Lawmakers advanced the Fiscal Year 2027 budget package on Monday after three months of hearings, with Senate Budget Committee Chair Novelle Francis Jr. warning that the territory’s finances are “precarious” as tax collections weaken, federal funding remains uncertain and expected revenues from disaster-recovery activity continue to fall short.
The Committee on Budget, Appropriations and Finance spent the past several months reviewing agency spending requests before taking up the budget measures Monday. Mr. Francis said the financial environment required lawmakers to adopt what he described as a “conservative approach to the government’s finances.”
In light of “ongoing factors affecting the global and national economies,” he said the Legislature would be “underestimating the government's anticipated revenues while being brutally honest about our projected revenues expenses.”
Mr. Francis said the effect of federal policy and funding decisions is already being felt locally, with residents experiencing the “trickle-down effect of the increased federal scrutiny and the impact on programs and services that serve our community.”
“This budget reflects our fiscal caution, but also our optimism that, with sound and responsible financial management leadership and collection, we will right this ship,” he said.
The Legislature’s own summary of Monday’s meeting said strengthening government collections is considered critical to maintaining essential services, while further work remains on disaster recovery and other sources of economic activity.
Collections Become Central to Budget Debate
Several lawmakers argued that balancing the government’s finances will depend heavily on collecting taxes and other obligations already owed to the territory.
Sen. Marvin Blyden described preparation of the spending plan as “challenging” because of “the shortfalls in collection.” He said lawmakers have attempted to provide revenue-generating agencies with the staffing and physical resources necessary to improve collections.
Sen. Kurt Vialet expressed similar frustration. “There are expectations in terms of collection, and a number of times we are seeing where we believe that this government is under collecting, and not really making sure that the money necessary to run the government is collected,” he said.
Mr. Vialet also pointed to the territory’s dependence on federally financed reconstruction work. In recent years, he said, “the expectation in terms of collection from federally funded projects don't meet the goals that we have, and hence this committee has been very frugal.”
The territory’s proposed FY 2027 executive budget presented to lawmakers in August totaled approximately $1.64 billion, including $958 million in projected General Fund revenue and $543.3 million in federal funding. At that hearing, the administration projected $733.9 million in disaster-recovery spending during FY 2027, illustrating the scale of federal reconstruction activity embedded in the territory’s economic and fiscal outlook.
Mr. Vialet said agencies must “make sure that all that is owed to the Government of the Virgin Islands is collected” while moving federal projects faster so the territory can realize the associated economic activity and revenues.
Sen. Marise James thanked residents and businesses that meet their tax obligations, saying those payments make government services possible. She also appealed to delinquent taxpayers. “A lot of times people don't realize that we can't provide the services and programs because we're not able to collect the money that we should,” she said. Francis:
'The State of Our Finances Is Precarious'
“I think that the state of our finances is precarious,” Mr. Francis said as lawmakers completed their consideration of the budget measures. He cited continued uncertainty surrounding HUD funding and stressed the importance of deploying FEMA money within required timelines.
“The revenues are down. If it had not been for the underpinning of a line of credit, you know, I think that we'll be in a worse-off situation than we have been in,” he said.
That concern is consistent with information provided by the governor’s financial team during the August budget wrap-up. Officials told lawmakers that FY 2026 was then projected to close with a nearly $59 million deficit, while the government was relying on a $150 million line of credit for short-term cash flow. As of August 13, approximately $124.78 million of that facility had been drawn, leaving $25.22 million available.
Mr. Francis said individual income-tax collections declined by $31.7 million, falling from $434.7 million in FY 2025 to $403 million in FY 2026. Although total revenues through August 21 were approximately $11.5 million higher than during the comparable FY 2025 period, he said the apparent improvement was “associated and being leveraged by the line of credit.”
The government, he said, has “tremendous work to continue to do.”
Mr. Francis argued that the Legislature cannot “sit on our laurels” and must be “aggressive” in exercising oversight over agencies responsible for collecting government revenue.
Sen. Ray Fonseca, meanwhile, emphasized spending discipline alongside collection efforts. “As legislators, our responsibility is to not simply approve the budget, but we have to make sure people's money is being spent responsibly, that agencies are accountable, and that the services our residents depend on are properly funded,” he said.
The FY 2027 budget measures approved Monday are now headed to the Committee on Rules and Judiciary for further consideration. The Legislature’s published budget process provides for Rules Committee review before the measures advance to the full Senate and, if approved, to Gov. Albert Bryan Jr. for consideration.
