USVI Profligacy Demonstrates Need for Heightened Oversight, Distribution of Existing Funds

The leadership of US Virgin Islands (USVI) Governor Albert Bryan and his government-run power utility, Water and Power Authority (WAPA) has been the source of much criticism. Therefore, it should come as no surprise that taxpayers were holding their collective breaths when it was announced Governor Bryan would be coming to Washington, DC looking for yet more federal funds from the Biden administration.

Governor Bryan Goes to Washington

His trip took place at a tumultuous time for his USVI government, as it WAPA’s recent failures to pay its debts have led to consequences for the territory. WAPA’s main provider of liquefied petroleum gas (LPG), Vitol, suspended its services as a result. This threatens rolling blackouts just as the holiday travel season is ramping up. This is especially dangerous for USVI, considering how dependent the local economy is on tourism dollars.

While Governor Bryan took to social media during the trip to highlight his daily meetings with administration and congressional officials, it appears he may have come home empty-handed. Bryan clarified after the trip, “We didn’t ask for more money. We just asked for permission to use our money in the places we see fit.”

For taxpayers across the country, this is a welcome and long-overdue result. Permission to use existing money to pay debts – as opposed to more taxpayer funding – would be a good start on this front.

Federal Funds in the Virgin Islands

This then begs the question – how much federal money does the USVI actually have to pay off these debts? First, USVI received just over $7 billion in funds for recovery efforts in the wake of Hurricanes Maria and Irma. Of that, they’ve spent roughly $2.8 billion. Assuming there are no undisclosed expenses, this leaves roughly $4.2 billion left over.

Additionally, the territory has received $75 million from the CARES Act, $257 million from the Coronavirus Education Stabilization Fund, and $515 million as part of the American Rescue Plan.

Unfortunately, Bryan’s record with this money has not inspired confidence. Among the expenditures in recent years are four generators that ended up failing, an entitlement program providing $500 to every USVI resident, $48 million in more subsidies for WAPA, 23 Tesla vehicles, 14 tennis courts, 20 basketball courts, and eight paddleball courts.

Marcia Fudge – the Secretary of Housing and Urban Development (HUD) – was recently quoted telling the USVI government to “move with some urgency” in spending existing funds, because “the funds can be taken away for use elsewhere.”

This would be a welcome solution as well. There is currently at least $4 billion in taxpayer dollars existing unused in the Virgin Islands while America approaches a debt limit and there are many outstanding expenditures where those funds could be made more useful. If Governor Bryan is unwilling or unable to use these funds to settle the territories debts and fix WAPA, he should return the money to the US Treasury and discontinue the barrage of handouts his government receives.

More Waste, Fraud, and Abuse

Also of concern is the fact that WAPA threw a lavish Christmas party while Governor Bryan was in Washington, ostensibly convincing lawmakers of the seriousness with which they are handling their financial situation. The publicly-run utility company is renting out a castle to host its employees for a holiday bash. Meanwhile, the territory’s 87,000 residents risk going without power for the holidays if WAPA cannot settles its debt.

WAPA claims it is using wellness funds given by healthcare insurance provider, Cigna, and are not using taxpayer dollars to fund their blowout celebration. However, Cigna outright denies this, making it seem more and more likely that taxpayers are footing the bill for this extravagance.

While the WAPA CEO is quoted as saying his employees “have earned these celebrations,” local Virgin Islanders are expressing frustration at “blackout after blackout” while their governmental authorities urge them “to be patient.”

USVI resident Marie Ferreras recently said, “Survival mode means no spending on anything, other than critical things. Castle parties don’t qualify… No money means you appreciate the millions you are being given and should pledge to be good stewards of the gift of the public purse.”

More Oversight Needed Going Forward

This is one of many examples of why oversight is so desperately needed in this area. Despite all of this, WAPA has asked HUD for another $53 million in funding for enhancements to its St. Croix power plant. Without needed oversight, WAPA has not demonstrated they will not mishandle any further funds.

Thankfully, members of Congress – like Rep. Byron Donalds (R-Fla.) – and the HUD Inspector General have seen this before and are staying vigilant to implement needed accountability measures.

The HUD Inspector General’s office currently has two open audits into the Virgin Islands Housing Finance Authority’s (VIHFA) oversight of federal funds. There is a trend of those funds being distributed to sub-recipients with a demonstrated proclivity for mismanagement. Before the utility receives a dime more, the results of the IG’s audits must be made public.

Governor Bryan must get his territories financial house in order. This is vital not only for the well-being of USVI residents, but their economy more broadly. Roughly 50 percent of the USVI’s GDP comes from the tourism sector. The territory can scarcely afford sustained blackouts to hotels, restaurants, or retail shops. If that is allowed to happen, there will no doubt be severe long-term consequences.

If the Governor’s trip and WAPA’s castle party have not highlighted the need for heightened oversight of federal funds flowing to USVI, very little will. Federal officials owe it to taxpayers everywhere and to USVI residents to ensure this money is well-spent and unused disaster funds are used only on necessary expenditures, with the rest being used to offset future spending by the federal government.