[House Report 113-110]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-110
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TO CREATE THE OFFICE OF CHIEF FINANCIAL OFFICER OF THE GOVERNMENT OF
THE VIRGIN ISLANDS, AND FOR OTHER PURPOSES
_______
June 17, 2013.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hastings of Washington, from the Committee on Natural Resources,
submitted the following
R E P O R T
[To accompany H.R. 85]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred
the bill (H.R. 85) to create the Office of Chief Financial
Officer of the Government of the Virgin Islands, and for other
purposes, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
PURPOSE OF THE BILL
The purpose of H.R. 85 is to create the Office of Chief
Financial Officer of the Government of the Virgin Islands.
BACKGROUND AND NEED FOR LEGISLATION
The U.S. Virgin Islands (USVI) is an organized,
unincorporated territory of the U.S. It is an unincorporated
territory because Congress has selected only certain provisions
of the U.S. Constitution to apply to the territory. The USVI is
an organized territory due to federal legislation--an Organic
Act. The first USVI Organic Act was enacted in 1936 and a
revised Organic Act was approved in 1954. The Organic Act is
analogous to a state constitution and is intended to serve as a
basic charter of government for the territory until the USVI
adopts its own constitution. The Organic Act made comprehensive
and complete provisions for the legislative, executive and
judicial branches of government, including imposing limitations
upon them. Only Congress can make changes to the Organic Act,
whereas, if the USVI adopts its own constitution, changes could
be made locally without Congressional action. To date, the USVI
has held five constitutional conventions, the latest in 2004.
However, none of the efforts have resulted in the adoption of a
constitution.
The Organic Act did not authorize or establish a chief
financial officer for the USVI government. It does require the
Governor to present, at the opening of each regular legislature
session, a message on the state of the USVI and a budget of
estimated revenues and expenditures. The Governor is also
required to establish and maintain accounting and internal
control systems to allow for the full disclosure of financial
actions and provide for the accountability and accounting of
all funds, property and other government assets. The USVI
created an Office of Management and Budget to perform these
functions.
The Assistant Secretary for Insular Affairs of the
Department of the Interior testified in the 112th Congress that
territories are facing deficit situations which arise due to
disputes between the executive and legislative branches over
revenue projections. This ``estimation discrepancy'' leads to
revenue management issues, resulting in the accumulation of
harmful debt over a period of years and the charges on such
debt interferes with the territory's ability to solve current
fiscal issues.
According to a 108th Congress Natural Resources Committee
report (H. Rept. 108-645), several years of hurricane damage,
the decline of tourism, and the replication of services more
easily provided in the mainland had led to economic instability
in the USVI. H.R. 3589 was introduced in the 108th Congress to
establish a Chief Financial Officer (CFO) to control spending
in the territory to lessen the annual budget deficits that were
growing the territory's overall debt. H.R. 3589 passed the
House of Representatives by voice vote. Bills in the 109th and
110th Congresses (H.R. 62 and H.R. 2107, respectively) which
were similar to H.R. 3589 also passed the House of
Representatives by voice vote and without objection.
As the issue evolved over the years, and due to concerns
raised by the Department of the Interior, USVI Governors
(Governor Turnball and Governor de Jongh) and local officials,
language that was seen as giving the CFO excessive power was
removed. In the 112th Congress, the House of Representative
passed the modified version of the bill, H.R. 3706, by voice
vote. While the USVI Governor still opposed the bill, the
Department of the Interior stated, ``In the view of the
Department of the Interior, the duties contained in H.R. 3706
would constitute only de minimus interference with self-
government in the Virgin Islands, while addressing other issues
of mistrust between the executive and legislature and possibly
the public. Thus, the Department of the Interior has no
objection to the enactment of H.R. 3706.''
With regard to USVI revenues and expenditures, Governor de
Jongh provided in his testimony during the 112th Congress that,
``expenditures have declined from a total of $960 million in FY
2008 to an estimated $832.5 million in FY 2012. Meanwhile,
during the same period, revenues declined from $928.7 million
in FY 2008 to $801.7 million in FY 2012.'' According to the
2009 Annual Audit, the latest audit the Department of the
Interior has for the USVI, federal funding sent to the USVI
totaled $247 million, which in that year included American
Recovery and Reinvestment Act funding (compared to the 2008
audit with a federal grant figure totaling $167 million). The
USVI also receives annual funding from the Office of Insular
Affairs at the Department of the Interior that is not included
in the annual audits. In 2012, the USVI received $6.6 million
in grant funding and a rum tax remittance of $256 million.
The USVI is no different than the other U.S. territories
with regard to challenges it faces in developing its economy,
and increasing its revenues. Economic constraints including
geographic isolation, limited land resources, small population,
limited pool of expertise, and locations subject to severe
storms (hurricanes and typhoons) can make it difficult to
attract or keep businesses. The Department of the Interior's
Office of Insular Affairs, through its annual appropriations
and coordination with other federal agencies, works to empower
the territories to overcome these constraints and develop
opportunities for business development and revenue growth. The
Natural Resources Committee annually oversees these efforts and
the progress of each territory.
H.R. 85 was introduced by Delegate Donna Christensen on
January 3, 2013. The bill text is the same as H.R. 3706,
introduced in the 112th Congress. The bill would require the
Governor of the Virgin Islands to appoint a CFO, with advice
and consent from the USVI legislature, picked from a list
created by a USVI Chief Financial Officer Search Commission. If
the legislature does not confirm the Governor's choice within
90 days, the Governor can appoint an acting CFO. If a CFO has
not been appointed within 180 days, the Commission, by majority
vote, is required to select an acting CFO. If the acting CFO
then serves 180 days without further action, the acting CFO
becomes the CFO. The acting CFO could be removed for cause, or
if the legislature confirms a CFO through advice and consent.
The duties of the CFO would be: to develop and report on
the financial status of the USVI government; to prepare and
certify each year spending limits for the annual budget,
including estimates of all revenues brought in by the
territory, without regard to sources, and whether or not the
budget is balanced; and to revise and update standards for
financial management, including inventory and contracting for
the USVI government and each agency. To do this, USVI
department heads are required to provide all documents and
information requested by the CFO.
The CFO would be appointed for a 5-year term and would be
paid at a rate determined by the Governor, but not less than
the highest rate of pay for a cabinet officer or any CFO
serving in a government or semi-autonomous agency. The bill
would require a referendum to be held closest to the 4th year
of the 5th year term, to allow the voters to determine if the
CFO position should be permanent.
The USVI Chief Financial Officer Search Commission would be
comprised of eight members appointed no later than 30 days
after enactment of this Act. Its charge would be to recommend
candidates for nomination for USVI CFO. The Commission members
are required to have business, government or financial
expertise. One individual would be appointed by each of the
following: the governor; the president of the legislature; St.
John St. Thomas Chamber of Commerce; St. Croix Chamber of
Commerce; President of the USVI University; Central Labor
Council of the USVI; St. John at-large Member; and the
President of AARP Virgin Islands. The Chairperson of the
Commission would be the Chief Justice of the USVI Supreme Court
or his designee. Current government employees would be
prohibited from being appointed, except in the case of the
Central Labor Council appointment. The Commission would be
required to meet 15 days after all the members are appointed
and report its recommendations no later than 60 days after its
first meeting. The Commission would terminate upon the
nomination and confirmation of the CFO.
COMMITTEE ACTION
H.R. 85 was introduced on January 3, 2013, by Delegate
Donna Christensen (D-VI). The bill was referred to the
Committee on Natural Resources, and within the Committee to the
Subcommittee on Fisheries, Wildlife, Oceans, and Insular
Affairs. On April 24, 2013, the Full Natural Resources
Committee met to consider the bill. The Subcommittee on
Fisheries, Wildlife, Oceans and Insular Affairs was discharged
by unanimous consent. No amendments were offered, and the bill
was then adopted and ordered favorably reported to the House of
Representatives by unanimous consent.
COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS
Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII of the Rules of the House of Representatives, the
Committee on Natural Resources' oversight findings and
recommendations are reflected in the body of this report.
COMPLIANCE WITH HOUSE RULE XIII
1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the
Rules of the House of Representatives requires an estimate and
a comparison by the Committee of the costs which would be
incurred in carrying out this bill. However, clause 3(d)(2)(B)
of that rule provides that this requirement does not apply when
the Committee has included in its report a timely submitted
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule
XIII of the Rules of the House of Representatives and section
403 of the Congressional Budget Act of 1974, the Committee has
received the following cost estimate for this bill from the
Director of the Congressional Budget Office:
H.R. 85--A bill to create the Office of Chief Financial Officer of the
Government of the Virgin Islands, and for other purposes
CBO estimates that enacting H.R. 85 would have no
significant effect on the federal budget. H.R. 85 would require
the Governor of the Virgin Islands to appoint, with the advice
and consent of the legislature of the Virgin Islands, a Chief
Financial Officer (CFO) who would serve for a five-year period.
The legislation also would require the territory to hold a
referendum during a scheduled election on making the CFO
position a permanent part of the Virgin Islands executive
branch. Finally, H.R. 85 would establish a commission to
recommend candidates for the CFO position. Enacting H.R. 85
would not affect direct spending or revenues; therefore, pay-
as-you-go procedures do not apply.
Requirements on the Governor of the Virgin Islands and the
Board of Elections of the Virgin Islands are intergovernmental
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Based on information from representatives of the Virgin
Islands, CBO estimates that the costs would be small and well
below the annual threshold established in UMRA ($75 million in
2013, adjusted annually for inflation). The legislation
contains no private-sector mandates as defined in UMRA.
The CBO staff contacts for this estimate are Matthew
Pickford (for federal costs) and Melissa Merrell (for the
impact on state and local governments). The estimate was
approved by Theresa Gullo, Deputy Assistant Director for Budget
Analysis.
2. Section 308(a) of Congressional Budget Act. As required
by clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives and section 308(a) of the Congressional Budget
Act of 1974, this bill does not contain any new budget
authority, spending authority, credit authority, or an increase
or decrease in revenues or tax expenditures. CBO estimates that
enacting H.R. 85 would have no significant effect on the
federal budget.
3. General Performance Goals and Objectives. As required by
clause 3(c)(4) of rule XIII, the general performance goal or
objective of this bill is to create the Office of Chief
Financial Officer of the Government of the Virgin Islands.
EARMARK STATEMENT
This bill does not contain any Congressional earmarks,
limited tax benefits, or limited tariff benefits as defined
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of
the House of Representatives.
COMPLIANCE WITH PUBLIC LAW 104-4
This bill contains no unfunded mandates.
COMPLIANCE WITH H. RES. 5
Directed Rule Making. The Chairman does not believe that
this bill directs any executive branch official to conduct any
specific rule-making proceedings.
Duplication of Existing Programs. This bill does not
establish or reauthorize a program of the federal government
known to be duplicative of another program. Such program was
not included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-139
or identified in the most recent Catalog of Federal Domestic
Assistance published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169) as relating to other programs.
PREEMPTION OF STATE, LOCAL OR TRIBAL LAW
This bill is not intended to preempt any State, local or
tribal law.
CHANGES IN EXISTING LAW
If enacted, this bill would make no changes in existing
law.