Revenue conference cut U.S. Virgin Islands fiscal 2020 forecast amid pandemic downturn

The U.S. Virgin Islands’ Spring Revenue Estimating Conference, held virtually on June 2, 2020, reduced the territory’s fiscal 2020 revenue projection to $718.3 million from an earlier estimate of $868.9 million, according to the Office of Management and Budget.

OMB Director Jenifer O’Neal said the fiscal 2021 projection stood at $742.8 million. Actual revenue in fiscal 2019 was $841.9 million.

Officials said the sharp decline was tied to the economic effects of the COVID-19 pandemic, particularly in tourism. Tourism Commissioner Joseph Boschulte said daily air arrivals into St. Thomas fell from nearly 2,400 on March 14, 2020, to fewer than 100 by the end of March, while mainland flights dropped from about 90 a week to 15. Hotel room tax collections fell to $1.83 million in April from $2.55 million in March.

Mark Wenner, chief economist at the Bureau of Economic Research, said tourist expenditures were expected to decline by $273 million for the remainder of fiscal 2020 and tax revenue was projected to come in $150.1 million below initial forecasts. He said the territory’s gross domestic product was likely to contract by 12% to 14%, while unemployment rose to 8.4% in April from 4.2% in March.

Labor Commissioner Gary Molloy said the Labor Department received 6,292 unemployment claims between March 8 and May 31, 2020. He said the department had issued $10.8 million in Federal Pandemic Unemployment Compensation and $5.3 million in regular unemployment insurance payments.

Bureau of Internal Revenue Director Joel Lee said the territory had recorded $64 million in excise tax losses as of April 30, 2020, and expected declines in individual and corporate income tax collections and other taxes. He said gross receipts tax collections were running about $6.5 million above the same period in fiscal 2019.

Two agencies projected gains despite the broader downturn. The Bureau of Motor Vehicles forecast revenue of $10.68 million in 2020, up from $10.41 million in 2019, and the Department of Licensing and Consumer Affairs outlined planned fee increases and stepped-up collection of delinquent license fees and penalties.

Official source: https://www.vi.gov/spring-revenue-estimating-conference-spotlights-economic-scope-and-impact-of-covid-19-pandemic/