U.S. Virgin Islands Gov. Albert Bryan, Jr. touted his progress in his final State of the Territory speech Monday while acknowledging continuing Water and Power Authority problems.
"Securing the permanent increase to the rum cover over rate was one of the most important victories of this administration," he said. Bryan has been in office since 2019 and local law bars him from running for a third consecutive term. A successor will be elected in November.
In July the
The USVI's SPSC sold the bonds in 2022 with the assumption the tax rate would be $13.25. If the tax was held at the $10.50 level, it would cost the USVI government $60 million per year, USVI Sen. Janelle Sarauw said in 2023, adding it would threaten the financial stability of the territory.
By refunding the rum tax bonds with the SPSC bonds and then securing the permanent increase in the rum tax, "We took a [retirement] system that was on the verge of collapse and gave it a lifeline measured in decades," Bryan said Monday.
"KBRA anticipates that the
The permanent increase to the rum cover is "positive in the short run but until we see what the plan is to spend the money, I wouldn't say that the corner has been turned," said Joseph Krist, publisher of Muni Credit News. "Right now, the stationing of a U.S. aircraft carrier and the potential for several thousand personnel to spend money in Charlotte Amalie is a short term positive. Given consumption trends for alcohol in the US, the long-term outlook for the rum tax is less positive."
Bryan said he continued to urge reforms to the retirement system to ensure its solvency. In the government's most recently available annual comprehensive financial report, for the year ending Sept. 30, 2022, the primary government had a net pension liability to the USVI government employees retirement system of $4.1 billion. It had total liabilities and deferred inflow of resources of $9 billion.
About 85,000 people live in the U.S. Virgin Islands.
When Bryan entered office in 2019, "We inherited a government so strained that even meeting payroll was in doubt," he said. "The Virgin Islands government had borrowed $212 million for operations and could not borrow any more. There were no cash reserves."
Since then, "for the first time in this government's history, we activated the budget stabilization fund, commonly known as the rainy-day fund. That fund now has over $10 million." Bryan said the government has $70 million in cash reserves.
Since 2019, "we have managed to reduce the overall debt by 25% to $1.6 billion today," Bryan said.
The fiscal 2022 ACFR specifies the territory's bond debt as $560 million of gross receipts revenue bonds, $8.5 million of tobacco settlement bonds, $953 million of matching fund special purpose securitization bonds, $63 million of federal aid highway grant anticipation revenue vehicle bonds, $9.6 million of tax increment funding revenue bonds, $48 million of bonds premium and $13.9 million of bonds accretion.
The USVI Office of Management and Budget reports that as of April 30, 2025, there were $457 million of gross receipts revenue bonds and $54 million of Garvee bonds outstanding.
The ACFR for fiscal 2022 was posted on the Municipal Securities Rulemaking Board's EMMA disclosure website in November 2025, more than three years after the fiscal year closed.
"Because governments derive their authority from the consent of the governed, the Government of the United States Virgin Islands has a responsibility to report its financial results in a timely and transparent manner," said Sheila Weinberg, founder and CEO of Truth in Accounting. Releasing them so late makes "them virtually useless for accountability and decision making."
Bryan says visitor arrivals to the islands increased to 2.5 million in 2025 from 1.6 million in 2019. In August the 126-room Hampton by Hilton opened in St. Thomas, the first newly built large-scale hotel in more than 30 years on the islands.
The U.S. Bureau of Labor Statistics says the islands' seasonally adjusted employment increased to 36,000 in December from 35,400 in January 2019, an increase of just 1.7%.
Bryan said his government's efforts to curb major power outages this past year "did not go as smoothly as any of us had hoped. We experienced setbacks that contributed to rotating power outages and costly surges that damaged the equipment of residents and businesses alike."
Yet, the
WAPA received bids in 2025 for the replacement of two power plants in St. Thomas, and it expects to use federal funds to fund the work, Bryan said. The authority has started two solar farms in St. Croix that deliver about two-thirds of the island's electricity. It is now advancing two solar and battery facilities for St. Thomas which would also provide substantial electrical supply.
"The final fix for WAPA … will come when we solve its financial problems," Bryan said. "We can harden the system and modernize generation, but we also must fix the balance sheet. WAPA is working hard on that solution and I am asking the legislature to join me in passing the reforms and tools we need to put the utility on solid financial footing."
In October, U.S. Virgin Islands Sen. Ray Fonseca said the Water and Power Authority should either start bankruptcy proceedings or be subject to a federal takeover. Fonseca said the troubled utility should consider filing for Chapter 9 bankruptcy, for which attorneys have said the authority is not eligible.
"Bankruptcy is not an option for WAPA because neither federal nor Virgin Islands law authorizes it to file for relief under Chapter 9 of the U.S. Bankruptcy Code," a WAPA spokeswoman said in October. "In addition, the authority is unaware on what basis Sen. Fonseca reached those conclusions, no discussions have taken place with the WAPA management team and Sen. Fonseca's office."
In February, a consultant's report said WAPA couldn't pay its debt without a $375 million inflow.
WAPA, Bryan and several members of the legislature didn't respond to inquiries for this story.
"WAPA remains plagued by its longstanding operational issues as well as governance issues," Krist said. "They have 'done the consultant thing' and now are having issues implementing recommendations about its governance. The long-standing lack of serious professional management will be hard to address. As long as politics pressure WAPA, and they will, it will remain a problem credit."
In unaudited figures, WAPA said as of December 2024 its electrical system had $162.5 million in long-term bond debt, $12.5 million in current due bond debt, $197.5 million in total long-term debt, $437.8 million in long-term liabilities and $970.3 million in total liabilities. By comparison, it had $201.6 million in net income before taxes in calendar year 2024.
In the auditor's report in the fiscal 2022 ACFR, auditor BDO USA said, "the government reported an unrestricted net deficit in governmental activities and in the general fund that raise substantial doubt about its ability to continue as a going concern." As of Sept. 30, 2022, the government reported a net deficit of $5.4 billion in governmental activities and a fund deficit in the general fund of $376.6 million.
In the ACFR, BDO provided disclaimers on its opinions of governmental activities, business-type activities, general fund, federal grants fund, unemployment insurance-enterprise fund, aggregate remaining fund information and aggregate discretely presented component units.
The greater than 30% deficit in the general fund is the worst Merritt Research Services has seen in the U.S. Virgin Islands since it started keeping tabs on it in 2004, said Richard Ciccarone, Merritt's president emeritus. The 1096 day period from the end of the fiscal year to the release of the ACFR is the worst it has seen from the U.S. Virgin Islands central government.
WAPA's most recently available ACFR is from fiscal year 2020.
