Does the GVI have a Revenue Problem or Spending Problem?

Former OMB Director Nellon L. Bowry discusses the long-standing fiscal issues and potential solutions for the Government of the Virgin Islands. He examines the unsustainable fiscal imbalance and argues for a balanced approach to resolving it

There is no disputing the problem. For many years, there has been a fiscal imbalance between GVI operating revenues and expenditures. Every year for at least 15 fiscal years – very likely longer – General Fund revenues have been less than expenditures; or if you prefer, expenditures have exceeded revenues by hundreds of millions of dollars per year. This has resulted in chronic cash shortages, credit rating downgrade, loss of access to credit, and overall deterioration in GVI’s fiscal condition and outlook. All agree that it is unsustainable and needs to be fixed.

The dispute is about the messaging. Framing it as a revenue problem implies that the solution is to increase revenues – instinctively interpreted as “more burden on taxpayers”. Framing it as a spending problem implies that the solution is to reduce expenditures – instinctively assumed to be doable by “cutting out government waste and mismanagement”. Which explains the popularity of the claim, particularly by campaigning politicians, that “the GVI has a spending problem, not a revenue problem”.