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Remove Differences in Federal Government’s Relationship to Territories and States, Bryan says as he Testifies Before U.S. Senate Committee

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Governor Albert Bryan Jr.’s testimony before the U.S. Senate Committee on Energy and Natural Resources Thursday morning reminded committee members of how critical differences in treatment of territories and states by the federal government has a detrimental impact on the quality of life of American citizens living in these territories.

He called for legislative fixes to the “benefits cliff” whereby mainlanders moving to the Virgin Islands and other territories lose access to Supplemental Security Income and other benefits guaranteed to American citizens living in the states. The current cap on Medicaid funding also needs to go, the governor told senators on the committee, as did his colleague from Guam, Governor Leon Guerrero.Governor Bryan highlighted the inconsistencies in taxation policy that exist for the Virgin Islands. He noted that Section 924 of the Internal Revenue Code allows for tax incentives that encourage U.S. investment in the territory. However, the Global Intangible Low-Taxed Income (GILTI) framework, “meant to keep American companies from stashing profits in tax havens,” is also applied to the USVI, which Mr. Bryan said “guts the territory’s economic development programs.” Removing the burden of GILTI from the territory would spur American investment in the Virgin Islands, the governor argued. 

While Mr. Bryan minced no words in expressing his displeasure at the status quo, he was thankful for the victories in the journey to equality that were achieved last year, with the help of the lawmakers on Capitol Hill.

Governor Bryan highlighted measures like the permanent raising of the Federal Medicaid Assistance Percentage (FMAP) from 55 percent to 83, achieved through the passage of the 2023 Consolidated Appropriations Act (CAA). Now, rather than being a temporary and uncertain reprieve, the 83 percent level of FMAP matching permanently brings the USVI on par with what is offered to States. However, the Medicaid funding cap is now constraining the quantum of federal assistance the territory can receive in this regard. The territory is also burdened with a uniquely anachronistic system by which hospitals are reimbursed. Governor Bryan urged action on this by Congress as well, which would result in a more effective and equitable approach to federal Medicaid support to the Virgin Islands public healthcare system.

“We are not second-class citizens,” the governor told U.S. Senators. “Our people need first-class local care.”

Mr. Bryan also pressed the case for a permanent increase in the rate of excise tax remittances for rum, just as was done for the increase in the FMAP. “The devastating impact on our finances is now unfolding,” he said, referring to the expiration of the last “tax-extender” at the end of December which resulted in a 20 percent reduction in cover-over funds allocated to the territory. “The situation will rapidly deteriorate unless action is taken by Congress to honor our longstanding cover-over arrangement.” 

In a briefing with local journalists following his Senate testimony, Governor Bryan indicated his confidence that suitable legislation would be identified to carry an amendment for the permanent “extension” of the funds covered over to include the full excise tax rate of $13.25 per gallon. 

Along parallel lines, the governor during his Senate testimony asked Congress to tweak the law surrounding the disbursement of federal funds to the territory. Specifically, Mr. Bryan wants to remove discretionary power from federal agencies as to when waivers of matching funds requirements would be granted to territories. He argued that a matching requirement of 10-20 percent is often beyond the ability of territories with limited resources to meet, and thus they are barred from availing themselves of funds that would otherwise be approved. Amending the relevant statute to require these waivers would free the USVI and other territories “from local match requirements that exceed our limited ability to pay, and appropriated funds would be allowed to flow,” Governor Bryan told lawmakers. In this, he was echoed by Governor Lemanu Mauga of American Samoa.

The governor also called for help from U.S. lawmakers in overcoming EPA “resistance” to having the refinery on St. Croix return to functionality. “While we are fully supportive of the green revolution and moving aggressively as a territory and a nation to diversify into renewables, we still need fossil fuel to keep the lights on reliably,” Governor Bryan said. “We need refining capacity.”

Mr. Bryan suggested a “compromise approach” that balances environmental justice with economic opportunity.

The governor closed by once again reminding Congress that, with the U.S. Supreme Court continuing to hold that territorial residents are not entitled to Constitutionally-held equal protection under the law, it was up to the federal legislative body to ensure that Americans are treated the same by their government no matter where they choose to live.

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