The U.S. Virgin Islands Senate has cut the size of a proposed bond by 42% and sent the plan back to the governor for his signature.
In July Gov. Kenneth Mapp announced a plan to sell a $1 billion bond. By mid-September Mapp was talking about selling two separate bonds totaling $426 million.
However, late last week the Senate voted to reduce the planned bonding to $246 million, according to Senate President Neville James.
In addition the Senate altered the planned uses of the money. Mapp had planned to use $279 million for capital spending and $147 million for operating expenses. In the Senate-approved version, $116 million would be used for operating expenses, $100 million would be for cash for the government pension system, $25 million would be for the territory's two public hospitals, and $6 million would be for the Virgin Islands Waste Management Authority operating expenses. If approved, the bond probably would be sold in either October or November, James said.
The bond will be sold as either: a matching fund revenue bond, paid back with a portion of taxes on the sale of rum in the 50 states that the federal government sends to the Virgin Islands; or a gross receipts taxes bond, paid back from a government sales tax.
The gross receipts tax bond is rated BB by Fitch Ratings. The most senior lien matching fund bond is rated B1 by Moody's Investor's Service and BB by Fitch Ratings.
The Virgin Islands has a unicameral legislature. The bond bill will now go to Mapp for his signature or veto.
The Senate is considering selling an additional bond after the $246 million bond. The later bond would be for capital spending, Senate Committee Coordinator Ryan Nugent said.
Also last week the Senate passed a $720 million fiscal year 2017 operating budget, Nugent said.
Mapp has proposed a raft of new taxes and tax increases to cut projected operating deficits. James said Mapp's proposals were just ideas right now and not concrete proposals. James said he was unsure if he supported them.
