[House Report 108-645]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 108-645
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TO CREATE THE OFFICE OF CHIEF FINANCIAL OFFICER OF THE GOVERNMENT OF
THE VIRGIN ISLANDS
_______
September 7, 2004.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Pombo, from the Committee on Resources, submitted the following
R E P O R T
[To accompany H.R. 3589]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 3589) to create the Office of Chief Financial Officer of
the Government of the Virgin Islands, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. CHIEF FINANCIAL OFFICER OF THE VIRGIN ISLANDS.
(a) Appointment of Chief Financial Officer.--
(1) In general.--The Governor of the Virgin Islands shall
appoint a Chief Financial Officer, with the advice and consent
of the Legislature of the Virgin Islands, from the names on the
list required under section 2(d). If the Governor has nominated
a person for Chief Financial Officer but the Legislature of the
Virgin Islands has not confirmed a nominee within 90 days after
receiving the list pursuant to section 2(d), the Governor shall
appoint from such list a Chief Financial Officer on an acting
basis until the Legislature consents to a Chief Financial
Officer.
(2) Acting chief financial officer.--If a Chief Financial
Officer has not been appointed under paragraph (1) within 180
days after the date of the enactment of this Act, the Virgin
Islands Chief Financial Officer Search Commission, by majority
vote, shall appoint from the names on the list submitted under
section 2(d), an Acting Chief Financial Officer to serve in
that capacity until a Chief Financial Officer is appointed
under the first sentence of paragraph (1). In either case, if
the Acting Chief Financial Officer serves in an acting capacity
for 180 consecutive days, without further action the Acting
Chief Financial Officer shall become the Chief Financial
Officer.
(b) Transfer of Functions.--
(1) In general.--Upon the appointment of a Chief Financial
Officer under subsection (a), the functions of the Director of
the Office of Management and Budget established under the laws
of the Virgin Islands shall be transferred to the Chief
Financial Officer. All employees of the Office of Management
and Budget become employees of the Office of the Chief
Financial Officer.
(2) Documents provided.--The heads of each department of the
Government of the Virgin Islands, in particular the head of the
Department of Finance of the Virgin Islands and the head of the
Internal Revenue Bureau of the Virgin Islands shall provide all
documents and information under the jurisdiction of that head
that the Chief Financial Officer considers required to carry
out his or her functions to the Chief Financial Officer.
(c) Duties of Chief Financial Officer.--The duties of the Chief
Financial Officer shall include the following:
(1) Assume the functions and authority of the office of the
Office of Management and Budget established under the laws of
the Virgin Islands as transferred under subsection (b).
(2) Develop a report on the financial status of the
Government of the Virgin Islands not later than 6 months after
appointment and quarterly thereafter. Such reports shall be
available to the public and shall be submitted to the Committee
on Resources in the House of Representatives and the Committee
on Energy and Natural Resources in the Senate.
(3) Each year certify spending limits of the annual budget
and whether or not the annual budget is balanced.
(4) Monitor operations of budget for compliance with spending
limits, appropriations, and laws, and direct adjustments where
necessary.
(5) Develop standards for financial management, including
inventory and contracting, for the government of the Virgin
Islands in general and for each agency in conjunction with the
agency head.
(6) Oversee all aspects of the implementation of the
financial management system provided pursuant to section 3 to
ensure the coordination, transparency, and networking of all
agencies' financial, personnel, and budget functions.
(7) Provide technical staff to the Governor and legislature
of the Virgin Islands for development of a deficit reduction
and financial recovery plan.
(d) Deputy Chief Financial Officer.--Until the date that is 5 years
after the date of the enactment of this Act, the position of the
Director of the Office of Management and Budget of the Virgin Islands
shall--
(1) have the duties, salary (as specified in subsection
(f)(3)), and other conditions of the Deputy Chief Financial
Officer in lieu of the duties, salary, and other conditions of
the Director of the Office of Management and Budget of the
Virgin Islands as such functions existed before the appointment
of the Chief Financial Officer; and
(2) assist the Chief Financial Officer in carrying out the
duties of the Chief Financial Officer.
(e) Conditions Related to Chief Financial Officer.--
(1) Term.--The Chief Financial Officer shall be appointed for
a term of 5 years.
(2) Removal.--The Chief Financial Officer shall not be
removed except for cause. An Acting Chief Financial Officer may
be removed for cause or by a Chief Financial Officer appointed
with the advice and consent of the Legislature of the Virgin
Islands.
(3) Replacement.--If the Chief Financial Officer is unable to
continue acting in that capacity due to removal, illness,
death, or otherwise, another Chief Financial Officer shall be
selected in accordance with subsection (a).
(4) Salary.--The Chief Financial Officer shall be paid at a
salary to be determined by the Governor of the Virgin Islands,
except such rate may not be less than the highest rate of pay
for a cabinet officer of the Government of the Virgin Islands
or a Chief Financial Officer serving in any government or semi-
autonomous agency.
(f) Conditions Related to Deputy Chief Financial Officer.--
(1) Term; removal.--The Deputy Chief Financial Officer shall
serve at the pleasure of the Chief Financial Officer.
(2) Replacement.--If the Deputy Chief Financial Officer is
unable to continue acting in that capacity due to removal,
illness, death, or otherwise, another person shall be selected
by the Governor of the Virgin Islands to serve as Deputy Chief
Financial Officer.
(3) Salary.--The Deputy Chief Financial Officer shall be paid
at a salary to be determined by the Chief Financial Officer,
except such rate may not be less than the rate of pay of the
Director of the Office of Management and Budget.
(g) Resumption of Functions.--On the date that is 5 years after the
date of the enactment of this Act, the functions of the Chief Financial
Officer shall be transferred to the Director of the Office of
Management and Budget of the Virgin Islands.
(h) Sunset.--This section shall cease to have effect after the date
that is 5 years after the date of the enactment of this Act.
SEC. 2. ESTABLISHMENT OF COMMISSION.
(a) Establishment.--There is established a commission to be known as
the ``Virgin Islands Chief Financial Officer Search Commission''.
(b) Duty of Commission.--The Commission shall recommend to the
Governor not less than 3 candidates for nomination as Chief Financial
Officer of the Virgin Islands. Each candidate must have demonstrated
ability in general management of, knowledge of, and extensive practical
experience at the highest levels of financial management in
governmental or business entities and must have experience in the
development, implementation, and operation of financial management
systems. Candidates shall not have served in a policy making or
unclassified position of the Government of the Virgin Islands in the 10
years immediately preceding appointment as Chief Financial Officer.
(c) Membership.--
(1) Number and appointment.--The Commission shall be composed
of 9 members appointed not later than 30 days after the date of
the enactment of this Act. Persons appointed as members must
have recognized business, government, or financial expertise
and experience and shall be appointed as follows:
(A) 1 individual appointed by the Governor of the
Virgin Islands.
(B) 1 individual appointed by the President of the
Legislature of the Virgin Islands.
(C) 1 individual, who is an employee of the
Government of the Virgin Islands, appointed by the
Central Labor Council of the Virgin Islands.
(D) 1 individual appointed by the Chamber of Commerce
of St. Thomas-St. John.
(E) 1 individual appointed by the Chamber of Commerce
of St. Croix.
(F) 1 individual appointed by the President of the
University of the Virgin Islands.
(G) 1 individual appointed by the Chief Judge of the
Virgin Islands Territorial Court.
(H) 1 individual, who is a resident of St. John,
appointed by the At-Large Member of the Legislature of
the Virgin Islands.
(I) 1 individual appointed by the Advocates for the
Preservation of the Retirement System.
(2) Terms.--
(A) In general.--Each member shall be appointed for
the life of the Commission.
(B) Vacancies.--A vacancy in the Commission shall be
filled in the manner in which the original appointment
was made. Any member appointed to fill a vacancy shall
be appointed for the remainder of that term.
(3) Basic pay.--Members shall serve without pay.
(4) Quorum.--Five members of the Commission shall constitute
a quorum.
(5) Chairperson.--The Chairperson of the Commission shall be
the Chief Judge of the Territorial Court or her designee and
shall serve as an ex officio member of the Commission and shall
vote only in the case of a tie.
(6) Meetings.--The Commission shall meet at the call of the
Chairperson. The Commission shall meet for the first time not
later than 15 days after all members have been appointed under
this subsection.
(7) Government employment.--Members may not be current
government employees, except for the member appointed under
paragraph (1)(C); and
(d) Report; Recommendations.--The Commission shall transmit a report
to the Governor and the Resources Committee of the House of
Representatives and the Committee on Energy and Natural Resources of
the Senate not later than 60 days after its first meeting. The report
shall name the Commission's recommendations for candidates for
nomination as Chief Financial Officer of the Virgin Islands.
(e) Termination.--The Commission shall terminate 210 days after its
first meeting.
SEC. 3. FINANCIAL MANAGEMENT SYSTEM.
It is hereby authorized to be appropriated such sums as necessary
for the installation of a Financial Management System, including
appropriate computer hardware and software, to the Government of the
Virgin Islands. Upon becoming available, the financial management
system shall be available to the Chief Financial Officer and, after the
date that is 5 years after the date of the enactment of this Act, the
Director of the Office of Management and Budget of the Virgin Islands,
to assist the Chief Financial Officer or the Director of the Office of
Management and Budget of the Virgin Islands, as the case may be, to
carry out the official duties of that office.
SEC. 4. DEFINITIONS.
For the purposes of this Act, the following definitions apply:
(1) Chief financial officer.--In sections 1 and 2, the term
``Chief Financial Officer'' means a Chief Financial Officer or
Acting Chief Financial Officer, as the case may be, appointed
under section 1(a).
(2) Commission.--The term ``Commission'' means the Virgin
Islands Chief Financial Officer Search Commission established
pursuant to section 2.
(3) Governor.--The term ``Governor'' means the Governor of
the Virgin Islands.
(4) Removal for cause.--The term ``removal for cause'' means
removal based upon misconduct, failure to meet job
requirements, or any grounds that a reasonable person would
find grounds for discharge.
SEC. 5. NO ABROGATION OF POWERS.
Nothing in this Act shall be construed to permit the Governor and
Legislature of the Virgin Islands to dilute, delegate, or otherwise
alter or weaken the powers and authority of the Office of Management
and Budget established under the laws of the Virgin Islands.
PURPOSE OF THE BILL
The purpose of H.R. 3589 is to create the Office of Chief
Financial Officer of the Government of the Virgin Islands.
BACKGROUND AND NEED FOR LEGISLATION
H.R. 3589 is intended to ensure that the growing deficit of
the United States Virgin Islands (USVI) will be addressed. The
bill establishes a framework for choosing a Chief Financial
Officer (CFO) who would temporarily be in place to control
spending by the territorial government.
Multiple factors in the past 15 years have led to a long
period of economic instability in the USVI. These include the
economic costs throughout the public and private sector of
rebuilding after six hurricanes, as well as the gradual decline
in the tourism industry. Further, the government workforce in
the USVI is substantial and many services that are delivered
more easily on the mainland are replicated on the Islands, a
practice which has been mirrored in other U.S. insular areas.
Currently, the USVI carries approximately $1 billion in
debt. Over time, and under numerous administrations on both the
federal and territorial levels, the budget deficits became new
debt by the end of each year, with little action taken to
recover the local economy.
In October 1999, Congress passed legislation amending the
Revised Organic Act of the Virgin Islands authorizing the USVI
to issue general obligation bonds for ``any public purpose
authorized by the Virgin Islands Legislature.'' The enactment
of the legislation, Public Law 106-84, allowed the USVI to
issue $300 million in bonds to fund working capital. Nearly
half of the bond went towards paying past due income tax
refunds and government vendors. The issuance of these bonds has
only exacerbated the territory's economic difficulties, and
fundamental restructuring of debt that was to take place and
bring about fiscal stability has not occurred.
In accordance with Public Law 106-84, the USVI Governor
also entered into a Memorandum of Understanding (MOU) with
then-Secretary of the Interior Bruce Babbitt, establishing
mutually agreed financial accountability and performance
standards for the fiscal operations of the USVI. Though the
Government of the USVI was to implement a short-term recovery
plan that included mandates for large reductions in local
expenditures, this MOU has not resulted in economic recovery.
To address this problem, this legislation will establish a
CFO to oversee all government expenditures and serve a
temporary term of five years. The CFO would be authorized to
disapprove spending inconsistent with budgets approved annually
by the Virgin Islands Legislature. The practical applications
stated in the legislation, according to some, contradict those
powers delegated to the USVI under its Revised Organic Act, the
law that provides for specific areas wherein self-governance is
encouraged. The Committee intends the legislation to reflect
the framework for fiscal restraint that was enforced in the
District of Columbia in the late 1990s under the District of
Columbia Financial Responsibility and Management Assistance Act
of 1995 (Public Law 104-8).
The Committee notes that USVI Governor Turnbull does not
support this legislation, a sentiment that has been echoed by
other elected officials within the Virgin Islands Legislature.
Specifically, the Governor wrote to Chairman Richard Pombo on
July 13, 2004, to express his opposition to the Committee
marking up H.R. 3589. Within this correspondence, he states
that ``H.R. 3589 would severely impair the authority of elected
Territorial officials, and place excessive power in the hands
of a single unelected person who would remain unaccountable to
the people and their elected officials in the Virgin Islands
for the full five-year tenure of his or her term of office.''
COMMITTEE ACTION
H.R. 3589 was introduced on November 21, 2003 by
Congresswoman Donna M. Christensen (D-VI). The bill was
referred to the Committee on Resources. On June 16, 2004, the
Full Committee held a hearing on the bill. On July 14, 2004,
the Full Resources Committee met to consider the bill. Mrs.
Christensen offered an amendment in the nature of a substitute
to remove the role of the Secretary of Interior in choosing and
overseeing the CFO directly and allow for a local Commission to
select the CFO while retaining the independence of this officer
from the territorial government. It was adopted by unanimous
consent. The bill, as amended, was then 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 Resources' oversight findings and recommendations
are reflected in the body of this report.
CONSTITUTIONAL AUTHORITY STATEMENT
Article IV, section 3, of the Constitution of the United
States grants Congress the authority to enact this bill.
COMPLIANCE WITH HOUSE RULE XIII
1. Cost of Legislation. Clause 3(d)(2) 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)(3)(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.
2. 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.
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, as ordered reported, is to create the
Office of Chief Financial Officer of the Government of the
Virgin Islands.
4. Congressional Budget Office Cost Estimate. 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:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 27, 2004.
Hon. Richard W. Pombo,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3589, a bill to
create the Office of the Chief Financial Officer of the
Government of the Virgin Islands.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Matthew
Pickford (for federal costs) and Marjorie A. Miller (for the
state and local impact).
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
H.R. 3589--A bill to create the Office of Chief Financial Officer of
the Government of the Virgin Islands
H.R. 3589 would require the Governor of the Virgin Islands
to appoint a Chief Financial Officer (CFO) to serve for a five-
year period, with the advice and consent of the legislature of
the Virgin Islands. The legislation would establish a Virgin
Islands Chief Financial Officer Search Commission to recommend
candidates for the CFO position. The current Director of
Management and Budget of the Virgin Islands would become Deputy
CFO and all functions would be transferred to the CFO. In
addition, the bill would authorize the Department of the
Interior (DOI) to provide a financial management system to the
Government of the Virgin Islands. Five years after enactment,
all functions of the CFO would be transferred to the Director
of Management and Budget of the Virgin Islands.
Assuming the availability of appropriated funds, and based
on information from DOI, CBO estimates that implementing this
legislation would cost a total of $5 million in 2005 and 2006
to install a financial management system for the Virgin
Islands. Enactment of H.R. 3589 would not affect direct
spending or revenues.
The bill contains no private-sector mandates as defined in
the Unfunded Mandates Reform Act (UMRA). H.R. 2400 contains an
intergovernmental mandate as defined in UMRA, but CBO estimates
that the cost of the mandate would be well below the threshold
established in that act ($60 million in 2004, adjusted annually
for inflation.) By requiring the appointment of a Chief
Financial Officer, this bill would preempt powers previously
delegated to the local government of the Virgin Islands by the
Untied States. Because the Chief Financial Officer would assume
the duties and the staff of an existing agency--the Office of
Management and Budget of the Virgin Islands--CBO estimates that
the costs imposed by this mandate would be less than $200,000
per year.
The CBO staff contacts for this estimate are Matthew
Pickford (for federal costs) and Marjorie A. Miller (for the
state and local impact). This estimate was approved by Peter H.
Fontaine, Deputy Assistant Director for Budget Analysis.
COMPLIANCE WITH PUBLIC LAW 104-4
This bill contains no unfunded mandates, as defined by
Public Law 104-4.
PREEMPTION OF STATE, LOCAL OR TRIBAL LAW
This bill is not intended to preempt any State, local or
tribal law. The bill does preempt powers previously granted to
the Virgin Islands by the United States.
CHANGES IN EXISTING LAW
If enacted, this bill would make no changes in existing
law.