As the Senate Energy and Natural Resources Committee prepares for a hearing on February 9th regarding the status of US territories, many concerns are only just now being brought to light. It’s important for taxpayers to understand the true situation and how much of their hard earned money is being spent on fraud, waste, abuse, and sheer incompetence.
Governor Albert Bryan of the US Virgin Islands (USVI) is set to testify in front of the committee regarding the state of the territory, the struggle to manage its finances, and the ongoing crisis surrounding USVI’s Water and Power Authority (WAPA).
While it might be convenient to blame the USVI’s difficulties on the myriad natural disasters that have by some estimates caused more than $12 billion in damages, the USVI has received more than enough funds to respond to the crises. To date, the federal government has allocated $7.4 billion in funds, with an additional $5.9 billion being obligated from federal resources. In addition to these funds, the USVI has received nearly $900 million combined from various COVID packages, including the CARES Act, Coronavirus Education Stabilization Fund and American Rescue Plan Act. In total, USVI has or will receive $14.2 billion in recent funding from the above-mentioned sources; $2.2 billion more than the projected cost of damages.
Taxpayers should be very concerned by the amount of funds being sent to USVI, and no additional funding should be provided without oversight and safeguards being put in place.
One example of a USVI program that should have lawmakers concerned and should take a large percentage of the committee’s time with Gov. Bryan is the ongoing struggles of the USVI’s public power utility, WAPA.
WAPA sources its liquid propane gas (LPG) from facilities operated by a Texas based company, Vitol. WAPA is currently more than $150 million in debt to the company and as a result of these debts, propane delivery has been suspended.
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In order to try and keep the public’s power up and running Gov. Bryan decided to subsidize WAPA at a cost of $4 million a month of taxpayer ARPA funds. In and of itself, this isn't necessarily a concern, but when we examine what brought us to this point the water certainly becomes murkier.
In July of 2020, WAPA purchased four Wartsila generators paid for by a $75 million HUD Community Development Block Grant (CDBG), which FEMA approved funding for at 100 percent of costs. WAPA originally estimated that the generators would be online as early as the first quarter of 2022, however as of February 2023, they still do not have the ability to burn propane and generate electricity.
The delay in implementation is due in part to incompetence. WAPA took $75 million in federal funding and procured generators that require liquid propane when the Vitol LPG terminal was only designed to deliver gaseous propane. This means that the $75 million of federal funds were used to procure ineffective equipment that needs to be retrofitted before it can even begin to serve its sole purpose.
As lawmakers prepare to hear from Gov. Byran and a slew of other experts, they need to consider if USVI is even fit for more federal funding at this time as well as how they can implement new oversight measures and safeguards against fraud, waste and abuse. USVI is no stranger to their fair share of scandals. As recently as 2018, a USVI senator was convicted of wire fraud and theft of federal program funds, and USVI is still the only US state or territory to not have an ethics commission.
Congress should take a note from the Governor of the British Virgin Islands (BVI) who recently spearheaded an independent inquiry into corruption of BVI. Although the territories are kin to separate nations, they are connected not only through geography but an overlapping population. It follows if BVI is experiencing such intense levels of corruption that USVI likely is as well, especially considering that many officials of both territories have “belonger” citizenship status in the opposite territory. The BVI investigation could provide the US with a road map on how to handle oversight of federal funds in USVI.
It is encouraging to see some Representatives take this issue seriously. Rep. Byron Donalds (R-FL) recently sent a letter to the HUD Inspector General in which he requested a probe into the reckless spending of HUD funds. To be completely transparent the HUD Inspector General’s office currently has two open audits into the Virgin Islands Housing Finance Authority’s (VIHFA) oversight of federal funds, but the audits are still ongoing. The first examines if the territory effectively administered its CDBG Disaster Recovery funding and the second seeks to ensure the VIHFA appropriately utilized the CDBG Disaster Recovery Match Program. Calls for oversight and transparency are not new however, as far back as 2019 USVI’s delegate to Congress, Stacey Plaskett, voiced her own concerns about WAPA’s ability to handle hundreds of millions of dollars in federal aid.
Taxpayers are right to be concerned about the financial well being of USVI and the Senate Energy and Natural Resources Committee should seize this as an opportunity to shine a light on the shortcomings of the territory. Hopefully, increased transparency will yield better results and more protection of hard earned taxpayer money.
Alex Milliken is a policy and government affairs manager with the National Taxpayers Union, a nonprofit dedicated to advocating for sound tax and budget policy at all levels of government.
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