U.S. Virgin Islands tries to avoid looming pension crisis
United States Virgin Islands Gov. Albert Bryan Jr. is trying to find ways to avoid a possible 42% cut to its pensions effective January 1.
In addition to refinancing its matching funds bonds, and taxing legalized marijuana, the governor is now suggesting a sales tax on retail items imported to the island.
The Government and Employees Retirement System has $3.35 billion in net pension liabilities. A consultant to the system, Segal, said it would have to cut benefits by 42% Jan. 1 unless other sources of funding were found.
On Tuesday Bryan said he was working with Virgin Island senators and GERS officials to find a way to avoid “the possibility of significant benefit cuts for retirees beginning Jan. 1.”
“If our pension system goes, then everything else goes,” Bryan said.
Total long- and short-term debt outstanding for the U.S. Virgin Islands government as of Sept. 30, 2018, according to the government’s comprehensive annual financial statement, was $2.642 billion.
The territory has about 107,000 residents.
According to the preliminary official statement for a proposed September 2020 refunding, the government has $2.11 billion in bond debt. These figures exclude the debt of the Water and Power Authority.
The government withdrew the proposed bond refunding in late September due to what Virgin Islands Senate Finance Committee Chairman Kurt Vialet said was a lack of investor interest due to a cap on interest rates. Alternately, the governor said it was withdrawn partly because there was a lawsuit filed against the refunding.
Bryan said he is committed to working with senators and GERS officials on doing some version of the refunding before the end of December, passing his Cannabis Use Act, and introducing a sales tax on imported items.
Bryan said he supported a Remote Sales Tax bill introduced by Senate President Novelle Francis Jr. The governor said he was working to reconcile Francis’s version with his own version of an internet sales tax. Revenues from the tax would go to pay for the unfunded pension mandate.
Bryan said he would be meeting further on these financial issues with senators and GERS officials later in the week.