In her biweekly column, “State of the Territory,” former Sen. Janelle K. Sarauw delves deeper into issues of concern for V.I. residents.
The financial state of the U.S. Virgin Islands is at a crisis point, despite the rosy picture painted in the recent State of the Territory Address. The reality, as exposed when the financial team appeared before the Senate, is starkly different from the governor’s narrative. The numbers do not lie, and they demand urgent attention and accountability.
The Hard Facts
- $185 Million Deficit – The government is operating under a staggering deficit, a figure that should alarm every resident of the territory.
- Epstein-Linked Funds in Government Spending – A Scandalous Misuse of Public Money
The misuse of Epstein-related settlement funds is one of the most egregious financial missteps in recent history. In total, the government received $182 million from civil claims against Epstein’s estate and associates, with $156 million available to the Virgin Islands Government. Shockingly, $33.6 million of these funds were spent on government operations without legislative approval—a clear violation of financial oversight.
Senators were stunned by this revelation, pressing Finance Commissioner McCurdy for answers on how and why these funds were used. McCurdy attempted to justify the expenditure by claiming the master agreement allowed for the transfer to the General Fund, but that excuse fell flat.
In reality, the Bryan administration improperly appropriated these funds to meet critical expenses without legislative oversight, a flagrant disregard for transparency and accountability. Meanwhile, $97.8 million remains parked in an interest-bearing account, and an additional $25 million is still expected from the law firm representing the government in Epstein-related litigation. The administration has yet to provide a clear plan for how these funds will be used to benefit the people of the Virgin Islands rather than filling financial gaps of its own making.
This was not disclosed in the Governor’s feel-good State of the Territory Address. Instead, the administration quietly shuffled money around, covering shortfalls with no input from the Senate and no plan for long-term financial stability. If the funds had been properly allocated with legislative oversight, the fiscal deficit of $152 million might have been mitigated rather than exacerbated.
- Outstanding Debt to Vendors – The government owes $66.1 million to vendors, yet the cash on hand is only $38.9 million, creating a major shortfall that threatens essential services and economic stability.
- Reliance on Borrowing – The government had to borrow $40 million from a $50 million line of credit just to maintain operations. Without this emergency borrowing, the territory’s available cash would be ZERO, virtually nonexistent—a glaring sign of fiscal mismanagement.
- Revenue Declines Across the Board – According to the January 2025 Revenue Report, General Fund revenues are down 9% compared to the previous year. Individual income tax collections plummeted by 33%, while withholding tax revenue dropped 17%. These figures point to economic contraction, potential job losses, and stagnant wages. Government expenditures, especially in payroll, remain one of the largest drains on resources.
- A Few Bright Spots, But Not Enough – While corporate income tax revenues increased by 15%, corporate estimated payments remained flat, suggesting that business profitability may decline later in the fiscal year. Gross receipts tax revenue grew 5%, indicating stable business activity, but this was not enough to offset overall revenue losses.
- Tourism and Special Revenue Struggles – Hotel Room Tax collections increased 10%, and the Vehicle Rental Surcharge rose 16%, reflecting an uptick in tourism. However, Non-Hotel Room Tax revenue dropped 28%, suggesting issues in tax compliance or a decline in short-term rentals.
- Delayed Federal Fund Utilization – Only $3.7 billion of the $23.9 billion in federal disaster recovery funds have been spent, a glaring failure in executing infrastructure projects and economic recovery efforts. The delay in spending these funds threatens economic development and the stability of the workforce.
- Pension System in Peril – The General Employees Retirement System (GERS) remains on the brink of collapse. The government’s reliance on rum cover-over funds to sustain GERS is risky, especially with Congressional uncertainty about extending the current rate. If GERS fails, retirees will be left without their promised pensions, deepening the financial crisis for thousands of Virgin Islanders.
- Public Employee Costs and Union Negotiations – With 15 active union contracts currently being negotiated, rising public employee salaries and benefits pose a significant financial burden. Health insurance costs alone have risen nearly 10%, further straining the budget. The administration has yet to outline a clear strategy for balancing these costs with the territory’s declining revenue base.
- Self-Serving Pay Raises Amid a Financial Crisis – At a time when the government cannot meet vendor payments and is borrowing to remain operational, Governor Bryan awarded himself a $42,000 raise, along with raises for Lt. Governor Roach and his cabinet members totaling nearly $350,000. $350k may be a drop in the bucket, but it boils down to the principal of it – while the masses are suffering it is not wise to entertain pay raises at this time. It is called reading the room. Additionally, the financial crisis is being labeled as “stable,” a misleading characterization that suggests uncertainty and an unpredictable future. This is greed, pure and simple. It is an abuse of power and a violation of the public trust.
A Reality Check is Needed
This is not just a matter of numbers on a page—this financial instability affects real people. Public employees, business owners, and everyday Virgin Islanders can sense that all is not well. The strain of delayed payments, an underfunded public sector, and an uncertain economic future have created a growing sense of unease. These challenges affect livelihoods, businesses, and the overall stability of our community. People should not have to wonder whether their government can meet its obligations or if essential services will suffer due to financial mismanagement.
Addressing these issues requires a commitment to transparency and responsible leadership. The government must acknowledge the true financial state of the territory, move beyond misleading narratives, and focus on solutions that prioritize fiscal responsibility. With declining revenues, mounting debt, and an overreliance on borrowing, the current trajectory is not sustainable. The people of the Virgin Islands deserve leaders who will make difficult but necessary decisions to restore confidence and economic stability. Now is the time for meaningful reforms, greater accountability, and leadership that puts the interests of the people first.
Editor’s Note: Opinion articles do not represent the views of the Virgin Islands Source newsroom and are the sole expressed opinion of the writer. Submissions can be made to visource@gmail.com.
