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Senators Press Finance Leaders on Delays, Debt, and Disaster Spending
Lawmakers on Tuesday pressed top financial officials on the government of the Virgin Islands’ ability to meet basic obligations like paying vendors and reconciling accounts, as key agencies presented their fiscal year 2026 budget requests during a Senate Committee on Finance, Budget, and Appropriations hearing.
The Finance Department, Office of Disaster Recovery, and Virgin Islands Public Finance Authority laid out their spending priorities, touted modernization efforts, and defended operational needs. But senators remained focused on what they described as persistent gaps between systems and outcomes, particularly in areas like vendor payments, financial reporting, and oversight of special funds.
Finance Department: Modernizing, but Gaps Remain
The Finance Department is seeking $13.9 million for fiscal year 2026, with $13.8 million coming from the General Fund and $108,500 from the Indirect Cost Fund. Executive Assistant Commissioner Clarina Modeste-Elliott told senators the department is operating with just 50 staff across both districts — 38 on St. Thomas and 12 on St. Croix — including only three accounting analysts responsible for processing more than 50,000 transactions totaling roughly $900 million so far this fiscal year.
“We need that number doubled,” Modeste-Elliott said. “But at this point in time, we’re just trying to be fiscally responsible,” adding that the Office of Management and Budget had asked that the department hold its number of active vacancies to just four.
Finance officials pointed to improvements underway, including technology upgrades, a structured month-end closing schedule, and a forthcoming special fund revenue report. A more robust training program is also in development to improve internal capacity. But several senators said those changes hadn’t yet resolved widespread concerns about payment delays.
“We’re hearing that vendors are still waiting over 90 days to get paid,” said Committee Chair Sen. Novelle Francis Jr., who also noted reports of agencies being asked to curb spending without clear updates to their budget allotments.
In response, Modeste-Elliott explained that while Finance aims to pay vendors within 30 to 45 days based on available cash, delays often stem from agencies submitting invoices that are already overdue. “By the time invoices get to us, they’re already past due,” she said. Executive Assistant Commissioner Maurice Wells added that many agencies don’t even input their invoices into the system, making it difficult to track real-time obligations. “We’ve asked them to send us every single outstanding item, whether entered or not,” he said.
Finance officials pointed to the lack of standardized financial oversight across departments as a major hurdle — one they say a proposed “chief financial officer” legislation could help resolve. “The CFO bill would help establish the necessary checks and balances,” Modeste-Elliott said, explaining that the legislation would ensure that all agency CFOs report directly to the commissioner of Finance. The aim, she said, is to improve consistency in accounting practices, promote transparency, and strengthen internal controls across the government.
Meanwhile, she said the department “tries its best to reconcile monthly,” and that it is committed to managing public funds with “fairness, equity and transparency.”
Whether reconciliations are being completed timely or accurately came under renewed scrutiny after questions surfaced over the balance in the Tourism Revolving Fund, which Finance officials reported at $88 million, nearly double its typical annual intake. “That fund only generates about $44 million a year,” said Sen. Kurt Vialet, prompting further examination of the figures. Finance officials acknowledged that the fund is one of their top five priorities for reconciliation and financial cleanup.
In addition to reconciliation concerns, senators expressed frustration over ongoing audit delays. While the government is reportedly paying private auditors around $5 million annually, the fiscal year 2022 audit remains incomplete.
Office of Disaster Recovery: Billions Managed, but Draws Delayed
Office of Disaster Recovery Director Adrienne Williams-Octalien outlined a $12.2 million budget request for FY 2026 — a $3.3 million reduction from last year, driven largely by staffing vacancies budgeted at 50%. Of the total request, $4 million is expected from the General Fund, with the remainder reimbursed through federal disaster programs managed by the Federal Emergency Management Agency and the U.S. Department of Housing and Urban Development.
“We manage more than $23 billion in federal funds,” Williams-Octalien told senators. “That includes everything from project development and construction oversight to payment processing and closeout reporting.”
According to Williams-Octalien, ODR has completed more than 1,000 recovery projects and expects to expend $441 million in FY 2025 alone, generating an estimated $14.1 million in gross receipts taxes. Recovery spending is projected to increase to $643 million next fiscal year, with potential tax revenues of nearly $139 million.
Despite those figures, she said the office continues to face serious cash flow challenges due to delays in federal drawdowns. “We need seed and float funds to stabilize cash flow and ensure payroll continuity,” she said. “Without them, we risk disrupting operations at a critical moment.”
Senators responded by highlighting an amendment approved during last week’s full legislative session that increases the government’s existing line of credit from $150 million to $250 million, effectively boosting the amount available for advancing disaster recovery projects.
Of ODR’s 104 budgeted positions, 41 remain vacant, including key roles in engineering, finance, construction management, and project oversight. While much of the office is funded through federal administrative cost reimbursements, Williams-Octalien said the local match remains essential to keeping operations moving while waiting on those draws.
Lawmakers praised the office’s Super Project Management Office, or Super PMO, for keeping major recovery efforts on track. Recent contracts awarded include school projects across all three islands, as well as health care infrastructure like the Queen Louise Home for the Aged and the Knud Hansen Complex.
Still, Francis stressed the need for continued urgency. “We need to keep projects moving,” he said. “Every delay has a ripple effect – not just on services, but on the local economy.”
Public Finance Authority: Managing Debt, Seeking Support
Testifying on behalf of the Virgin Islands Public Finance Authority, Director of Finance and Administration Nathan Simmonds presented a $26.11 million budget request, down 21% from FY 2025, largely due to reduced consulting costs and budgeting salaries at half capacity. Of the request, $9 million would come from the General Fund, with $5 million allocated to the Authority’s operations and $4 million directed to ODR.
The authority is responsible for managing the government’s complex debt portfolio, including Matching Fund Securitization Bonds, Grant Anticipation Revenue Vehicle Bonds, and the $1.7 billion note issued to support the Government Employees’ Retirement System.
“We’ve made substantial progress reducing debt service costs and freeing up capital for critical needs,” Simmonds said.
However, revenue shortfalls — particularly from declining rum sales — have strained the funding stream that supports the Matching Fund structure. Simmonds noted a $22 million shortfall in collections, which was announced last year and attributed, in part, Tuesday to declining domestic demand for spirits. “We’re ramping up marketing, working on new product mixes, and engaging with Diageo and Cruzan Rum to increase sales,” he said.
The authority recently closed on a $150 million GARVEE Bond issuance to support key infrastructure projects, including $48 million for the Veterans Drive Highway, $20 million for the ferry system, and $28 million in road improvements on St. Croix.
In addition to bond management, the authority oversees semiautonomous agencies like the Virgin Islands Next Generation Network and the West Indian Company Ltd., and manages compliance agreements tied to Limetree Bay Terminals and Port Hamilton Refining. Simmonds said that while Port Hamilton continues its legal dispute with the Environmental Protection Agency, the territory remains engaged as discussions around a possible refinery restart evolve.
IRB and OMB Outline Reform Efforts
The committee also heard from the Virgin Islands Bureau of Internal Revenue and the Office of Management and Budget, both of which presented fiscal priorities aimed at improving efficiency and oversight.
IRB Director Joel Lee proposed a $14.06 million budget — up 6% from the current year — and emphasized the agency’s need to fill 21 vacant positions across its 133-person workforce. Lee also noted that the bureau spends close to $950,000 annually on rental spaces, including more than $730,000 for its main office in Red Hook, St. Thomas.
OMB Director Julio Rhymer presented a $46.5 million budget that includes funding for 13 new or vacant roles. He announced plans to terminate the government’s third-party fiduciary contract by the end of the current fiscal year and launch a new in-house Fiscal Responsibility Unit by Oct. 1. An additional $500,000 has been allocated to support the transition.
When asked about the biggest threats to fiscal performance, Rhymer pointed to the uncertainty around the flow of federal dollars. Lee, meanwhile, said the government must move toward a performance-based budgeting model to better align funding with measurable outcomes.