U.S. Virgin Islands Gov. Kenneth Mapp ordered a 10% cut in government spending for the remainder of the fiscal year.
On Saturday Mapp and the Office of Management and Budget told department heads to make the cuts in their departments.
The order comes after Mapp said on Jan. 30 that his government might not have enough money to make payroll on Feb. 16. When Mapp's Director of Communications Cherie Munchez was asked about this possibility on Monday, she said that the government's liquidity was a day-to-day concern. She noted that the legislature is considering a "sin tax" on alcohol and tobacco and an increase in taxes on time-shares, both proposed by Mapp .
The governor indicated that the 10% reduction in spending may not have to go into effect if the island's senate passes the tax measures.
The ratings agencies have downgraded the government and the Water and Power Authority deep into speculative territory. The two entities have more than $2 billion in bonds outstanding.
"While I am extremely empathetic about the issues raised by departments/agencies as a result of these required reductions, without the shared contributions and commitment by all branches and instrumentalities of government, our cash position will continue to erode and result in delays of government operations," Mapp said, according to Munchez.
Mapp told the department heads to refine their reduction measures in preparation for a meeting on Friday.
The current fiscal year ends on Sept. 30.
