VIRGIN ISLANDS STATEMENT OF GOV. JUAN LUIS, VIRGIN ISLANDS ACCOMPANIED BY: ROY SCHNEIDER, M.D., COMMISSIONER OF HEALTH OPENING REMARKS Senator BURDICK. Our next group will be from the Virgin Islands. The budget request for fiscal 1980 is $2.4 million which would provide for preliminary design of a new hospital in the Virgin Islands. Welcome to the committee. As in the other cases, your full statement will be made a part of the record, and if you care to summarize, it is fine. Please introduce the others at the table other than Dr. Evans, whom I know quite well, and you can proceed. Dr. EVANS. May I have the honor of introducing the Governor? It is my pleasure to introduce Gov. Juan Luis. He had the very difficult task of taking over very suddenly, about a year ago, when he was serving as Lieutenant Governor, upon the death of the Governor. He did a very good job and was reelected in his own right. He appears before you with his commissioner of health, who is sitting on my immediate left, a position I had many years ago, so I appreciate his problems. Mr. Amadeu I. D. Francis, commissioner of commerce, who is a very, very able individual, is a native Virgin Islander who we actively recruited from another island. Senator BURDICK. Well, with a sendoff like that, Governor, you ought to accomplish something. We will insert your biographical sketch in the record at this point, and you may go ahead with your statement now if you wish. [The information follows:] (1643) BIOGRAPHY OF Gov. JUAN LUIS Juan Luis was born to Juan Luis, Sr., and the former Victoria Monell on July 10, 1940 on the Island of Vieques, Puerto Rico, but moved with his family to the Island of St. Croix, United States Virgin Islands when he was two months of age, and has lived there ever since. He attended the St. Mary's Catholic Elementary School, St. Croix. He is a graduate of the Christiansted High School and was Valedictorian of the class of 1958. Following graduation from High School, Juan Luis attended the Inter American University and University of Puerto Rico, where he completed Pre-Medicine. He later served in the United States Army, where he attained the commendation of "Outstanding Trainee" of his Company and achieved the rank of Sergeant. Prior to and following his honorable discharge from the Army, Juan Luis held several executive positions both in Government and private enterprise on the Island of St. Croix. He served as a teacher in the local school system; as Project Office Manager for the Department of Housing and Urban Development; as Administrative Personnel Officer in the Department of Health; as Industrial Relations Manager for the Litwin Corporation; and as Personnel Officer and Comptroller at the Estate Carlton Hotel. Entering public life, Juan Luis was elected to the Virgin Islands Tenth Legislature on November 7, 1972 as a candidate of the Independent Citizens Movement (ICM) from the District of St. Croix. During his term as Senator, Juan Luis served as Chairman of the Housing and Planning Committee, Vice Chairman of the Recreation Committee, and as a member of the Legislative Committees on Finance, Public Safety, Health and Welfare and Labor and Veterans Affairs. In the Gubernatorial run-off Election of 1974, Juan Luis was elected Lieutenant Governor with former Governor Cyril E. King on November 19, 1974, running as a team on the ticket of the Independent Citizens Movement. On January 6, 1975 Juan Luis became the second elected Lieutenant Governor of the U.S. Virgin Islands. During his term as Lieutenant Governor, Juan Luis served as Secretary of State, Chairman of the Banking Board, Chairman of the Virgin Islands Bicentennial Commission, Commissioner of Insurance, and executive member of the Lieutenant Governors' Conference. Upon the untimely death of former Governor Cyril E. King on January 2, 1978, Juan Luis was administered the Oath of Office as Governor of the United States Virgin Islands. On November 7, 1978 Juan Luis became the third elected Governor of the United States Virgin Islands with Henry A Millin being elected Lieutenant Governor and as a team mate on an independent ticket. As Governor, Juan Luis is Commander-in-Chief of the Virgin Islands National Guard, heads the Civil Defense, and is an executive member of the National Governors' Conference. His hobbies include playing baseball and softball; fishing, singing and playing guitar. Juan Luis is married to the former Luz Maria Guadalupe of St.Croix. VIRGIN ISLANDS GOVERNMENT FINANCES Governor Luis. Mr. Chairman and members of your committee, I appreciate the opportunity afforded me to appear before this committee for the purpose of bringing to your attention the financial problems of the Virgin Islands of the United States and our pressing need for Federal assistance. The financial condition of the Virgin Islands government is very unstable. For several years operating expenses have exceeded revenues. Currently there is a projected gap of $19.3 million between revenues and expenditures for fiscal year 1979. Because of restrictions on deficit spending mandated by our Revised Organic Act, our various departments, including those providing health, education, welfare, and other social services, have been forced to operate without sufficient funds. Consequently, certain health services have been limited; procurement of books and other educational materials and equipment has been curtailed; certain restrictions and reductions of payments to eligible welfare recipients have been instituted; maintenance of essential public safety equipment such as police vehicles, firetrucks, and ambulances has been grossly inadequate and vital public works projects have been stalled. In the past, in order to avoid deficit spending, we have customarily transferred and utilized funds from other accounts and earmarked for other purposes to pay ongoing costs of the government. Most of these accounts, upon which we have depended to balance our operating budget, are rapidly becoming depleted. We have fully committed our internal revenue matching fund to meeting some of these costs, although the matching fund is our only source of immediate funding should some unforeseen emergency arise. In the interest of good public administration the matching fund should remain flexible and, to the greatest extent possible, unencumbered. We are presently pursuing other alternatives which include the renegotiation of the Hess Oil tax concession agreement prior to its expiration date in 1981; increasing our tax base by recommendation of a tax package which I recently submitted to the Virgin Island Senate; instituting a soon to be implemented new accounting and financial information system; imposing mandatory spending ceilings through the budget process; initiating a study to identify nonessential programs or services which may be curtailed or eliminated; imposing a freeze on new hiring and promotions; reducing payroll expenses by attrition; revising the present pay plan which provides increments annually to nonunion employees to one which provides increments every 2 years based on merit; requiring mandatory purchase of compact cars which meet energy saving standards and implementing a vigorous revenue collection program. The gains to be realized from implementing all of the above and other measures that we will be exploring are, at best, long range and will not offset the projected deficit for this fiscal year. Our only viable alternative, then, is the appropriation of funds authorized by the omnibus territories bill, formerly H.R. 12481 and S. 2821. You may recall that section 4 of the omnibus territories bill authorizes the following appropriations for the Virgin Islands: One, up to $5 million, of which $1 million may be appropriated during fiscal year 1979, for promoting economic development. Two, up to $52 million, including amounts attributable to fluctuations in construction costs, for the construction of new hospital facilities. Three, up to $20 million during fiscal years 1979, 1980, and 1981 to offset anticipated budget deficits on the condition of status reports about the financial ability of the Virgin Islands by the Secretary of the Interior. That bill also authorizes the remittance of duties, taxes, and fees collected or derived from the Virgin Islands, contingent on the change of our fiscal year to conform to the Federal fiscal year. Without an immediate infusion of these funds, the Virgin Islands government cannot optimistically look forward to a reversal of current fiscal problems, the restoration of vital services and projects, and the improvement in overall government administration. As you are very much aware, tourism is the major industry in the Virgin Islands. Through a concerted and determined advertising campaign and capable direction from our department of commerce, new impetus has been given to our tourist trade. Currently, record numbers of visitors are again coming to our shores. However, in order to establish a more stable and viable economic base, we must more fully develop our industrial potential. We must be in a position to attract new industries to the islands and to revive traditional ones such as the rum and watch industry. For us to achieve these announced goals, moneys authorized for such activities by the omnibus bill must be appropriated. PROPOSED HOSPITALS For more than 24 months we have been presenting justifications, pictorial presentations, and position papers to the Department of Health, Education, and Welfare soliciting financial assistance for the construction of new health facilities in the Virgin Islands. Our requests for financial assistance have been brought to the attention of the White House, the Department of the Interior, the Office of Management and Budget, and various Senate and House committees. We have described the dilapidated condition of our health facilities and its effect on the health and well-being of our residents and visitors. Everyone agrees that we have a demonstrated need for new health facilities. Because of the ever-rising costs of construction and freight-most construction materials must be shipped to the islands-coupled with the high cost of living in the Virgin Islands-some sources estimate the cost of living in the territory to be at least 25 percent higher than in the United States-costs can be contained and savings realized with "fast track" construction. Timely appropriation of the $52 million authorized for health facilities construction by the omnibus bill will therefore be cost beneficial. FINANCIAL ACCOUNTABILITY Recently, I submitted a bill to the Virgin Islands Legislature, which was subsequently approved by that body, to change our fiscal year to conform with the Federal fiscal year period of October 1 to September 30. A major intent of this enactment was to insure the remittance of duties, taxes, and fees as authorized by the omnibus bill. We feel that this remittance is justified and proper and will serve to demonstrate the interest of the United States in its relationship with the Virgin Islands and the welfare of its people. We are determined to correct our financial accounting and budget problems and our administrative deficiencies so that we may restore vital government services and programs and to acquire the expert services of qualified professionals to manage and direct all facets of government. However, our present status, aforementioned, does not enable us to commit funds toward this end. We must, therefore, secure the appropriation of $20 million to meet our projected budget deficit and to provide us with needed funds to commence our efforts to improve government financial, accounting, and administrative systems. My administration and cabinet members are new. We are faced with serious and pressing problems in providing adequate potable water resources, controlling and preventing crime, responding to the needs of an overburdened educational system, providing such essential public services as electric power, road maintenance and garbage collection, and providing health and welfare services. All of these problems are directly related to a population explosion due in large part to Federal immigration policies beyond our control. As a result, government expenditures have unavoidably exceeded available revenues. In an attempt to successfully resolve these problems, a constant shifting of priorities and finances has been necessary. Insufficient funds have made the task of addressing these problems within the framework of a balanced budget extremely difficult. I therefore strongly urge you and your committee, on behalf of all the people of the U.S. Virgin Islands, to favorably consider the appropriation of all moneys authorized by the omnibus territories bill. Gentlemen, the heart of my presentation is to request the appropriations as authorized in the omnibus territories bill, which will go a long way in restoring some of our financial problems. I will now be pleased to respond to any questions that you may have, sir. STATEMENT OF DR. SCHNEIDER-NEW HOSPITALS Senator BURDICK. Do any of your associates care to say anything before we go into the question period? Dr. SCHNEIDER. Thank you, Mr. Chairman. I have a statement prepared on the commission of health, but I would like to summarize and add to what the Governor said. There is a significant factor indicative of our need for new hospital funding. The two hospitals in the territories were constructed in 1951. The public health facilities date back to 1910. These vestiges of the |