Senators who said they committed to $25 million in retroactive wage payments based on assurances from the government that the money would be available were dismayed to hear Friday that only $2.5 million had been paid by the Dec. 31, 2023 deadline while the rest was used to cover government payroll.
Testimony from the government’s financial team indicated that a revenue shortfall in fiscal year 2023 – approximately $83 million under FY 2022, according to Office of Management and Budget Director Jenifer O’Neal – was backfilled by $48 million in federal American Rescue Plan Act (ARPA) funds. Of that, approximately $22 million was supposed to bridge the gap, while the remainder was earmarked for the retro, according to senators.
In her testimony during a marathon six-hour hearing – four of which were dedicated to government finances – O’Neal said the government’s total FY 2023 budget appropriation was $1,037,117,327. OMB released allotments in the amount of $1,013,848,645, leaving
$23,268,683 unallotted. In comparison to revenues, the amount released ($1.013 billion) exceeded revenues collected by $23.4 million. However, the difference between the revenues collected and the FY 2023 appropriations was $46.7 million, she said.
Based on “the math,” Sen. Donna Frett-Gregory, who chaired Friday’s hearing, said she still didn’t understand why the retro commitment wasn’t paid since O’Neal explained it was accounted for in the $48 million ARPA funds. But, after some drilling down from Sen. Francis-Heyliger, in which O’Neal said the money was sent to Finance on Sept. 27, Frett-Gregory explained bluntly, “They used the money for other things, and you all just need to say it.”
“Don’t say you don’t understand what the senator is asking,” Frett-Gregory said after O’Neal’s discussion with Francis-Heyliger. “You say the money was transferred and for that purpose – so, who’s talking to who, because clearly there hasn’t been any conversation going on and that’s why the money got spent.”
Turning to Finance Commissioner-designee Kevin McCurdy, Frett-Gregory added, “And you spent the money and didn’t realize that portions of it should have been left back for the retro.”
With money tight, McCurdy said that when the money was transferred, the government had to make a decision on whether it was going to fund critical expenses, like payroll, the hospitals or the Bureau of Corrections’ consent decree, but still intended to fund the remaining $22.5 million “once we have cash.”
The same was said about outstanding vendor payments, which, combined with outstanding allotments, total about $89 million, McCurdy said. Asked by Senate President Novelle Francis how the government plans to safeguard against this in the future, McCurdy added, “This is how we started the first quarter for the past five years.”
Adding more context, Bureau of Internal Revenue Director Joel Lee explained that the primary drivers of the government are income taxes and gross receipts, of which there is generally an influx in April.
“That’s where the dip occurred – April is where we can expect an influx of cash, so we expect to level off at that point and have extra to do a major catch-up,” Lee added. Meanwhile, both he and McCurdy advocated for either the use of $50 million from the government’s existing line of credit for operations – which senators have not yet authorized – or the establishment of a new revolving line of credit that could get them through the slow periods.
According to the financial team, as of Dec. 31, the government has collected an unaudited amount of $150.6 million, including $89 million in income taxes, $7 million in property taxes, $34 million in gross receipts, and $6 million in hotel taxes – 16 percent less than what was collected during the same period last fiscal year.
