H.R. 3706: To create the Office of Chief Financial Officer of the Government of the Virgin Islands, and for other purposes

H.R. 3706

To create the Office of Chief Financial Officer of the Government of the Virgin Islands, and for other purposes

Sponsor
Sen. Bernard Sanders

Date
July 31, 2012 (112th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Tuesday, July 31, 2012, the House is scheduled to consider H.R. 3706, a bill to create the Office of Chief Financial Officer of the Government of the Virgin Islands, and for other purposes, under a suspension of the rules requiring a two-thirds majority vote for approval. The bill was introduced on December 16, 2011, by Del. Donna Christensen (D-VI) and referred to the Natural Resources Committee. On June 7, 2012, the Committee held a mark-up on the bill and reported the legislation, as amended.

Bill Summary

H.R. 3706 would require the Governor of the Virgin Islands to appoint a Chief Financial Officer (CFO), with the advice and consent of the Legislature of the Virgin Islands. The CFO would be required to:

  • Develop and report on the financial status of the Government of the Virgin Islands not later than 6 months after appointment and quarterly thereafter.
  • 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.
  • 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.

Under the legislation, the CFO would be appointed for a term of five years and could only be removed for cause. The CFO’s salary would be determined by the Governor of the Virgin Islands.

In order to recommend candidates for the CFO position, the bill would establish the “Virgin Islands Chief Financial Officer Search Commission.” The Commission would be required to recommend at least three candidates for nomination as the CFO. The Commission would be composed of 8 members appointed within 30 days of the enactment of the bill. The Commission members would be appointed by relevant stakeholders from the Virgin Islands, including the Governor, the Legislature, the Chamber of Commerce, and the AARP. Each member of the Commission would be appointed for life and serve without pay.

Once a candidate is selected by the governor, the legislature would be required to confirm the appointment within 90 days. If they fail to do so, the governor would be permitted to appoint an acting CFO. If the CFO serves for more than 180 days without further action by the legislature, the commission would be required to appoint a CFO by majority vote.

Background

According to the Committee on Natural Resources, 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, the Organic Act. 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 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.

Cost

According to CBO, H.R. 3706 would have no significant effect on the federal budget.