For a new Halls of Justice, nearly $9 million. For water system improvements, nearly $5 million. For ongoing work on the new National Emergency Operations Centre and the new West End ferry terminal, more than $4 million each. To continue repairs at the Ralph T. O’Neal Administration Complex, $3.3 million.
These and other delayed hurricane recovery projects are at the heart of a 2024 budget with nearly $448 million in spending unveiled on Tuesday.
“In order to fund some of the capital expenditure, it will be necessary for us to engage in some borrowing,” Premier Dr. Natalio “Sowande” Wheatley said while delivering the annual budget address. “Based on the quantum of work that we are aiming to achieve, the government is considering borrowing at least $100 million.”
Dr. Wheatley began the address — titled “Planning, Priorities and Progress: Building a Sustainable Nation” — by touting recently completed projects such as administration buildings on the sister islands and ongoing work on other projects including the Jost Van Dyke Primary School and Eslyn Henley Richiez Learning Centre.
Such efforts, he said, will continue in the coming year.
“The 2024 budget contains a number of major infrastructure projects to support economic growth,” Dr. Wheatley said. “Strong consideration was given to how advancing or deferring an initiative would affect the quality of life of our citizens. Striking the balance in these cases has not been easy, and there is always the possibility that someone somewhere would be disappointed.”
‘Smoke and mirrors’
Opposition Leader Ronnie Skelton didn’t respond to a request for comment on the budget address, but opposition member Marlon Penn told the Beacon yesterday that the speech lacked substance.
“It seems to be a lot of smoke and mirrors, a lot of fancy talk: no substantial things that are going to improve the infrastructure, improve the economy, and support the business sector,” said Mr. Penn, who leads the National Democratic Party.
Such concerns were exacerbated when he read the draft budget estimates, he said: Though the premier’s speech mentioned several projects, Mr. Penn said he didn’t find sufficient funding for them in the document.
“They say the devil is in the details, and when you go through the details nothing is there as it relates to the funding for those key things,” Mr. Penn said.
Spending
The budget includes combined total capital expenditure of $70.9 million and recurrent expenditure of nearly $377 million, according to the premier.
Of the recurrent expenditure projected for 2024, about $160 million, or 42 percent, will go towards employee compensation, he noted. He described the government’s plan to seek loans as an investment in the economy.
“The projects they will finance will improve our infrastructure to support and increase activities in our various sectors while benefitting the public,” he said.
The total debt in the territory for 2024 is projected to increase to some $143 million, about $24 million of which will be local and about $89 million of which will be foreign, according to the premier.
Currently, the total government debt at the end of 2023 is expected to stand at just under $119 million, about $88 million of which is foreign.
Some of the priorities this year are designed to trim costs, according to the premier.
“We are all aware of the impact that hurricanes Irma and Maria had on the territory’s infrastructure, including government buildings, and in particular the [Ralph T. O’Neal] Administration Complex,” he said. “Government offices that were affected had to be relocated to whatever property was left intact or available, increasing our rent bill. But even before the hurricanes, some public buildings had been allowed to become unfit for occupancy, and alternative facilities had to be rented.”
Now, he said, the government is spending $8.9 million annually on renting office space.
“We must prioritise the repair, renovation and, where necessary, reconstruction of government buildings,” he said. “We have done this on Virgin Gorda, Anegada and Jost Van Dyke, as mentioned earlier.”
Now, he said, Communications and Works Minister Kye Rymer is pushing to complete the main administration complex in Road Town, and $3.3 million has been allocated for the purpose.
Economic pillars
The premier also painted an optimistic picture for the territory’s two economic pillars, stating that the tourism and financial services industries have remained resilient in recent years.
“Despite challenges to the industry from external forces, our financial services industry maintained a strong presence,” Dr. Wheatley said.
“The forecast is that 2023 should close with revenues in the vicinity of $251 million.”
Tourism, he said, has been similarly buoyant this year: Projected hotel accommodation tax revenues are up nearly half a million dollars over 2022, to about $7 million; cruising permit revenues are expected to stay steady at just over $4 million; and tourist arrival levy earnings are expected to be up 24 percent, to $2.24 million.
“I am advised that the projection is that the Virgin Islands economy will end 2023 with 5.5 percent growth in nominal gross domestic product,” Dr. Wheatley said. “All of these facts demonstrate that we do have an economy that is resilient and very active.”
Tourism projects
In the coming months, the premier added, tourism development projects will provide a further boost.
“Major hotels and resorts, such as at Nanny Cay, Peter Island, Long Bay, Bitter End and Eustatia Island, have either commenced large-scale expansion work in 2023 or will start in 2024,” he said. “Other major development works are planned at Blunder Bay, for which the $38 million master plan was already approved.”
Additionally, a wellness resort and spa development on Jost Van Dyke was approved this year, and development of villas at Oil Nut Bay will continue, according to the premier’s speech.
“Development on Norman Island is progressing well,” he said, adding, “The redevelopment of Prospect Reef is of highest priority. We are working feverishly to constitute the new board by the end of this year and to issue the request for proposals for a new resort facility at Prospect Reef early in 2024.”
2023 revenue
The premier also outlined the broader financial picture for this year. The total 2023 revenue of $377.02 million was driven mostly by $244.42 million in taxes from goods and services — which includes fees from the incorporations sector — and $57.68 million from income and payroll taxes, according to Dr. Wheatley.
International trade taxes contributed $44.88 million, while non-alcoholic import duties raked in $39.15 million in revenue.
Despite the projected $12.98 million surplus between recurrent revenue and recurrent expenditure seen in 2023, the premier stressed the importance of increasing government’s revenue.
“We have to exercise our innovativeness to draw out more business from our existing revenue streams, and we have to develop new ones,” he said. “We also have to look at how we can lower the cost of government operations without compromising the quality and efficiency of service, and ensuring that our public officers are justly and fairly compensated for their work.”
Minimum wage
To that end, the issue of minimum wage also took centre stage during the budget address.
Dr. Wheatley said his government will commit $10 million to ensure that all public officers earn at least a living wage.
The recent PricewaterhouseCoopers Compensation Review and Job Classification Report found that $23,719 is needed for a single person to “live a basic but decent life in the Virgin Islands,” the premier said.
‘Unacceptable’ pay
But the report also found that more than 17 percent of government workers aren’t making that much, according to Dr. Wheatley.
An additional 43 percent are earning no more than 20 percent above the living wage, which “leaves limited opportunities for upward social mobility, savings, settling debt, emergencies, investments, etcetera,” the premier added, quoting from the report.
“It is unacceptable for approximately 60 percent of our public officers to be working poor, with no hope of being able to meet their basic needs, their bills — or to save not just for a rainy day but to advance their social conditions,” Dr. Wheatley said. “They must be released from this frustration and hopelessness. The inadequacies of our current compensation system have been highlighted in several reviews over the past two decades.”
PRIORITIES
Government will prioritise various capital projects in the upcoming year, according to the budget address. Several of the biggest allocations are listed below.
$8.92m – New Halls of Justice
$4.9m – Water system improvements in Luck Hill, upper Greenland, George’s Northside, Havers
$4.6m – National Emergency Operations Centre
$4m – The new West End ferry terminal
$3.5m – Sewerage projects in Cane Garden Bay, East End, and Road Town
$3.3m – Ongoing repairs to the Ralph T. O’Neal Administration Complex
$3m – Improvements to the existing Terrance B. Lettsome International Airport
$2.6m – Road improvements
$1.9m – Agriculture and Fisheries Complex