USVI Legislature backs $1.64B budget as tax shortfall deepens

The US Virgin Islands Legislature moved forward with its Fiscal Year 2027 spending plan on Monday, completing three months of committee review. However, Senate Budget Committee Chair Novelle Francis Jr. cautioned that the territory is navigating treacherous financial ground.

A sharp decline in personal income tax revenue has become the focal point of budget discussions. Collections fell by $31.7 million year-on-year, dropping to $403 million in FY 2026 from $434.7 million the previous year. Mr. Francis characterised the overall fiscal situation as "precarious," pointing to eroding tax receipts, unpredictable federal allocations and shortfalls in reconstruction-related revenues.

The spending package totals roughly $1.64 billion, with $958 million expected from General Fund sources and $543.3 million from federal programmes. Disaster-recovery activities are projected to account for $733.9 million during the fiscal year.

Lawmakers stressed that improving revenue collection is essential to sustaining government services. Sen. Marvin Blyden called the budget process "challenging" given collection gaps, while Sen. Kurt Vialet voiced concern that the government may not be securing all revenues it is owed. Sen. Marise James urged both compliant taxpayers and those in arrears to understand that unpaid obligations directly limit the programmes residents receive.

The government has tapped $124.78 million of a $150 million credit facility for short-term operations, leaving $25.22 million undrawn. Mr. Francis noted that revenue improvements recorded through late August were "associated and being leveraged by the line of credit," suggesting that without this backstop the position would be worse.

Sen. Ray Fonseca underscored the need for fiscal restraint in spending decisions. "As legislators, our responsibility is to not simply approve the budget, but we have to make sure people's money is being spent responsibly, that agencies are accountable, and that the services our residents depend on are properly funded," he said.

The measures will next be reviewed by the Committee on Rules and Judiciary, then submitted to the full Senate and finally to Gov. Albert Bryan Jr.