Bryan releases fiscal analysis of public-sector minimum salary mandate

Gov. Albert Bryan Jr. on June 17, 2025, released an initial fiscal impact analysis of legislation passed by the 36th Legislature that would raise the minimum salary for public-sector workers from $27,000 to $35,000 effective Oct. 1, 2025.

According to the analysis, the measure would increase government payroll and fringe-benefit costs by about $40 million a year, raising total payroll from $488.9 million to about $529 million, an 8.2% increase.

The administration said the mandate would directly affect 679 central government workers and would require additional salary adjustments for more than 5,200 other employees because of salary compression. The analysis also said the law did not account for more than 4,100 employees in semi-autonomous agencies and instrumentalities who could seek comparable increases.

The analysis estimated the territory's debt load could rise by $120 million to $200 million over the next three to five years unless offset by new revenue or cost-saving measures. It also said the salary increase could generate about $6.1 million in new tax revenue, below the projected cost, and that an additional 3% employer contribution to the Government Employees' Retirement System would add to long-term pension liabilities.

Bryan's team also said a sudden wage increase without phased implementation or broader economic changes could add inflationary pressure. The governor cited union-related disruptions within the Virgin Islands Police Department in the St. Thomas-St. John district as an example of labor effects tied to broad wage changes.

The administration said it recommended phasing in the increase over three to five years, conducting a compensation and classification study, identifying operational efficiencies and improving workforce data collection across agencies.

Official source: https://www.vi.gov/governor-bryan-releases-initial-fiscal-impact-analysis-on-legislative-minimum-salary-mandate/