[House Report 112-600]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-600
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TO CREATE THE OFFICE OF CHIEF FINANCIAL OFFICER OF THE GOVERNMENT OF
THE VIRGIN ISLANDS, AND FOR OTHER PURPOSES
_______
July 17, 2012.--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. 3706]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred
the bill (H.R. 3706) 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
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) Duties of Chief Financial Officer.--The duties of the Chief
Financial Officer shall include the following:
(1) Develop and 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.
(2) Each year prepare and certify spending limits of the
annual budget, including annual estimates of all revenues of
the territory without regard to sources, and whether or not the
annual budget is balanced.
(3) Revise and update 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.
(c) 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.
(d) 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
semiautonomous agency.
(e) Referendum.--As part of the closest regularly scheduled, islands-
wide election in the Virgin Islands to the expiration of the fourth
year of the five-year term of the Chief Financial Officer, the Board of
Elections of the Virgin Islands shall hold a referendum to seek the
approval of the people of the Virgin Islands regarding whether the
position of Chief Financial Officer of the Government of the Virgin
Islands shall be made a permanent part of the executive branch of the
Government of the Virgin Islands. The referendum shall be binding and
conducted according to the laws of the Virgin Islands, except that the
results shall be determined by a majority of the ballots cast.
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.
(c) Membership.--
(1) Number and appointment.--The Commission shall be composed
of 8 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, who is a resident of St. John,
appointed by the At-Large Member of the Legislature of
the Virgin Islands.
(H) 1 individual appointed by the President of AARP
Virgin Islands.
(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 Justice of the Supreme Court of the United States
Virgin Islands or the designee of the Chief Justice. The
Chairperson 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).
(d) Report; Recommendations.--The Commission shall transmit a report
to the Governor, the Committee on Natural Resources 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 upon the nomination
and confirmation of the Chief Financial Officer.
SEC. 3. 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.
PURPOSE OF THE BILL
The purpose of H.R. 3706, as ordered reported, 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 the USVI government, including imposing
limitations. 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 held in
2004. However, none of these efforts have resulted in the
adoption of a constitution.
The Organic Act did not authorize or establish a chief
financial officer for the Virgin Island Government. It does
require the Governor to present, at the opening of each regular
legislature session, a message on the state of the Virgin
Islands 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 USVI has outstanding debts totaling over $1.2 billion.
The Assistant Secretary for Insular Affairs of the U.S.
Department of the Interior testified at a Subcommittee hearing
that this type of deficit situation arises 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. The charges on such debt
interferes with the territory's ability to solve current fiscal
issues.
H.R. 3706 would require the Governor of the Virgin Islands
to appoint a Chief Financial Officer (CFO), with advice and
consent of 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 CFO could be removed for cause, or if the
legislature confirms an individual through advice and consent.
The duties of the CFO would be: to develop and report on
the financial status of the USVI government; to certify each
year spending limits for the annual budget and whether the
budget is balanced; and to revise and update standards for
financial management, including inventory and contracting for
the USVI government and its agencies. 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 five 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 fourth
year of the fifth year term, to allow the voters to determine
if the CFO position should be permanent.
The USVI Chief Financial Officer Search Commission would be
made up 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 the American Association of Retired Persons Virgin
Islands. The Chairperson of the Commission would be the Chief
Justice of the USVI Supreme Court or his designee. Current
government employees could not be 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 on the
confirmation of the CFO.
During Full Committee consideration of the bill, the
Committee adopted an amendment offered by Congressman John
Fleming (R-LA) to clarify that the CFO would be required to
prepare and certify annual budget spending limits and include
estimates of all revenues brought in by the USVI, without
regard to source.
COMMITTEE ACTION
H.R. 3706 was introduced on December 16, 2011, 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 May 17, 2012, the Subcommittee held a hearing on
the bill. On June 7, 2012, the Full Resources Committee met to
consider the bill. The Subcommittee on Fisheries, Wildlife,
Oceans, and Insular Affairs was discharged by unanimous
consent. Congressman John Fleming (R-LA) offered amendment
designated .028 to the bill; the amendment was adopted by
unanimous consent. The bill, as amended, 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. 3706--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. 3706 would have no
significant effect on the federal budget. H.R. 3706 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 also would require the territory to
hold a referendum on adding the CFO position as a permanent
part of the Virgin Islands executive branch during a scheduled
election. Finally, H.R. 3706 would establish a Virgin Islands
Chief Financial Officer Search Commission to recommend
candidates for the CFO position.
H.R. 3706 contains intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA). It would require the
governor of the Virgin Islands to appoint a Chief Financial
Officer (CFO) who would be responsible for reporting on the
financial status of the government, preparing and certifying
spending limits, and revising standards for financial
management. In addition, the bill would require the Board of
Elections of the Virgin Islands to hold a referendum on whether
the CFO would be a permanent position. 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 ($73 million in 2012, 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 Peter H. Fontaine, 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. 3706 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, as ordered reported, 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.
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.