue, to be ded~cted su~­ quently from his pay: Provided further, That the foregomg J?rOVISO shall apply to midshipmen who entered the Naval Academy dur~g the period between June 20, .1921, and the date of the a_pproval of th1s Act; officers on the retired hst, $3,113,771; commutatiOJ?. of quarters ~or officers, including boatswains, gunners, carpenters, sa1lmakers, mac~m­ ists, pharmacists, pay clerks, and mates, naval constructors, and assist- ant naval constructors, $4,254,192, and also members ~f Nu_rse Corps (female) $1 000; for hire of quarters for officers servmg With troops where th;re ~reno public quarters belonging to the Government, and where there are not sufficient quarters possessed by the United States to accommodate them or commutation of quarters not to exceed the amount which an officer would receive were he not serving with troops, and hire of quarters for officers and enlisted men on sea duty at such times as they may be deprived of their quarters on board .ship ~ue to repairs or other conditions which may render them unmhab1table, $25,000; pay of enlisted men on the retired list, $620,250; e~tra pay to men reenlisting under honorable discharge, $4,390,800; mterest on deposit by men, $10,000; pay of petty officers, seamen, landsmen, and apprentice seamen, including men in the engineer's force and men detailed for duty with the Fish Commission, enlisted men, men in trade schools, and pay of enlisted men of the Hospital Corps, $77,- 034,687; pay of enlisted men undergoing sentence of court-martial, $655,000; and as many machinists as the President may from time to time deem necessary to appoint; and apprentice seamen under train- ing at training stations and on board training ships, at the pay pre- scribed by law, $2,294,136; pay of the Nurse C'orps, $688,608; rent of quarters for members of the Nurse Corps, $29,000; retainer pay and active-service pa;y: of members of the Naval Reserve Force, $7,000,000; payment of $60 discharge gratuity, $465,000; reimbursement for losses of property under Act of October 6, 1917, $10,000; payment of six months' death gratuity, $200,000; in all, $137,815,303 ; and the money herein specifically appropriated for "Pay of the Navy," shall be dis- , ' 18 bursed and a~ounted for in accordance with ~xisting law as "Pay of the Navy," and for that purpose shall constitute one fund.: Provided That retainer pay provided by existing law shall not be paid to any member. of the Naval Reserve Force who fails to train as provided by law durmg the year for which he fails to train. PRoVISIONs, NAVY: For provisions and commuted rations for the seamen al\_d marines, which comm~ted rations may be paid to catez:ers of messes fn case of death or desertiOn upon orders of the commandmg o~~rs, commuted rations. for officers on sea duty (other than com- m~ssiOned offic:ers of ~he hne, Medi~l and Supply Co;ps, cha~l9:ins, ch~ef boatswams, chief gunners, chief carpenters, chief machmtsts chief pay . clerks, and chief sailmakers) and midshipmen, and com~ muted rations. stopped on ~ount of sick in hospital arid credited to the ~val hospital fund; su'bsistence of officers and men unavoidably ~etam~ or a~nt from yessels to which attached under orders ( dur- mg which subsistence mtwns to be stopped on board ship and no credit for ~mmu~tion therefor to be given) ; subsistence of m~~ on detac?ed duty, subsistence of officers and men of the naval auxiharv service· bs. -., ' su. Istence of members of the Naval Reserve Force during period of active service; expenses in handling provisions and for subsistence of f~le nurses an~ N ayy a~d Marine ;Corps geneml courts-martiaJ. p~soners undergoing Impnsonment with sentences of•dishonora:bl( di~rge from the service at the expiration of such confinement 1 Pr~ided, That the Secretary of the Navy is authorized to commute rations f~r such gene~ courts-martial prisoners in such 8Jllounts as seem to him proper, which may vary in accordance with the location of the naval_prison, but which shall in no case exceed 30 cent:6 per diem for each ration so commuted; and for the purchase of l{nited States. Anny e.r;nergency rations as required; in all, J$21,9'25,922.50, to be avail-~ able until the close of the fiscal year ending June 30, 1923. MAINTENANCE, BumJ4u. 9! SuPPLIES A.l'm AccouNTS: Fpr fuel; the removal~ and transportatiOn of ashes and garba~ from ships of war; .books, ))lan.ks, _and st~~,tionery, including statidnery 'for com- mandmg and n~vigatmg.officers of ships, chaplains on shore and afloat and for the use of cou~-mart;ial ?n board ships; purchase, re_{>air; ~nd ~xchan~e of typewriters.for ships; packing boxes and matenals· mteno~ fittmgs for ge11~ral 'Storeho~~' pay offices, a.nd accountind · ' offices m. navy yards;. expenses of (;hsbtirsmg officers; coffee mills and repair thereto; expenses of naval clothing factory\ an9, machin- ery . .for the same; laboratc1ry equipment; purchase of articles of eqmpage_ at home and abroad under the cognizance of th6'.Bureau of Supplies ~d Accou11ts, and for the pa~ent of labor in ~uipping vessels therewith, ~nd t~e manufacture of. such articles in the several navy yards; musical mstrume~ts and music; mess outfits; soap on board naval vessels; athletic outfits·. tolls ferriages yeomen's • stores, safes, a.nd other ·incidental expen~s; labor in gen'eral store- houses, payma~rs' o~ces, and accourtting offices in navy yards and ";&Val ststwns, mcludmg naval ~tations maintained in island posses- sions under the control of the Umted States, and expenses in handling stores purchased and . manu~actured under "General account of advan~," and the ~unting offices of the Treasury are authorized and directed to credit "'Geneml account of advances" with the amount of ~the net losses which may be certified by the Paymaster t ' .. ' 19 General of the Navy as having been incurred in disposing of excess · stocks in the naval supply account; and reimbursement to appro- priations for the Department of Agriculture of cost of inspection of meats and meat-food products for the Navy Department: Provided, That the sum to be paid out of this 111ppropriation, under the direc- tion of the Secretary of the Navy, for chemists and for clerical, inspection, and messenger service in the SUpJ?lY and accounting departments of the navy yards and naval statiOns and disbursing offices for the fiscal year ending June 30, 1922, sh111ll not exceed $3,500,000; in all, $9,000,000. The clothing and small-stores fund shall be chlftiged with the value of all issues of clothing and small stores made to enlisted men and apprentice seamen reqmred as outfits on first enlistment, not to exceed $100 each, and for civilian clothing not to exceed $15 ~r man to men given "discharge for bad conduct, for undesirability, or maptitude, and the uniform gratuity paid to officers of the Naval Reserve Force. FREIGHT, BUREAu OF SUPPLIES AND AccoUNTS: All freight and ex- press charges pertaining to the Navy Department and 1ts bureaus, except the transportation of coal for the Bureau of Supplies and Accounts, $4,000,000. . FuEL AND TRANSPORTATION : Coal and other fuel for steamers' and ships' use, including expenses of transportation, storage1 and handling the same; maintenance and general operation of machinery of naval fuel depots and fuel plants; water for all purposes on bo¥d naval vessels; and ice for the cooling of water, mcluding the eXpense of transportation and stor~ of both, $17,500,000: Provided; That $1,000,000 of this appropriation shall ·be available for use, in the dis- cretion of the Secretary of the Navy, in minjng coal or contracting for the same in Alaska, the transportation of the same and the con- struction of coal bunkers and the necessary docks for use in supplying ships therewith; and the Secretary of the Navy is hereby authorized ., to select from the public coal lands in Alaska such areas as may be necessary for use by him for the purposes stated herein. BUREAU OF CONSTRUCTION AND REPAffi CoNSTRUCTION AND REPAIR oF VESSELS: For preservation and comple- tion of vessels on the stocks and in ordinary; purchase of materials and stores of all kinds; steam steerers, steam capstans, steam wind- lasses, and all other auxiliaries; labor in navy yards and on foreign stations; purchase of machinery and tools for use in shops; carrying on work of experimental model tank and wind tunnel; designmg naval vessels; construction and repair of yard ~raft, lighters, and barges; wear, tear, and reJ?air of vessels afloat; genernl care and protection of the Navy in the lme of construction and repair; incidental expenses for vessels and navy yards, inspectors' offices, such as photographing, books, professional magazines, plans, stationery, and mstruments for drafting room, and for pay of classified force under the bureau· for hemp, wire, iron, and other materials "for the manufacture of cordage, anchors, cables, galleys, and chains; specifications for purchase thereof shall be so prepared as shall give fair and free competition; canvas for the manufacture of sails, awnings, hammocks, and other work ; interior appliances and tools for manufacturing purposes in navy yards and . •. 20 naval stations; and for the purchase of all other articles of equipage at home and abroad; and for the payment of la:bor in equipping ves- sels therewith and manufacture of such articles in the several navy yar{l.s; naval signals and ~ppa~us, other than electric., namelyt sig- nals, lights, lanterns, runnmg hghts, and lamps and their appen.ctages for general use on boat:d ship for. illumina~ing purposes; and !>II and candles used in connection therewith; buntmg and other matenals for making and repairing flags of all kinds; for all perm!lnent gallery fittings and equipage; rugs, carpets, curtains, and hangings on board naval vessels, $22,500,000: Provided, That the amount of money to be expended from the appropriation "Construction and repair of vessels_,~ for the restoration, preservation, and maintenance of the naval b!"lg !nagara in the city of Erie, Pennsylvania, including the construct!on. of suitable facilities for anchoring said vessel and properly preservmg it for historical purposes shall not exceed $10,000: Provzded further, That the sum to 'be paid out of this approJ?riation, u~der. the di~­ tion of the Secretary of the Navy, for cleriCal, draftmg, mspection, watchmen (ship keepers), and messenger service In navy yard§, naval stations, and offices of superintending naval constructors for the fiscal year ending June 30, 1922, shall not exceed $3,450,000. BUREAU OF ENGINEERING ENGINEERING: For repairs, preservation, and renewal of machinery, auxiliary machinery, and boilers and naval vessels, yard. craft, and ships' boats, distilling and refrigerating apparatus; repairs, prese~­ vatwn, and renewals of electric interior and exterior signal commum- catiors and all electrical appliances of whatsoeyer nature on l?<>ard nava ~essels, except range finders. battle orders fmtl range transmitte~ and indicators, apd motors and their controlling app~ratus used to operate machinery belonging to other bureaus; searchh~hts and .fire- control equipments for antiaircraft defense at short statwns; f!ai:pte- ~ nance and operation Qf coast signaJ service, includ~ng not to e~ceed $2,500 for the purdiBSe of land. necessary for radio shore stations; ,, equiJ?age, sdppHes, and materials uiJ.der the cogn:lzaf\Ce of the bureau reqmred for the inai:Qtenance and operation of naval vessels, yard craft, and ships' boa'ts; purchase, installation, repair, and f:l,rest>rvation of machinery, tools, and appliances in.pavy yards and stationl'l. pay of classified force under the bureau; incidental expenses ~or n11:val vessel~, navy yards, and !?tations, inspectors' offices, the engineermg experi- ment station, such as photographing, technical bOoks and period'icalc;, , stationery, and in~trwnents; in~truments and apparatus, supplies, and ., • technical books and periodicals necessary to carry on experimental and research work in radiotelegraphy at the naval radio laboratory: Pro- vided, That the sum to be pa'id out of this appropriatit>n, under 'the . direction of the .Secretary of the N.a.vy, for clerical~ drafting, in·' spection, and m~ge service in naval yards, naval'lstations, a'nd offices of the United States inspectors <>f machinery and engineering material for the ·fiscal year ending June 30, 1922, shall not exceeld $2 500,000 ; in all, engineering, $20.500,000. ENGINEERING, EXPERIMENT STATION, UNITED STATES NAVAL AcADEMY, ANNAPOLIS~ MARYLAND: For original inveStigation and extended experimentation of naval appliances, testing implements 21 and apparatus; purchase and installation of such machines ~nd auxiliaries considered applicable for test and use in the naval serv1ce, and for maintenance and equipment of buildings and grounds, $225,000. NAVAL ACADEMY PAY, NAvAL AcADEMY: Pay of professors and others, Naval Acad- emy: Pay of professors and instructOrs, including one professor as librarian, $385,000; One swordmaster, $1,900; a.ssistan~ne $1,700, one $1,500; head master in physical training, $2,200; instructors in physical training- one $2,100, two at $2,000 each, seven at $1,900 eac.h; assistant librarian, $2,500; cataloguer, $1,800; two shelf assistants, at $1,400 each; secre- tary of the Naval Academy, $3,000; clerks-two at $2,100 each, two at $1,900 each, two at $1,800 each, nine at $1,600 each four at $1,400 each, twenty-three at $1,300 each, seven at $1,200 each i repair men or seamstress, $1,000; surveyor, $1,700; services of choirmaster and organist at chapel, $1,700; captain of the watch, $1,600; second captain of the watch, $1,500; thirty watchmen, at $1,400 each; five telephone switchboard operators, at $840 each; mail messenger, $1,200; m all, $161,600; In all, pay of professors and others, Naval Academy, $546,600. DEPARTMENT OF ORDNANCE AND GUNNERY: For leading ordnance- men, ordnancemen, ordnance helpers, electricians, and other em- ployees, $20,658. DEPARTMENTs OF ELECTRICAL ENGINEERING AND PHYSICS : For elec- trical machinists, mechanics, laboratorians, and other employees, $19,431.{)4. . DEPARTMENT oF SEAMANSHIP: Three coxswains, at $1,176.88 each; three seamen, at $1,001.60 each; two seamen, at $826.32 each; in all, $8,188.08. DEPARTMENT OF MARINE ENGINEERING AND NAVAL CONSTRUCTION: For master machinists, assistants, pattern makers, boiler makers, blacksmiths, machinists, molders, coppersmiths, who shall be con- sidered practical inStructors of midshipmen, and oth~ employees, $55,914.32. ' CoMMISSARY DEPARTMENT: For chief clerk and purchasing agent, chief cook and cooks, steward and assistant stewards, stenographers, typists, head waiters and assistant head waiters, head paiitrymen, chief baker and bakers, butchers, truck chauffeurs, moohanicians for repair of tniCks, firemen, seamstresses, and necessary pantrymen, butcher's helpers, baker's helpers, waiters, co:ffeemen, dish pantry- men, utility men, linen men, laundrymen, scullions, and other un- skilled and unclassified occupations, wages to be detennined by the Superintendent of the Naval Acadt>my and in no case to exceed $75 per month in case of unskilled and unclassified employees, $238,415.99: Provided, That no employer paid under the provisions of this para- graph shall receive a salary in exct>ss of $2,000. DEPARTMENT OF BUILDINGS AND GROUNDS: One messenger to super- intendent, $1,001.60; necessary building attendants, $145,436.80; in all, $146,438.40. In all, civil establishment, $1,035,645.83. 22 CuRRE).'T AND MISCELLANEOus EXPENSF..s, NAVAL AcADEMY: Text and reference books for use of instructors; stationery, blank books and forms, models, maps, and periodicals; apparatus and materials for instruction in physical training and athletics; expenses of lectures and entertainments not exceeding $1,000, including pay and expenses of lecturer; chemicals, philosophical apparatus and instruments, stores, machinery, tools, fittings, apparatus, and materials for instruc- tion purposes, $110,000. Purchase, binding, and repair of .books for the library ~to be pur- chased in the open market on the written order of the supermtendent), $2,500. For expenses of the Board of Visitors to theN a val Academy, $3,000. For contingencies for the superintendent of the academy, to be expended in his discretion, $3,000. For contingencies for the commandant of midshipmen, to be ex- pended in his discretion, $1,200. In all, current and miscellaneous expenses, $119,700. MAINTENANCE AND REPAIRs, NAVAL AcADEMY: For general main- tenance and repairs at the Naval Academy, namely: For necessary repairs of public buildings, wharves, and walls inclosing the grounds of the Naval Academy, improvement~, repairs, and fixtures; f?r ~o~s, periodicals, maps, models, and drawmgs; purchase and repa1r of f!.re engines; fire apparatus and plants; machmery ; purchase and mam- tenance of all horses and horse-drawn vehicles for use at the academy, including the maintenance, operation, and repair of three horse-drawn passenger-carrying vehicles. fu be used only for o~cial purpos~; seeds and plants; tools and repairs of the same; statlo~ery; !nrmtu~ for Government buildings and offices at the academy, mcludm.g furniture for midshipmen's rooms; coal and other fuels; candles, ml, and gas; attendance on light and power plants ; cleaning and clearing up. sta- tion and care of buildings; attendance on fires, lights, fire engines, fire apparatus, and plants, and telephone, telegraph, and clock sys- tems· incidental labor; advertising, water tax, postage, telephones, teleg~ms, tolls, and ferriage; flags and awnings; packi?g boxes; fuel for heating and r •bandsmen's quarters; pay of mspectors and draftsmen; music astronomical instruments; and for pay of employees on leave, $1,105,000. Commutation of rent for bandsmen, at $15 per month each, $13,500. In all, maintenance and repairs, $1,118,500. In all Naval Academy, exclusive of public works, $2,273,845.83. MARINE CORPS PAY, MARINE CoRPS : Pay of officers, active and reserve list : For pay and allowances prescribed by law for all officers on the active and reserve list, $4,386,196.01. For pay of officers prescribed by law, on the retired list: For three major generals, four bri~adier generals, eight colonels, six lieutenant colonels, twenty-six maJors, forty-four captains, twenty-two first lieutenants, nine second lieutenants, two marine gunners, one quar- termaster, clerk, two pay clerks, and for officers who may be placed thereon during the year, including such increased pay as is now or may hereafter be provided for retired officers regularly assigned to active duty, $353,761.25. . . Pay of enlisted men, actlve a_n~ reserve hst.: Pay and allow~nces of noncommissioned officers, musicians and PJ?-Vates, as preS?ribed by law, and for the expenses of. clerks. of the y~uted States Ma~me Corps traveling under orders,.and mcludmg ~;idd1t10nwl compt:nsat10n for en- listed men of the Manne Corps qualified as expert ri.flemen, sha:rp- shooters, marksmen, or regularly detailed as gun captams, gun po~nt­ ers, cooks, messmen, signalmen, or h_olding g~od-conduct medals, p1ns, or bars, including interest on deposits by enhsted men, post exchl}nge debts of deserters, under such rules as the Secretary: of the Navy .may prescribe, and the authorized travel allowance of ~ischarged enhsted men and for prizes for excellence in gunnery exerCise and.target prac- tice,' and for pay of enlisted men designated as Navy ma1l clerks and assistant Navy mail clerks, both afloat and ashore, $1.2,060,300.76. For pay and allowances prescribed by. law of enlisted m!3n on the retired list: For nineteen sergeants maJor, one drum maJor, forty ts thirty-six quartermaster sergeants, fifty-four first sergeants, ' sergeants, ~'!elve corporwls, five princip~l musi- cians, eighteen first-class musicians, one second-class m~siCian, ~me drummer, and ten privates, and for those who may be retlred durmg the fiscal year $210,822.60. . . Undrawn ciothing: For payment to discharged enhsted men for clothing undrawn, $25,000. . . Mileage: For mileage to officers traveling under orders without troops, $150,000. . . . Commutation of quarters for enlisted men on recrmtmg duty, for otl'cers and enlisted men serving with or without troops where there are no public quarters belonging to the Government, and where there are not sufficient quaiters possessed by the United States to accomm?- date them for enlisted men employed as clerks and messengers m the offices' of the commandant, adjrutant and inspector, paymaster, and quaitermaster, and the offi~es of the assistant adjutant and inspec- tors, assistant paymasters, aSSistant quartermasters, at. $21.each per month, and for enlisted men e1nployed as messengers m said offices, at $10 each per month, $711,100. PAY OF cmr .. FORCE: In the office of tJhe major general comman- dant: Temporary special assistant to the major general comma~dant, $2,750; chief clerk, $2,250; clerk, $1,800; messenger, $971.28; m all, $7,771.28. . . . In the office of the paymaster: Chief clerk, $2p.50; clerk, $1,500 , in~$3~Q . In the office of the adjutant and inspector: Chief clerk, $2,25g; clerks-one $1,800, one $1,600, one $1,500, one $1,400, one $1,200; m all, $9,750. In the office of the quartermaster: Temporary special assistant to the quartermaster, $2,750; chief clerk, $2,250; clerks-two ~t $1,8~0 each one $1,500 two at $1,400 each, two at $1,200 each, techmcal engi- neer; $2,300; dr~ftsman, $2,000; in all, $19,600. . . In the office of the assistant quaitermaster, San Francisco, Cali- fornia: Ohief clerk, $2,500. . . In the office of the assistant quartermaster,. Philadelphia, Pennsyl- vania: Chief clerk, $2,500; messenger, $840; m all, $3,340 . For temporary employees in offices at Marine Corps Headquarters and at Marine Corps posts, $100,000: PrmJided, That no person shall oo employed hereunder at a rate of compensation in excess of $2,000 per annum. . In all, for pay of civil force, $146,711.28, .and the money her~m specifically appropriated for pay of the Marme Corps shall be dis- bursed and accounted for in accordance with existing law as pay of the Marine Corps, and for the purpose shall constitute one fund. In all, pay, Marine Corps, $18,043,891.90. MAINTl")NANCJ<j, QUARTER::\IASTER'S DEPARTMENT, MARINE CORPS PROVISIONS. MARINE CoRPs: For enlisted men serving ashore; sub- sistence and lodging of enl~sted men :vhen travel~ng on duty, or cash in lieu thereof; commutatiOn of rations to enhsted men re!-,JUlarly detailed as clerks and messengers; payments of board and lodging of applicants for enlistment while held 1~n~e~ observ~tion, recruits, recruiting parties, and enlisted men where It IS Impracti~ab1e to ot~er­ wise furnish subsistence or in lieu of board, commutation of rations to recruiting parties, a1~d enlisted men traveling 01~ spe~ial dutY:, at such rates as the Secretary of the Navy may prescnbe; Ice, machmes and their maintenance where required for the health and com~ort of the troops and for cold stroage; ice for offices and preservation of rations, $4,141,450. CLOTHING, MARINE CoRPS: For enlisted men authorized by law. $1,125,000. Fr.:"EL, lfARINE CoRPS: For heat, light, and commutation thereof for the "authorized allowance of quarters for officers and enlisted men, and other buildings and grounds pertaining to the :Marine Corps; fuel electricity, and oil for cooking, power, and other purposes; and sales to officers, $590,000. MILITARY STORES, MARINE CoRPS: Purchase and repair of military equipments such as rifles, revolvers, cartridge boxes, bayonet scab- bards, hav~rsacks, b1anket bags, canteens, rifle slings, swords, drums, trumpets, flags, waistbelts, waist plates, cartridge belts, spare parts for repairing rifla'>, machetes; tents, field cots, field m':ens, and st~ves for tents· instruments for bands; purchase of mus1c and musical accessorie~. articles of field sports for enlisted men, signal equipment and stores, purchase and marketing of prizes for excellence in gunnery and rifle practice; good-conduct badges; medals and buttons awarded to officers and enlistt>d men by the Government for conspicuous, ~H.ant, and special service; incidental expenses of schools of applicatiOn; equipment and maintl"nance of school, library and amusement rooms and gymnasiums for enlis_ted men; .~ntal and m~intenance ~f target ranges, and entra~?e fees m competitions; pro~1_1rmg, prese_rvmg, and handling ammumtwn and other necessary military supphes; m all! $500,000. TRANSPORTATION AND RECRUITING, MARINE CoRPS: For transporta- tion of troops, and of applicants for enlistment between recruiting stations and recruiting depots or posts, including ferriage and trans- fers en route, or cash in lieu thereof; toilet kits for iss~e. to recr~its upon their first enlistment and the expense of the recrmtmg serviCe, $750,000. 25 REPAIRS OF BARRACKs, MARINE CoRPs: Repairs and improvement to barracks, quarters, and other public buildings at posts and stations; for the renting, leasing, and improvement of buildings in the District of Columbia, with the approval of the Public Buildings Commission, and at such other places as the puhlic exigencies require and the erection of temporary buildings upon the approval of the Secretary of the Navy; such temporary buildings as may be erected in pur- suance hereof at a total cost not to exceed $10,000 during the year, $450,000. FoRAGE, MARINE CoRPS: For forage in kind and stabling for public animals of the Quartermaster's Department and the authorized num- ber of officers' horses, $100,000. CoNTINGENT, MARIXE CoRPS: For freight, expressage, tolls, cart- age, advertising, washing bed linen, towels, and other articles of Gov- ernment property, funeral expenses of officers and enlisted men, and retired officers on active duty during the war and retired enlisted men of the Marine Corps, including the transportation _of bodies and their arms and wearing apparel from the ,place of demise to the homes of the deceased in the United States; stationery and other paper, print- ing and binding; telegraphing, rent of telephones; purchase, repair, and ex chang(' of typewriters; apprehension of stragglers and desert- ers; employment of civilinn labor and draftsmen; purchase, repair, and installation and maintenance of gas, electric, sewer, and water pipes and fixtures; office and barrncks furn~ture, vacuum cleaners, camp and garrison equipage and implements; mess utensils for en- listed men and for properly constituted officers' messes; packing boxes, wrapping paper, oilcloth, crash, rope, twine, quarantine fees, camphor and carbonized paper carpenters' tools, tools for police purposes, safes; purchase, hire, repair, and maintenance of such harness, wagons, motor wagons, armored automobiles, carts, drays, motor-propelled and horse-drawn passenger-carrying vehicles to be used only for official purposes, and other vehicles a.s are required for the transportation of troops and Enpplies and for official military and garrison purposes; purchase of public horses and mules; services of veterinary surgeons, and medicines for public animals, and the authorized number of of- ficers' horses; purchase of mounts and horse equipment for all of- ficers below the grade of major required to be mounted; shoeing for public animals and the authoriz.ed ~~umber of officers' horses; pur- chase and repair of hose,. fire e~"t!ngmshers, ca:rts, wheel.barrows, and lawn mowers; purchase, mstallatwn. and repair of cookmg and heat- ing stovPs and furnaces; purchase ~f towels, so~p, combs, and brushes for offices· postaue stamps for formg-n and registered postage; books, newspape;s, anl' periodicals; improving pa~ade grounds; repairs of pumps and wharves, watPr; straw for beddmg, mattresses; mattre~s covers, pillows, sheets, furniture for Government quarters and repair of same· packing and crating officers' allowance of baggage on cha~ge of stati~n, deodorizing, lubricants, disin!ectants; for the constructi?n, operation, and maintenance of _laundnes; and for all emer~enc1es and extraordinary expenses arismg at home and abroad, but Impos- sible to anticipate or classify, $2,000,000. . In .all for the maintenance of Quartermaster's Department, M~arme Corps, $9,656,450; and the money herein specifically appro~riated for the maintenance of the Quartermaster's Department, ~fanne Corps, 26 shall he disbursed and accounted for in accordance with the existing law as maintenance, Quartermaster's Depattment, Marine Corps, and for .that purpose shall constitute one fund. Total Marine Corps, exclusive of public works, $27,700,341.90. INCREASE OF 'l'HE NAVY, CONSTRUCTION AND MACHINERY: On account of hulls and outfits of vessels and machinery of vessels heretofore authorized, ito be available until expended, $53,000,000. INCREASE oF mE NAVY, TORPEDO BOATS: On account of submarine torpedo boats heretofore authorized, to be avtailable until expended, $4,000,000. iNCREASE OF 'l'HE NAVY, ARMOR AND ARMAMENT: Toward the al'DlOI' and armament for vessels heretofore authorized, to be available until expended, $33,000,000. '1'otal increase· of the Navy heretofore authorized, $90,000,000: Pro- vided, That no part of this appropriatiOn can be expended except on vessels now being constructed. That no part of any sum appropriated by this Act shall be used for any expense of the Navy Department at "Washington, District of Columbia, unless specific authority is given by law for such expenditure. That no part of the appropriations made in this Ae.t shall be avail- able for the sa1ary or pay of any officer, manager, superintendent, fore- many, or other person having charge of the work of any employee of the United States Government wh1le making or causing to be made with a stop watch or other time-measuring device a time study of any job of any such employee between the starting and completion thereof, or of the movements of any such employee while engaged upon such work; nor shall any part of the appropriations made in this Act be available to pay any premiums or bonus or cash reward to any em- ployee in addition to his regular wages, except for suggestions result- mg in improvements or economy in the operation of any Govermnent plant; and that no part of the moneys appropriated in each or any section of this Act shall be used or expended for the purchase or acquirement of any article or articles that, at the time of the proposed acquirement, can be manufactured or produced in each or ·any of the Government navy yards of the United Strutes, when time and facilities permit, for a sum less than it can be purchased or acquired other- wise[.]: Provided further, that, notwith8tanding any other provision of law, the legulature of the Virgin 18land8 i8 a;u,thoriud to levy a 81Jirtare on all tampayer8 in an amfYUnt not to errceed 10 per centum of their annual income tarr obligation to the government of the Virgin 18lands. 0 94.tr:H CoNGU.88 red Session } SENATE Calendar No. 964 { RwoRT No~ 94-1021 AUTHORIZING THE VIRGIN ISLANDS TO ISSUE. REVENUE. BONDS JuNE. 30 (legj.slative day, JUNE.1S)., 1976.-Qrde.red to be P.rinted, Mr. JoHNSTON, from the Committee on. Interior and Insular Affairs, submitted the foHowmg REPORT [To accompany H;R. 13359] The Committee on Interior and Insular Affairs, to which was re- ferred the act (H.R. 13.359-). to. authorize. loan funds for the govern- ment of the Virgin Islands, rund. for other pm:poses, b.asi:ng considered the· same, r6p()rts farorably thereen with an •amendment to the title and text and recommends that the act as amended do pass. AMENDMENT 1. The Committee- adopted an amendm.~nt in the. nature of a. sub- stitute. Strike out all after the enacting clause and insert instead the following: That (a) in addition. to the authority conferred by section 8 (b) of the· Re- vised Organic Ad of the Virgin Islands (48 U.S.C. 1574(b), the legislature of the government of the Virgin Islands is authorized to cause to be issued' bonds or other obligations of such government in anticipation of revenues to be recei·ved· under section 28(b) of such Act (26 U.S.C. 9652). The proceeds of· such bonds or othe1· obligations may be used for any purpose authorized by an act of the legislature. The legislature of the government of the Virgin Islands may initiate, by majority vote of the members, a binding referendttm vote to approve or dis- approve the amount of any such bond or other obligation and/or any purpose for which such bond or other obligation is authorized. (b) The legislature of the government of the Virgin Islands. may provide, in connecti.on w:ith any issue of bonds or other obligations authorized to be issued under subsection (a) the proceed's of which are to be used for publie works or other capital prejects, that a guarantee of such bonds or obligations by the United States should be applied for under section of this Act. (c) Except to the extent inconsistent with the provisions of this Act, the pro- visions of section 8 (b) ( ii} of the Revised Organic Act of the Virgin Islands (other than the limitation contained in the proviso to the first sentence of sub- paragraph (A)) shall apply to bonds and other obligations authorized to be issued under subsection (a). 51~010. 2 SEc. 2. (a) When authorized under subsection (b) of the first section of this Act; the.goverrunent of the Virgin Islands may .apply to the Secretary of the In- terior (hereinafter referred to as the "Secretary") for a guarantee of any issue of bonds or other obligations authorized to be issued under subsection (a) of the first section .of this Act. Any such application shall contain such information as the Secretary may prescribe. (b) The Secretary is authorized, with the approval of the Secretary of the Treasury, to guarantee and to enter into commitments to guarantee,.upon such terms and conditions as he may prescribe, payment of principal and mterest on bonds and other obligations issued by the government of the Virgin Islands under subsection (a). of the first section of this Act. No guarantee or commitment to guarantee shall be made unless the Secretary •letermines- (1) that the proceeds 'Of such issue will be used only for public works or other capital projects; (2) taking into account anticipated expenditures by the government of the Virgin Islands while the bonds or other obligations forming a part of such issue will be outstanding, all outstanding obligations of the government of the Virgin Islands which will ·mature while the bonds or other obliga- tions forming a part of such issue will be outstanding, and such other factors as he deems pertinent, that the revenues expected to be received under section 28 (b) of the Revised Organic Act of the Virgin Islands will be sufficient to pay the principal of, and interest on, the bonds or other obliga- tions forming a part of such issue; . . (3) that credit is not otherwi!!e ava1lable on reasonable terms and condi- tions and that there is reasonable assurance of repayment and (4) that the maturity of any obligations to be guaranteed does not exceed 30 years or 90% of the useful life of the physical asset to be financed by the obligation, whichever is less as determined by the Secretary. (c) 'l'he Secretary shall charge and collect fees in amounts sufficient in his judgment to cover the costs of administering this section. Fees collected under this subsection shall be deposited in the revolving fund created under subsection (g). . . . . . · . . · . (d) Any guarantee made by the Secretary shall be conclusive eVidence of the eligibility of the obligation for such guarantee, and the validity ?f any guara:t;tee so made shall be incontestable, except for fraud or material nnsrepresentatwn, in the hands of the holder of the guaranteed obligation. Such guarantee shall. constitute a pledge of the full faith and credit of the United States for such obligation. . . 11 b (e) The interest on any obligation guaranteed under this sect1on sha e included in gross income for purposes of chapter 1 of the Internal Revenue Code of 1954 (f) The aggregate principal amount of obligations which may be guaranteed under this Act shall not exceed $61,000,000. No commitment to guarantee shall be entered into under this Act after October 1, 1979 . (g) (1) There is hereby created within the Treasury a separate fund (herem- after referred to as "the fund") which shall be available to the Secretary without fiscal year limitation as revolving fund for the purpose of this Act. A busineSS'- . type budget for the fund shall be prepared, transmitted to the Congress, consid- ered and enacted in the manner prescribed by law (section 102 103, and 104 of the Government Corporation Control Act (31 US.C 847-849)) for wholly-owned Government corporations. (2) AU expenses, including reimbursements to other government accounts, a:t;d payments pursuant to operations of the Secretary _under this Act ~all be pru.d from the fund. If at any time the Secretary determmes that moneys m the fund exceed the present and any reasonably prospective future requirements of the fund such excess may be transferred to the general fund of the Treasury. (S) If at any time the moneys available in the fund are insufilcient to enable the Secretary to discharge his responsibilities under guarantees under this Act, he shall issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary of the Treasury. Redemption of such notes or obligations shall be made by the Secretary from appropriations which are hereby authorized for this purpose. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, which shall not be less than a rate determined by taking into S.R. 1021 3 oonsideration the av~ge market yield on. outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations. The Secretary of_ the Treasury shall purchase any notes or other obligations issued hereunder and for that purpose be is authorized to use as a public debt transaction the proceeds, from .the sale of any securities issued under the Second Liberty Bond Act ·and the purposes for which securities may be issued under that Ad are extended to. include any purchase of such notes or obligations. The Secretary of the Treasury may at any time sell any·. of the notes or other obligations, acquired by him under this subsection. All redemptions, purchases, and sales by the- Secretary of> the Treas- ury of such notes or other obligations shall be treated as public debt trans- actions of the United States. SEc. a. Each issue of bonds or other obligations issued under subsection (a) of the first section of this Act shall have priority for payment of principal and interest out of revenues received under section 28(b) of the Revised Organic Act of the Virgin Island~> in the order of the date of issue, except that issues guaranteed under section 2 shall have priority, according to the date of issue, over issues not so guaranteed and the revenues received under section 28(b) of the Revised Organic Act of the Virgin Islands shall be pledged for the pay- ment of such bonds or other obligations. SEc. 4. The Secretary is authorized and directed to make grants to the gov- ernment of the Virgin Islands for operation of such government in an amount not to exceed $8,500,000. SEc. 5. Chapter 44, section 1, of the Act of· July 12, 1921 { 42 Stat. 123; 48 U.S.O. 1397) is hereby amended by striking the period at the end thereof and inserting in lieu thereof the following language: " : Provideit further, That, not- withstanding any other provision of law, the Legislature of the Virgin Islands is authorized to levy a surtax on all taxpayers in an amount not to exceed 10 per centum of their annual income tax obligation to 1;he government of the Vir- gin Islands. SEc. 6. There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act. 2. Amend the title so as to read : An act to authorize the government of the Virgin Islands to issue bonds in anticipation of revenue receipts and to au- thorize the guarantee of such bonds by the United States under specified conditions, and for other purposes. PURPOSE The purposes of H.R. 13359 ·are to enwble the government o£ the Virgin Islands to raise sufficient funds for both operations of the government ann its capital improvement program and to make grants to the Virgin Islands to alleviate the present fiscal crisis. ' BACKGROUND AND NEED The economic crisis in the Virgin Islands has been precipitated by a sharp drop in tourism, the Virgjn Islands' largest industry, triggered bv the worlitwicle recession and local disturbances. ·The situation was compounded by the Tax Reduction Act of 1975 (and its extension), with numerous tax reduction features which re- duced the revenues available to the Vir!rin Islands Government. The loss of revenues required a matching reduction in expenditures since the taxing authority and public indebtedness of the Virgin Islands is, by law, more greatly restricted. than that of many states. It is clearthat this legislationis necessary to stimulate the economy o:f the islands and allow the territory to balance the operating budget at an acceptable level of services by fiscal year 1979. S.R. 1021 4 · The impact of the Tax Reduction .Act. on the $100 mWion Virgin Islands budget is indicated in the follow1!lg figu~es subhittfhbc!~ Department of the· Interior to the Committee pnor tot e u mittee markup: EFFECT OF TAX REDUCTION ACT ON GOVERNMENT OF THE VIRGIN ISLANDS REVENUES ling of 1 In a study conducted 1n February 1976 based on a samp · 2 000 tax returns it was estimated that the fol;lowing revenues ~ere lost to th~ Government of the Virgin Islands dur~ng calendar year 1975 due to the effect of the .Tax Reduct10n Act of 1975 (Public Law 94-12). $2 663 000 ~:~~~~ ~~ i~~ taxes __ alio-~~~-an"d-~ta~d.a;"d-d.-;dt;c"tio~= 1: sn: 000 2, 644,000 Credit for 1, 866, 000 Earned income 333 000 .Changes in normal corporate taxes---------------------- • Changes in corporate tax exemption from $25,000 to 3,153,000 $50,000 ---------------------------------------------- 300 000 Investment tax credit----------------------------------- ' Tori~e:i!en;at~7~~~~-~~~-~a~-~~~~-~~~~-a~.:':__t~~~-~':~ 12, 770, 000 11 The Tax Reduction Act of 1975 was extended by Public Law · 94-164 until June 30, 1976 and is expected to be ex.tended for another six months. Assuming that the earned mcome credit is maintained the Virgin Islands Government estimates that revenue losses for 1976 will remain the same as 1975 ex- cept that there will be no rebate. 12 770 000 1975 estimated revenue losS----------------------------- 2' 663, 000 Less rebates------------------------------------------- ' ' Total estimated loss for tax year January through De- 0 107 000 cember 1976-------------------------------------- 1 • • 111 Total estimated revenue loss for the Government of the Virgin . Islands for 1975 and 1976 due to the Tax Reduction Act and 22 880 000 its extensionS-------------------------------------------- • • Since the :federal income tax operates as a local territo~ia~ tax in the Virgin Islands not only were revenues reduced in the V1rgm.I?lands, but the Virgin' Islands was required to cover the rebate provisrons of the Tax Reduction Act from its own treasury. LEGISLATIVE HISTORY H.R. 13359 passed the House on Ma~ 3! 19'T6J and was th~ subject of a :full Committee hearing on May 10. Similar b1I;J.s _had b_een mtroduced in the Senate (S. 3327 at the request of the Adm1mstra~10n and~· 3357 at the request of Congressman DeLugo). The Comffilttee considered H.R. 13359 during a full Committee markup on June 23, and adopted a substitute amendment proposed by Senator Johnston. CoMMITTEE REcOMMENDATION AND TABULATION oF VOTEs The Senate Committee on Interior a~d Insular Affairs, in open business session on June 23, 1976, by unammous vote. of a quoruedm preds- ent recommends that the Senate pass H.R. 13359, 1f amend as e- scribed herein. S.R. 1021 5 Senators votmg to report the bill, as amended, were as follows: Jackson Church Metcalf Johnston .Ayes Abourezk Haskell Stone Bumpers CoMMITI'EE AMENDHENTS Nayes 1. The Committee adopted a substitute text proposed by Senator Johnston. The House passed measure would have provided loans to the Virgin Islands in the amount of $15 million for operations and $61 million for capital improvements. Th~ Committee decided that loans for operations were inappropri- ate smce the operations shortfall being experienced by the Virgin Islands is due, in part, to actions of the federal governm~:mt. A grant was substituted as being a more equitable form of assistance. The committee further believed that a loan guarantee approach :vould reduce direct Federal involvement in the financing of capital Improvements and encourage fiscal responsibility. T~e amendment, in brief, provides increased revenue bonding au- thonty to the Virgin Islands, authorizes a grant of $8.5 million to c?mpensate the Virgin Islands for the unexpected revenue loss occas- ~Ion~d by the Tax Reduction Act, and ·allows the Virgin Islands to mstitute a 10 percent surchar on income taxes. .Se?tion 1 (a) of the arne ent authorizes the legislature of the VIrgm Islands to cause to be issued bonds or other obligations in anticipation of revenues to be received under section 28(b) of the Revised Organic Act of the Virgin Islands. Section 1 (b) provides that the Virgin Islands may request a fed- eral gl!arantee for such obligations. Section 1 (c) extends the present controls on bond issues contained in section 8(b) (ii) of the Revised Organic Act except for the limita- tion that the public indebtedness may not exceed 10 percent of the aggregate assessed valuation of the taxable real propertv in the Virgin Islands, and other limitations inconsistent with this aiithority. Sec~ion 2 sets fo~h the re9uirements for a federal guarantee of any ~nd Issue. The sectiOn reqmr.es the Secretary of the Interior to deter- rome that (1) the proceeds Will be used only for oapit:al projects; (2) that there will be sufficient revenues to cover the bond issue: (3) that credit is not otherwise available on reasonable terms; and ( 4) that the maturity of the obligation does not exceed the lesser of 30 years or 9~ perr~nt of the useful life of the project. The section further pro- VIdes that the Secretary shall collect fees to cover administrative costs, tha~ the guarantee is conclusive e\i?ence of the eligibility of the obli- ~atiOn. for the ~arantee, that .the mterest on the guaranteed obliga- tion Will be subJect to federal mcome tax, that the aggregate amount of guaranteed obligations mav not exceed $61 million and that no guarantee may be entered into after October 1, 1979. The section also establishes a revolving fund and authorizes the Secretary of the Interior to borrow from the Treasury in the event of S.:rt. 1021 6 default on >a guaranteed ·?bligation. fT~ ftrowing ~i~~h~~::~e:f essary in order to assure mvestors o t1me Y paymen default h' A t ·n h ve a Secti~n 3 provides tha~ anyfbond issfed r;d('br) t of\h: R:~ise: Or- priority on revenues dtmved rom sec Ion . . . . ranteed issue ganie Act for rep~yl_llent and that of such bonds, any gua will have first pr1onty. . f . t' to the Section 4 directs the Secretary to make grants or opdv$a 8 1~ns ·mon Vir 'n Islands' government in an amount not t? excee · .m 1 • · S~tion 5 provides that th~ Vi'l'gin Islands 'legislature may msbtute a 10 percent mcome tax surcharge. be . Section 6 authorizes the apJ?r;>Priation. of such sums as may necessary to carry out the proVISions of 'th1s Act. 2. The title was changed to refle<% the amendment. CosT AND BunGE'l'ARY CoNsiDERATIONS The le islation contemplates an $8.5 million grant to th~ "Yirgin Islands the timing of the grant will depend upon the subm1ss~on of an a ~0 riation request by the Administration. Loan guaran Y ~u­ thori~~ of up to $61 million is provided subject to future appropria- tions action by the Congress. EXECUTIVE CoMMUNICATIONS The pertinent legislative reports and communica~ions re?eivel ~h the Committee from the Department of the Interior settmg or t Executive Agency recommendations relating to H.R. 13359, are se forth below : u.s. DEPARTMENT OF THE INTERIOR, 0FFICJ<l OF THE SECRETARY, Washington, D.O., April 'l, 1916. Hon. NELSON A. RocKEFEI.LER, President of the Senate, W ashingtcm, D:O. . " . · 1 D Mn PREsiDENT· Enclosed is a draft b1ll To authorize oan fundsf;r ihe Govern~ent of the Virgin Islands and :for other purposes." . . We recommend that the bill be referred to the appropnate Com- mittee for consideration and that it be enacted.. . . At present there is a fiscal crisis confrontmg the territorial Gov- ernment of the Virgin Islands. This cri~is is due .1? the sta~e of the economy and government revenue collectwn capabthty. Tou.rism-the largest industry and major contributor to the gross domestic pro~h~t of the Virgin Islands-has declined over the past t~ree years. 1s decline was caused by the worldwide recession, local disturbances, and the reduced attraction of the islands' :freeport status. The latt~r was the result o:f the devaluation of the U.S. dollar and tJ:e l~wermg: of tariff barriers on the mainland United States. The dl3l?h~e m tounsm recipitated the reduction of public revenues from th~s mdustry. p In addition to this revenue·decline, t!Ie T3:x R.ednctlon Act of !975 (and the amendment which extended It) With 1ts rebate prov1swns, S.R. 1021 7 nega!'ive income ta:x:, ;liberalized investment credit~? and other ta;x: r.e- ductiOn 'features, mther reduced:the revenues avauableto the V1rgm Islands Go\l"ernment. The purpose of the Tax Reduction Acts was to stimulate the econ- omy. While this -wB;S achieved in the continental United States, the Acts had 'the opposite ·result in the Virgin Islands. In practice, under the Tax Reduction Acts, people would have more mon{ly to spend, which would improve the demand for goods and serv- ices. This would have a multiplier effect on the economy, and thus it would improve. Such was true in the United States. However, most of the goods and services in the Virgin Islands come from the con- tinental United States. The new money in the Virgin Islands quickly went to the mainland without improving the Virgin Islands economy. Estimated losses of Virgin Islands Government revenues as a result of these Acts approximate $15 million. The loss of government revenues meant a corresponding reduction in expenditures. Since the taxing authority and public indebtedness of the Virgin Islands is, by law, far more restricted than that of the U.S. Government or many States, the Virgin Islands cannot compen- sate :for the loss of revenues. At the beginning of fiscal year 1976 the revenues projected for the Government of the Virgin Islands exceeded $132 million. Proposed expenditures for government operating costs were equal to that amount. That revenue amount included $20 million in anticipated receipts from custom duties on petroleum products imported into the United States from the Virgin Islands. However, the Department of ,Justice has ruled that there is no legal authority in the U.S. to make these payments, and thus, they are not available. Actual receipts for the first half of fiscal year 1976 suggest maximum receipts of $92.5 million from all taxes, fees and fines, including moneys collected from hospital operations. Executive action such as reducmg expenditures and increasing revenues yielded a balanced budget of $117.1 mil1ion. This included the transfer into the operating budget of capital im- provement funds in excess of $25 million, a severe curtailing of gov- ernment services, and a personnel reduction of 346 employees. The government is the primary employer in the Virgin Islands and the rate of unemployment prior to the government layoff already exceeded 9% of the work force. In the areas of health and education these reductions have been most pronounced. The reductions in health personnel required re- ducing the number of hospital beds and limited the service capability o:f the Virgin Islands' two hospitals. The schools are understaffed and over crowded. In 1970 the school system admitted all non-citizen (alien) school-age children legally residing in the Virgin Islands. The enrollment increase since then has been 58.3 percent, with a serious impact on education services. To meet its service responsibilities to its citizens, the Government of the Virgin Islands has, from 1971 through 1975, deferred $31 mil- lion worth of capital improvement projects to make these moneys available for operating expenses. Without financial relief, an addi- tional $30 million in capital projects will have to be deferred in fiscal years 1976 and 1977. This is a total of $61 million for the period fiscal years 1971 through 1977. S.R. 1021 The Government of the Virgin Islands needs legislati~n an~ Fed- eral assistance through loans to stimulate the economy. Such assiStance will allow the territory to balance the operating budget at an accept- able level of services by fiscal year 19'79. The attached draft bill would deal with the effects of the Tax Reduction Acts and the deferred capital improvements projects. Sec- tion 1 would amend the Act of July 14, 1921, to authorize the Govern- ment of the Virgin Islands to levy a surtax, not to exceed 10%, on the future income taxes payable to the Government of the Virgin Islands. The 1921 Act provides that the income tax laws in force in the United States shall be likewise in force in the U.S. Virgin Islands, except that the proceeds of Virgin Islands taxes shall be paid into the Virgin Islands Treasury. This amendment would en- able the Government of the Virgin Islands to respond to changes in the income tax laws of the United States. Along with the present estimated $15 million loss in revenues, the Virgin Islands expects to lose $5 million annually in future revenues under the Tax Reduction Acts. Section 2 would authorize loans up to $15 million to supplement the operations budgets of the Government of the Virgin Islands for their fiscal years 1977 and 1978. Their operating expenditures for fiscal year 1975 amounted to $117 million; fiscal year 1976 expenditures are projected at $117.1 million. The Government of the Virgin Islands has proposed an austerity budget of $118.6 million for fiscal year 1977 but estimates revenues at only $110.1 million. There i~ a short- fall of $8.5 million. Given the effects of inflation and past cuts in ex- penditures, government services are already at unacceptably low levels. .A. loan of $15 million would allow the balancing of local 1977 and 1978 budgets at acceptable levels of services. These loans for opera- tions taken together with the economic recovery stimulated by the capital improvement program loans proposed in section 3 would re- sult in increased revenue collections by the government. It would then be capable of balancing its fiscal year 1979 budget without :further assistance. Section 3 would authorize $61 million in loans to bring the Virgin Islands long-delayed capital improvement program u.e-to-date. How quickly these funds are requested for appropriation w1ll depend upon review of proposals by the Government of the Virgin Islands, how- ever the legislation would allow the funding to be spread out over five years. The Virgin Islands cannot borrow for non-revenue producing purposes under the Revised Organic Act of the Virgin Islands. Thus, if the capital improvement program is to be implemented at this time, the Virgin Islands will need a Federal loan. Section 4 would provide the conditions and repayment provisions for the loans authorized pursuant to sections 2 and 3. Amortization of the loans would begin July 1, 1982 and be paid back over 10 years, with interest equal to the average yield of outstanding marketable obligations of the United States o£ comparable maturities. In our judgment, since funds will become available to the Virgin Islands through the expiration of certain industrial tax exemptions in 1978 and 1981, the government will be readily able to amortize anv debt incurred through this provision. It is anticipated that after 1981 the S.R. 1021 9 (!overnment o~ the V:il:'gin Islands will benefit from up to $100 mil- lion an:11ually m additiOnal revenues due to the expiration of these exemptwns. . Under sec.tion 5. of the draft bill, the Secretary would be able to pl.ac~ any stipulations he deems appropriate on the loans to the U.S. V Irgm Islands. · ':fhe. Office of Management and Budget has advised that there is no obJectiOn to the presentation of this legislative proposal from the standpoint of the Administration's program. Sincerely yours, Enclosure. JoHN KYL, Secretary of the Interi01'. A BILL To authorize loan funds for the Government of the Virgin Islands and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That Chapter 44 Section 1, of the Acto~ <!uly 12, 19~1 (42 Stat. 123,48 USC 139'7) i~ ~er~by .amended by stnkmg the penod at the end thereof and insert- mg m heu thereof the following language : . :. Provided, further_, That notwiths~an~ng any other pro- yrSion of law, the Legrslature of the V1rgm Islands is author- Ized to levy a surtax on all taxpayers in an amount not to exceed ten percentum of their annual income tax obligation to the Government of the Virgin Islands." SEc. 2. There is ;hereby authorized to be appropriated to the Sec- retary of the .In~er10r $15,000,000 to be paid as loans to the Govern· ment of the V 1rgm Islands to be used for operating expenses. SEc. 3. .(a) The purpose of this Section is to provide the Virgin ~sland~ with fun~s. for the construction of necessary public works, mcludmg the !lcqms1ti<?n of real property. (b). There IS authonzed to be appropriated to the Secretary of the Inte~10r not to e~ceed $61,000,000 to carry out the purposes of this Sectwn, to be paid to the Government of the Virgin Islands in such sums as may be requested by the Governor of the Virgin Islands with the concurrence of the territorial legislature and approved by the Secretary o~ the Inte~ior, and such moneys as may be appropriated shall.be ava:Ilable until June 30, 1980. Funds appropriated pursuant to th1~ S~ct10n shall also b~ availab!e ~or use by the Government of t~~ V1!'g1n. Islands to permit the VIrgm Islands to qualify for par- hclp!ltwn m Federal prog!ams rel~tn;g to public works and com- mumty development for whiCh the V1rgm Islands is otherwise eligible. SEc. 4. Repayment of the loans under Sections 2 and 3 of this Act shall commence no la~er tha? June ~0, 1982 in such amounts as the S~re~ary of the Interior estimates will reimburse the United States, With mterest as set forth below, over a period of ten years These repayments may be made in the form of withholdings b th~ Secre- tary of ~he Treasury from sums collected pursuant to sectkn 7652 (b) of Public Law 83-591 ( 68A Stat. 90'7, 26 U.S. C. '7652 (b)) as amended, before such sums are transferred to the Government of the Virgin S.R. 1021 10 ~Islands. The foregoing amounts, until reimbursed to the United :States, shall' bear interest beginning on the date when the. moneys are .advanced, at a rate determined by the Secretary of the Treasury, tak~ ing. into consideration the average yield on outstand~ marketable ·obligations of the United States of comparable maturities as of the last day o. f the month precedins: the advance, adjusted to the nearest ·one-eighth of 1 per centum. All sums so withheld shall be deposited i;n the Treasury, of the United States as m~scell~eous receipts. SEc. 5~ The Secretary shall place such stipulations as he deems ap- propriate on any lo&ns to the Virgin Islands pursuant to Sections 2 ~nd 3 of this Act. SEa. 6. No portion of the sums to be repaid by the Government of the Virgin Islands to the United States, as provided :for in sections 2 and 3 of this Act, shall be considered to be public indebtedness of the Virgin Isla,nds within the meaning of section 8 (h) of the Revised Organic A.ct of the Virgin Islands (68 Stat. 500, 58 USC 1574(b) ). CHANGES IN ExiSTING LAw In compliance with subsection (4) of the rule XXIX ofthe Stand• ing Rules of the Senate, the Committee notes that no changes in exist- ing law are made by the bill H.R.13359 as reported. 0 S.R. 1021 H. R. 13359 J\intQ!~fourth Q:ongress of tht ilnittd ~tatts of 2lmtrica AT THE SECOND SESSION Begun and held at the City of Washington on Monday, the nineteenth day of January, one thousand nine hundred and seventy-six £In £let To authorize the government of the Virgin Islands to issue bonds in anticipation of revenue receipts and to authorize the guarantee of such bonds by the United States under specified conditions, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) in addition to the authority conferred by section 8(b) o£ the Revised Organic Act o£ the Virgin Islands (48 U.S.C. 1574(b) ), the legislature o£ the gov- ernment o£ the Virgin Islands is authorized to cause to be issued bonds or other obligations o£ such government in anticipation o£ revenues to be received under section 28(b) o£ such Act (26 U.S.C. 7652). The proceeds o£ such bonds or other obligations may be used £or any pur- pose authorized by an act o£ the legislature. The legislature o£ the government o£ the Virgin Islands may initiate, by majority vote o£ the members, a binding referendum vote to approve or disapprove the amount o£ any such bond or other obligation and/or any purpose £or which such bond or other obligation is authorized. (b) The legislature o£ the government o£ the Virgin Islands may provide, in connection with any issue o£ bonds or other obligations authorized to be issued under subsection (a) the proceeds o£ which are to be used £or public works or other capital projects, that a guar- antee o£ such bonds or obligations by the United States should be applied £or under section 2 o£ this Act. (c) Except to the extent inconsistent with the provisions o£ this Act, the provisions o£ section 8 (b) ( ii) o£ the Revised Organic Act o£ the Virgin Islands (other than the limitation contained in the proviso to the first sentence o£ subparagraph (A)) shall apply to bonds and other obligations authorized to be issued under subsection (a). SEc. 2. (a) When authorized under subsection (b) o£ the first section o£ this Act, the government o£ the Virgin Islands may apply to the Secretary o£ the Interior (hereinafter referred to as the "Secretary") £or a guarantee o£ any issue o£ bonds or other obligations authorized to be issued under subsection (a) o£ the first section o£ this Act. Any such application shall contain such information as the Secretary may prescribe. (b) The Secretary is authorized, with the approval o£ the Secretary o£ the Treasury, to guarantee and to enter into commitments to guar- antee, upon such terms and conditions as he may prescribe, payment o£ principal and interest on bonds and other obligations issued by the government o£ the Virgin Islands under subsection (a) o£ the first section o£ this Act. No guarantee or commitment to guarantee shall be made unless the Secretary determines- (!) that the proceeds o£ such issue will be used only £or public works or other capital projects; ( 2) taking into 'account anticipated expenditures by the govern- ment o£ the Virgin Islands while the 'bonds or other obligations forming a part o£ such issue will be outstanding, all outstanding obligations o£ the government o£ the Virgin Islands which will mature while the bonds or other obligations forming a part o£ such issue will he outstanding, and such other £actors as he deems H. R. 13359-2 pertinent, that the revenues expected to be received under section 28 (b) of the Revised Organic Act of the Virgin Islands will be sufficient to pay the principal of, and interest on, the bonds or other obligations forming a part of such issue ; (3) that credit is not otherwise available on reasonable terms and conditions and that there is reasonable assurance of repay- ment, and ( 4) that the maturity of any obligations to be guaranteed does not exceed thirty years or 90 per centum of the useful life of the physical assets to be financed by the obligation, whichever is less 'as determined by the Secretary. (c) The Secretary shall charge and collect fees in amounts sufficient in his judgment to cover the costs of administering this section. Fees collected under this subsection shall be deposited in the revolving fund created under subsection (g). (d) Any guarantee made by the Secretary shall be conclusive evi- dence of the eligibility of the obligation for such guarantee, and the validity of 'any guarantee so made shall be incontestable, except for fraud or material misrepresentation, in the hands of the holder of the guaranteed obligation. Such guarantee shall constitute a pledge of the full faith and credit of the United States for such obligation. (e) The interest on any obligation guaranteed under this section shall be included in gross income for purposes of chapter 1 of the Internal Revenue Code of 1954. (f) The aggregate principal amount of obligations which may be guaranteed under this Act shall not exceed $61,000,000. No commit- ment to guarantee shall be entered into under this Act after October 1, 1979. (g) (1) There is hereby created within the Treasury a separate fund (hereinafter referred to as "the fund") which shall be available to the Secretary without fiscal year limitation as revolving fund for the purpose of this Act. A business-type budget for the fund shall be prepared, transmitted to the Congress, considered, and enacted in the manner prescribed by law (sections 102, 103, and 104 of the Government Corporation Control Act (31 U.S.C. 847-849)) for wholly owned Government corporations. (2) All expenses, including reimbursements to other government accounts, and payments pursuant to operations of the Secretary under this Act shall be paid from the fund. If at any time the Secretary determines that moneys in the fund exceed the present and any reason- ably prospective future requirements of the fund, such excess may be transferred to the general :fund of the Treasury. (3) If at any time the moneys available in the fund are insufficient to enable the Secretary to discharge his responsibilities under guar- antees under this Act, he shall issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary of the Treasury. Redemption of such notes or obligations shall be made by the Secretary from appropriations which are hereby authorized for this purpose. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, which shall not be less than a rate determined by taking into consideration the average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obli- gations. The Secretary of the Treasury shall purchase any notes or other obligations issued hereunder and for that purpose he is author- H. R. 13359-3 ized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act and the purposes for which securities may be issued under that Act are extended to include any purchase of such notes or obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemp- tions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. SEC. 3. Each issue of bonds or other obligations issued under sub- section (a) of the first section of this Act shall have priority for pay- ment of principal and interest out of revenues received under section 28 (b) of the Revised Organic Act of the Virgin Islands in the order of the date of issue, except that issues guaranteed under section 2 shall have priority, according to the date of issue, over issues not so guar- anteed and the revenues received under section 28(b) of the Revised Organic Act of the Virgin Islands shall be pledged for the payment of such bonds or other obligations. SEc. 4. The Secretary is authorized and directed to make grants to the government of the Virgin Islands for operation of such government iu an amount not to exceed $8,500,000. SEc. 5. Chapter 44, section 1, of the Act of ,July 12, 1921 ( 42 Stat. 123; 48 U.S.C. 1397), is hereby amended by striking the period at the end thereof and inserting in lieu thereof the following language: ": Provided further, That, notwithstanding any other provision of law, the Legislature of the Virgin Islands is authorized to levy a surtax on all taxpayers in an amount not to exceed 10 per centum of their annual income tax obligation to the government of the Virgin Islands.". SEc. 6. There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act. Speaker of the House of Representatives. Viae President of the United States and President of the Senate.