04 February 2015

US Virgin Islands Governor - State of the Territory Address

Kenneth Mapp, Governor

January 26, 2015

Mr. President and members of the 31st Legislature, Lt. Gov. Osbert Potter, honorable justices of the Supreme Court of the Virgin Islands, honorable judges of the Superior Court of the Virgin Islands, honorable members of the District Court of the Virgin Islands, Delegate to Congress, Congresswoman Stacey Plaskett, members of the Cabinet, the reverend clergy, and my fellow Virgin Islanders; good evening.

First, let me take this opportunity to pay homage to our men and women in the armed forces who are serving - both near and far. As a people and a territory, we thank each of you for your service and sacrifices.

My fellow Virgin Islanders, I stand before you this evening, fulfilling one of my primary duties as governor of the Virgin Islands, reporting on the state of the territory.

Since Lt. Gov. Potter and I took office on Jan. 5, 2015, we have met and been among many Virgin Islanders whose warm embraces, prayers and good wishes have been a tremendous source of inspiration and strength to us. Our people's hope for change, a better quality of life and a better Virgin Islands are the bedrocks upon which the Mapp-Potter Administration will be guided.

Since our election, both of us have worked diligently to build a strong team, a cabinet with leaders of diverse backgrounds, who will provide leadership, management ability, and motivation to others to work hard- inside and outside of government. We recognize that in order to move our territory forward, time is of the essence and a serious change in our work ethic is required. I am here to present to you this evening, an honest and detailed report as to where we as a people, a government and a territory stand today. You will see from the report we are giving you this evening, that the journey ahead will not be easy.

Our problems are great, and there are no easy fixes. Personality conflicts which tend to obscure our path to a brighter future will have to be set aside for the greater good of this territory, if we are to be successful.

As many of you know, I have served in the public and private sectors of our community for over thirty years. While my experience is vast and deep, sitting in the governor's office brings a different perspective requiring measured consideration in balancing the many competing interests within the community. My aim is to arrive always at the point where the best interests of the people of the Virgin Islands will prevail.

During the process of transitioning from one administration to the other, we had the opportunity to peel back the various layers of all of our government agencies to gain a complete picture of the agencies' focus, core challenges and priorities. The transition team, led by our Lt. Governor, interviewed many, listened intently, and reviewed thousands of pages of documents and files to get to the core problems facing the territory. This assessment allowed us to begin a path to set the direction for the future of the territory with a realistic approach.

Upon leaving office in 2007, Gov. Charles Turnbull left a net cash available balance of $233 million. Since that time, the government of the Virgin Islands has collected an average of over $702 million annually, and has had available approximately $169 million annually in federal grant funding. In addition, we also borrowed $1.2 billion for working capital and project related activities.

So if we combine the cumulative value of the funds collected, borrowed and made available in the last eight years by using a multiple of 7.50 fiscal years; we see that the amount of money in hand exceeded $7.8 billion.

Today, this new administration must begin to manage your affairs with a critical shortage of funds and obligations that far outpace revenues projected for fiscal year 2015.

General Fund appropriations for basic critical services and operations of the government exceed revenues by approximately $91.2 million dollars. This does not include mandates and obligations for which there are no appropriations, such as the newly imposed 3-point increase in employer contributions to the Government Employees Retirement System, estimated at $7.5 million.

This shortfall also does not include the $10.3 million due to the Juan F. Luis Hospital, as part of the System Improvement Agreement with CMS or $26 million for the deficit of the Workers Compensation Fund, or the over $41 million due to the Government Employees Retirement System as employer contributions, or the $40 million payment on our outstanding working capital loan, which is due on Sept. 30, 2015. In addition, it does not include our growing debt to the Water & Power Authority for our hospitals, which stands at $42 million, or the $9.2 million owed to taxpayers in income tax refunds over the past three years.

In short, the current $91.2 million shortfall does not include $176 million in additional obligations, which I have just noted that is currently due and owing.

Our government is teetering on the brink of financial collapse. Our ability to deliver basic essential services to our communities is diminishing more and more each day. My predecessor made a decision to halt employer contributions to the GERS, halt payments of income tax refunds, delay vendor payments as long as possible, and cease payments for workmen's compensation claims for those who have been injured on their jobs. All of these factors underscore a worsening fiscal condition. Clearly, even meeting the government's payroll will continue to be a challenge. So my friends, the state of the territory is critical, and its financial condition is worsening.

The government's long term debt and debt service obligations have more than doubled since 2007. This growth is consuming a greater share of dwindling government revenues. Debt service payments for the current fiscal year are approximately $140 million dollars, for total debt obligations of $2.4 billion dollars. A full 62% of the $1.2 billion dollars we borrowed in the past eight years - or $763 Million - went directly to sustaining basic government operations.

In short, we have spent every penny we have laid our hands on. We have borrowed and borrowed again, not only for ourselves and essential services, but also for others, to fund private sector ideas called public-private partnerships, where we didn't even require or ask our private partners to put capital, equity and/or risk on the table. We have borrowed to fund projects that the federal government would have gladly funded; projects it has funded for the territory in the past.

So, financially, we are not in a good place. In fact, our territory has never been in such a state in our history.

To survive and recover, which we have the fortitude and ability to do, will require great courage. Courage to make some difficult decisions; courage to work with some folks you may not have gotten along with in the past; courage to be transparent and courage to embrace the reality in which we find ourselves.

We have but one option - to rebuild a sound and stable financial condition for our territory. I want you to understand, that financially, it will get worse before we rebound, but rebound we will.

With strategic planning, thoughtful governance coupled with tough decisions, hard work and your support, we will begin anew the long and arduous process of rebuilding the financial health and prosperity of our territory.

First, we will send to this august body a proposed plan to reorganize the agencies and processes of our government. A central piece of this reorganization is going to be consolidation of operations, curtailment of some services, and a major deployment of technology and customer-based systems in doing our work and providing services to you, the people of the territory.

In most areas of our government, we have an absence of technology in the functionality and delivery of public services.

Our U.S. economy is on the rebound, with more than 11 million jobs being created in the past year. We do not have to wait two or three years to reap some benefit from this whirlwind. We must work harder, faster and more efficiently.

Second, to bridge the great divide between spending and available cash and expenses, we have identified over $54 million in open encumbrances within the General Fund, many of which represent last-minute purchases for which no funds exist. Vendors previously received many of these purchase orders and notices to proceed, and we have moved to halt transactions where no services have been provided or products ordered and delivered.

Our commissioner of Finance has been directed to review and, in accordance with the law, liquidate these obligations.

Third, we have identified over $312 million owed to the Bureau of Internal Revenue in outstanding tax obligations. We are advised that approximately 40 percent - or $125 million - of this sum is collectible in the short to medium term.

I, personally, will hasten my payments to the BIR on my payment plan, and I am asking each taxpayer with such a plan to do the same.

I have directed our new director of the Bureau of Internal Revenue to review immediately and move to collect or liquidate assets on all outstanding or delinquent tax accounts for which no payments are being received. If you owe taxes to the government and know that you cannot settle on your account in a single payment, I am strongly urging you to execute a workable payment plan now. Willful tax evasion will no longer be tolerated, and all of those engaging in this practice are put on notice that the BIR along with the local and federal Departments of Justice will be bringing all such taxpayers to the bar of justice.

Fourth, the projected real property tax revenues to be collected for FY 2015 are $106 million. It is our plan to issue the 2014 property tax bills by the end of February, and the 2015 property tax bills in August.

In FY 2016, property tax billing will return to the normal one-bill per year cycle, which will be issued in May of each year. Revenues are projected to be $60 million for that period, compared to $42.8 million in FY 2014. Property taxes are an important revenue stream of our government. Our Lt. Governor is on top of his game, and I am confident his tax assessor will issue the bills on schedule to ensure timely receipt of the revenues.

It is important that we all understand that recovering from this financial crisis will require every citizen to do his or her part - no matter how small, how incremental. Lt. Gov. Potter and I are committed to working with you to accomplish this. But each of us must carry our piece of the burden, putting in our brick, one by one, to build a better Virgin Islands, by satisfying our tax obligations to the territory.

Fifth, we will work with Congresswoman Plaskett to assist us on several fronts on the federal level. We must have the U.S. Department of Treasury move on implementing new regulations which will make clear the issues regarding the continued reduction of the residency requirement days and definitions of source income as it relates to new investments of the financial service sector and the captive insurance industry. Tremendous economic opportunities for the territory lie ahead in jobs and revenues if we can persuade President Obama's Treasury secretary to move on these fronts.

Along with our delegate, we are forging a strategy to not only maximize access to federal grants, but to also ensure we are using the funds correctly and completing all of the reporting requirements to keep existing and new grant funds flowing. With an accountability process in place, we may successfully eliminate federal fiduciary oversight in some areas, which continues to cost this government some $3 million annually.

I have directed the OMB director to manage aggressively and monitor our compliance with the requirements so that, by June 2016, there will no longer be a justification for such oversight. We have hired a new deputy budget director for Federal Grants Management Unit at the Office of Management and Budget to ensure that this job gets done.

Unfortunately, we have not done a very good job of managing and properly utilizing our federal grant funding. This has been costly for this territory. I am therefore, putting our federal grant managers on notice that the people of these Virgin Islands demand accountability and performance, especially where the funding of this government is at stake.

Our ability to survive as a government requires it. As such, this administration will not transfer any employment cost to the General Fund to retain federally funded positions when federal grant managers fail to perform and lose federal grant monies.

In short, and effective immediately, I will promptly eliminate any federally funded positions where mismanagement of grants results in loss of funding for those positions. Your jobs will follow the money.

The economy of the territory has been severely injured by the closure of Hess Oil's operation on the south shore of St. Croix. No one in the territory has gone unscathed by this closure. Our relationship, the territory's and Hess Oil, for the most part, has been a good one. But according to Hess, market forces have brought us to this point where we must part company. And, let us assume for the purposes of this discussion that the closure was solely driven by market forces. Hess Oil wants to leave and, frankly speaking, the people of the Virgin Islands aren't interested in forcing them to stay.

In other words, as we say on the Big Island, it's time to turn a page. However, there must be an orderly exit, with Hess Oil fulfilling its obligations to the people of this territory.

Within the current fiscal year, Hess Oil promised, and backed its promise with a security instrument, to pay this territory pursuant to a settlement agreement, $43.5 million by Dec. 31, 2014. This was in consideration of the environmental damages caused to the ecosystems of the territory, estimated at over $800 million. While Hess Oil paid an initial sum of $3.5 million, this august body, acting on the good faith and our long standing relationship with Hess Oil, ratified this settlement agreement and in addition, deferred 50 percent of the $14 million due annually from Hess Oil as its payment in lieu of property taxes. This deferred amount now totals $14 million.

So our sixth initiative to stave off financial collapse is to collect from Hess Oil all of the current monies that are due and owing to this territory. Mr. Timothy Goodell, senior vice-president of Hess Oil, called and spoke with me last Friday on behalf of the company to assure me and to restate the company's intention to make good on Hess' obligations to the territory. I thanked Mr. Goodell for his thoughts, expressed our continued willingness to cooperate in a sale, and I expressed to him the importance of the territory protecting its interests from the looming threat of a bankruptcy action that may be filed by Hess Oil.

So, to protect the interests of these Virgin Islands, I am advising you that, earlier today, we filed our action for foreclosure to seize the refinery's assets at Estate Hope, on the south shore of St. Croix. In short, our position is that we are willing to work with Hess Oil, but we are proceeding with our efforts to collect what is due and owing to the people of the Virgin Islands.

Accordingly, I am asking you, the members of the 31st Legislature, for your help. Later this week, I will submit a bill for your consideration to authorize and appropriate an initial $1 million to begin the process of retaining legal counsel to pursue our claims against Hess Oil, arising out of our concession and settlement agreements.

If we are to take any lessons away from the current dispute with Hess Oil, that lesson is that we as a territory must work harder and invest more resources in truly diversifying our economy.

We are all painfully aware of the unemployment that continues to plague this territory. As of November 2014, unemployment territory-wide stood at 13 percent - 12.2 percent on St. Thomas-St. John, and 14 percent on St. Croix.

This is approximately one and a half times more than the national average, which stands at 5.6 percent. Our high unemployment rates not only hurt families, but also strain our public and social service programs.

Apart from the economic development efforts which will stimulate employment, we believe we must also implement a jobs plan to help stimulate the economy.

As we said in our campaign and restate this evening, we are committed to filling 1,000 government jobs. Now that we have a more accurate view of the financial condition of this government, we are prepared to work with our financial team to implement this employment goal by first targeting jobs in revenue collections, law enforcement, education and health.

Over the coming months, we will work with each of the targeted department heads to identify the critical staffing needs. We need the personnel to collect the revenues, personnel to protect our streets and communities, personnel to teach our children and personnel to man our hospitals in a manner consistent with federal guidelines.

While collecting as much of the money that is owed to the treasury is important, the greater sustainable strategy is growing our economy. My administration's goal is to continue to grow, in new and creative ways, our tourism industry by targeting and focusing on hotel development and attracting more overnight visitors.

Let me publicly thank commissioner of Tourism designee, Beverly Nicholson-Doty, for agreeing to remain on board and continuing the fine job she has been doing in the tourism industry for our territory. Thank you, commissioner.

Commissioner Nicholson-Doty and I have had several work sessions, which ranged from restructuring her department, additional training and repositioning of some department staff, to working with our partners in the cruise industry, with emphasis on improving the visitor experience, transportation, both on land and sea, and increasing ship calls to St. Croix.

The commissioner will lead the administration's efforts and strategy to pursue an increase in land-based visitors, as well as further develop sports, events and heritage tourism on a grander scale.

Nearly 20 percent of our workforce is employed in the tourism industry. Our challenge is to maintain our competitive edge in the market. To do this, we must greatly improve the visitor experience. It is important that our visitors experience these improvements.

It is also time for us to put more focus on attracting new and additional hotel rooms on St. Croix and on St. Thomas. With the growing availability of Cuba as a travel destination, we must position our territory to seize on the many opportunities that will open up for us here as well.

We can look to the opening up of Cuba as a competitor, or as an ally. I believe the opening up of Cuba will spur new business and tourism-related opportunities for the territory, given the proximity of Florida, Cuba, Hispaniola, Puerto Rico and the U.S. Virgin Islands in this region.

We are fortunate to have an exceptional environment of natural beauty, along with the richness of culture and history that visitors seek when they plan a travel experience. But it is no secret that we face serious challenges to our tourism product. We cannot surrender our edge. Taxi drivers, shop owners, government workers, residents, Crucians, St. Thomians, St. Johnians: You and I must work together to create a competitive tourism advantage in the region that is second to none. If we don't work together to accomplish this, in the end, none of us will have any work at all. It's just that simple.

The public sector must provide the foundation for our economic development and growth by investing in and improving our infrastructure. This includes new construction of the roads that remain in a state of disrepair even after being resurfaced.

We have begun this effort by working with our own delegate to Congress and Congressman Bill Schuster, of Pennsylvania, who chairs the Committee on Transportation and Infrastructure. We are looking forward to meeting with him again in February, when we will hammer out a strategy for greater funding targets to undertake these projects.

We applaud the Virgin Islands Port Authority for beginning the upgrade to our seaports and airports. We will work with and support VIPA to continue and to expand these initiatives.

We must build on the strategy of cooperation - rather than competition - between the Port Authority and the West Indian Company, Ltd. To do this, we are forging a stronger alliance between these entities, by adding three additional mutual members on their boards. This would bring a mutual view to both boards, by having shared members who work together for a common purpose - for the benefit of the people of the Virgin Islands.

The development of the south shore of St. Croix is vital to growing our economy as well. What are its best uses? Can the U.S. Department of Defense find value in placing and using assets there? Is a transshipment point a real option, or is it just a good idea and conversation? So, we must figure this out. In the end, the infrastructure there lends itself to the creation of many jobs and tremendous outside investment dollars.

Lt. Gov. Potter and I will need your help in launching our agriculture initiative. We have nominated Mr. Carlos Robles as our Agriculture commissioner. We will make an inventory of all agriculture leased land from the government. Those lands not being used for farming will be returned to the farm bank, and those whose leases are in default will be terminated.

Next, we will work with the farmers to create a farmers' cooperative. The Agriculture Department, along with the cooperative, will determine the necessary crops of fruit and vegetables that are needed for our school lunch program, hospitals, Head Start Program and senior citizens residential care facilities. We will plant and sow crops to provide the necessary fresh fruit and vegetables that we need and consume.

You should know that the federal government provides some $8.5 million annually to cover the cost of the school lunch program in our schools. The more we move away from sugar-laden and processed foods to local organic and fresh foods, the more the federal subsidy increases and becomes a part of our economic growth.

The objective is to jump start our agriculture industry, create jobs, provide healthier meals for our students, push for wider circulation of federal dollars in our economy and increase our subsidy of federal dollars. Senators, we will need your help to gain access to more resources for our farmers.

Equally important to growing our economy is providing safety and security in our communities. We cannot attract investment to our territory if our streets and neighborhoods are unsafe. Not many Virgin Islanders will invest in a business or expand their businesses if our streets and neighborhoods are unsafe. Crime is a far-reaching issue; it impacts the core of everyone's quality of life.

The manpower shortages in our law enforcement community are worse than even I could have imagined. I cannot speak to the specific numbers here, but I will convene a meeting with members of the Legislature to brief you on the state of law enforcement in the Virgin Islands.

Let me say that I fully understand why we cannot keep police officers in our department. We must respect and support their sacrifices and provide them with real and tangible resources so they can do their jobs. Police officers put themselves in harm's way for our protection. We must respect and support this sacrifice.

During the campaign, Mr. Potter and I promised to hire an additional 250 police officers. Today, I am not sure if this number is sufficient. Our Police Department is struggling with an absence of personnel. Let me repeat that - an absence of personnel; insufficient boots on the ground. What if I told you this evening that we do not have a single active police captain in the territory. Would you believe me? Well, we don't.

The department is operating with a complete absence of technology; don't let the laptop computers in the cars mislead you. Our Police Department is trying to do its job of protecting the territory, and we have failed to provide technological resources for them to fight crime.

Call reports from the 911 center arrive at the Police Department months after they are recorded. Police chiefs and zone commanders cannot accurately deploy resources in communities without the timely receipt of this information. Crime investigative technology tools; none. Ready access to DMV records of driver's licenses and motor vehicle registration information; none. Connectivity to the Superior Court's data base to access suspended driver license information and outstanding warrants; none. Ability to identify fingerprints found at crime scenes; none. Our Police Department is operating with an "absence of technology" in the performance of its duties. So here is what we are going to do. First, Acting Police Commissioner Delroy Richards has agreed to accept the job of Police commissioner permanently. Thank you, Chief Richards, for taking on what will be a difficult task. This week, I will forward his nomination to the Senate for consideration.

Next, we will conduct a full top-to-bottom assessment of our entire law enforcement community, so we can build a strategy for professional policing in the territory. This assessment will not be limited to VIPD, but will also include our Port Authority Police, officers at the DPNR and DLCA.

Third, we will sit with the labor unions of the department and discuss our initiatives and bring the officers on board who are the nucleus of our strategy going forward. Our plan includes pairing our department with a major police department on the mainland for training, mentorship and acquisition of federal resources to fight crime. We will lead the effort to establish a police foundation within the business community to further support our officers and our department. We will take a path that leads us out from under the consent decree and march towards a professional law enforcement community where we begin to nurture our police talent in our high schools and grow leadership within the department by encouraging, supporting and incentivizing our officers to pursue higher education and training outside the department.

Senators, I look forward to discussing the condition and the needs of our law enforcement community in greater detail. To our law enforcement officers and first responder community, please be assured that help is on the way.

The Department of Education is the largest government agency. Services are provided at 33 buildings supporting 40 activity centers. Territory wide, there are 31 schools. All the senior high schools, the Career and Technical Education Center on St. Croix, the Bertha C. Boschulte Middle School on St. Thomas, and the John H. Woodson Junior High School on St. Croix are fully accredited by the Middle States Association. Both Pearl B. Larsen and Ricardo Richards elementary schools, located on St. Croix, are designated Blue Ribbon Schools. The student population is more than 14,000 young people, many with a myriad of challenges that must be met. The Department of Education has a workforce totaling 2,353 employees.

We have invited here this evening, two individuals who have helped to prove that you can make a positive impact when faced with challenges. Our State Teacher of the Year is Ms. Jeune' Prevost, a third-grade teacher at the Julius E. Sprauve School. Our District Teacher of the Year is Mrs. Juliette Heddad-Miller, a second-grade teacher at Lew Muckle School. I am pleased to welcome you here, and again, I thank you for your commitment, dedication and inspiration as you continue to nurture the children of the Virgin Islands.

School leaders have collectively agreed that at the end of our first four years, we want all schools to be accredited or meet the requirements of a Blue Ribbon School.

An aggressive assessment was made by the department during the transition period. I would like to thank the Education transition team for their thorough analysis of the department.

I want to thank Dr. Sharon McCollum for accepting the task of leading my administration's initiatives and working collaboratively with schools, students, parents, teachers and the unions to provide the territory's students with a world-class education.

Since coming on board, the commissioner designee, Dr. Sharon McCollum and I have had lengthy meetings regarding the challenges of the Department and the new course that will be charted for our children. We realize that our most precious resource is our children.

Change will come to the Department of Education. A careful review is on-going, to include a detailed analysis of the department's Strategic Plan. There must be a careful alignment between the State and Districts. We acknowledge that all entities in the Department of Education must work closely together with a greater spirit of cooperation.

There has been a concerted effort to bring all parties to the fold. We extend our hand to all employees and their labor leaders to work in a spirit of cooperation and unity. While we do not have the funds to immediately give raises to employees, we acknowledge the need to do so. The commissioner designee has met with the AFT and EAA Union leaders on St. Croix and will be meeting with their St. Thomas counterparts this week to build a bridge of respect and cooperation. Plans are on the table to revitalize the Committee on Labor Relations to keep dialogue open before conflicts arise. Similar conversations will be held with all unions within the Department of Education.

As governor, I personally want to express my sincere gratitude to the employees of the Department of Education for working tirelessly. We are keenly aware of the challenges that you face on a daily basis, and we will address the needs of the Department of Education.

Commissioner Designee McCollum and I have built a skilled and experienced leadership team at both the state and district levels. There is a new level of energy and cooperation between the leadership teams in the state and district offices.

I know it is a challenge to meet all of the employees of the department. The new leadership teams have met with principals, assistant principals, coordinators and program managers. On St. Croix, the leadership teams have met in whole group meetings with school lunch personnel, school bus drivers and school monitors. Furthermore, site visits have been made to a number of schools and will continue. We acknowledge the immediate need to relocate the school lunch warehouse on St. Croix, and we will get it done. Optimally, I want us to construct our own facility.

The Department of Education will be streamlined to become a more efficient department. We are driven by the desire to meet the needs of our children to become productive citizens in the global community and to impart the desire to be life-long learners.

The Lt. Governor and I are committed to building four new schools; however, before undertaking the new construction, we must address some of the more critical and safety needs in our existing schools. The management and maintenance of our school facilities are critical. The technology infrastructure must be improved.

I will work with Congresswoman Stacey Plaskett, to assist in securing federal funds to address the needs of the physical plants. We both have begun these discussions.

Furthermore, the leadership of the Department of Education will leave no stone unturned in seeking funds to address the needs of our school facilities.

As noted earlier, June 2016 is the target date for transitioning from the Third Party Fiduciary Agreement. The Department of Education has reduced its audit findings to zero over the past 6 years and improved its management of federal funds. A timeline has been established with benchmarks, and the third party is assisting in helping to build capacity within the Department of Education to facilitate a timely and smooth transition.

The success of the Department of Education depends on all stakeholders joining hands and embracing change.

Change is hard work and all of us must come to the table: parents, employees, labor leaders, members of the business community, the Board of Education, and members of the Legislature. Difficult decisions must be made; and yes, we are examining the consolidation of schools. We will include all stakeholders and do this in a time-sensitive manner.

Ladies and gentlemen, the road ahead will be filled with challenges, but if we do not change course from the past, our results will remain the same and hasten our demise.

I am confident that with all of us coming to the table in a spirit of cooperation, we can meet these challenges. The focus of the Department of Education has to be, and will be, "What is best for the Children of the Virgin Islands?"

The sign of a successful and lasting community is one that takes care of both its young and its old.

Unfortunately, the Department of Human Services, which has a substantial mandate in this regard, continues to suffer severe financial constraints. This, in turn, diminishes our ability to care for our citizens.

Human Services continues to operate under the burden of critical vacancies and staffing levels that prevent it from properly serving our citizens. In 2009, the Department of Human Services was staffed with 1,020 personnel in its many centers and service areas. In FY 2014, those staffing levels are at 866. That is a reduction of 18 percent. This shortage continues, despite the increasing demand for services caused by the downturn in our economy and by those who remain unemployed or underemployed.

In addition the department is struggling to meet its responsibility to our aging population and our preschool-aged children in our head start programs. The impact of this critical staffing shortage is that certain service centers - and our ability to serve our most needy - have been diminished to a breaking point. This leaves our population at risk, to include: the disabled, senior citizens, and cancer care patients.

The operation of Senior Citizen Centers, Children and Family services and preschool and Head Start services are also severely affected.

Let me thank our commissioner of Human Services designee, Mrs. Vivian Ebbesen-Fludd, for taking on this monumental task of caring for those in our community who need our help now more than ever. Commissioner Designee Ebbesen-Fludd will lead our administration's efforts to improve on how we care for our people.

Head Start facilities and playground areas are in need of serious repairs in order to comply with federal program requirements. Many of the buildings currently occupied are old, and play areas are outdated and in a less than safe condition. While approximately 10 new classrooms are currently being constructed, and another eight being renovated, to serve children on the island of St. Croix, the Head Start program still needs modern and updated facilities and play areas.

We are failing our seniors, who have given so much of their lives to this community. Currently, there are 18,000 persons in our community who are 65 years and older. Senior centers have been reduced from six territory wide - to just one on each island. The six centers previously served our seniors every weekday, bringing comfort to our seniors, their families and caregivers who were assured of their safety and care while the rest of the household was at work.

Currently, however, our centers are offering services a mere two days per week and, even then, for very limited hours. Seniors on St. Croix are forced to share a single facility, resulting in service being offered to Christiansted and Frederiksted seniors for only four hours weekly.

These centers serve an important role in ensuring that seniors are provided socialization, supervision and nourishment, as many rely on these centers for their regular meals - particularly those living alone or with working adults.

Rest assured that the Mapp-Potter Administration will be marked by our ability to appreciate our senior citizens and care for them well. My administration is implementing a plan to prioritize the extension of all-day service to seniors at the three existing centers, within our first year in office. Thereafter, we will renovate and reopen the Aldershville Senior Center in Frederiksted. We are currently working to secure, or even build, an additional facility to open a center east of mid-island on St. Croix.

Underscoring the dire need for these services is the growing population of seniors with Alzheimer's or dementia-related diseases. To address this growing crisis, we will be implementing - in addition to full senior center services - a fully supported family-caregiver program as a less costly alternative to providing long-term care. I know this from my personal experience. I am a caregiver and a member of the family caregiving program sponsored by the Department of Human Services. We need your support, education and guidance. The caregivers program needs just a small bit of resources. The employees manning the program are great, but the department must stop asking caregivers to have bake sales to support the program.

We also recognize the need for long-term care for those who are not ambulatory, those who require around the clock medical attention, and those who cannot benefit from our other service centers.

In this area, too, our services have not kept pace with our needs. Long-term beds needed to care for our senior citizens in residential settings now stand at 700.

Currently, we provide 125. My friends, the number is only going to increase, so here again a critical task lies before us. My administration is dedicated to our seniors and is intent on commissioning a state of the art, Medicare certified skilled nursing facility on both St. Thomas and St. Croix.

The very real impact of these shortfalls is that many of our senior citizens are left unattended. The Mapp-Potter Administration intends to place the care of our elderly population as a priority, as my mother's care has long been my priority.

In the area of health, we are facing similar challenges in funding and staffing, and their impact on delivering care. Our Department of Health remains severely understaffed and underfunded, mainly in areas of community health clinic services and its regulatory units.

The Department of Health has not in recent times led the charge for coordinated comprehensive health services. Chronic diseases, including diabetes, hypertension and kidney failure, have been on the rise in the territory, with no concomitant public information programs in our schools or in our community teaching our people that changes in diet and lifestyles can prevent these illnesses.

The number of clients accessing direct care services at the Department of Health Community Clinics has also risen. While client load has increased, resources have decreased in the clinics. The rise in client load has resulted in increased appointment scheduling challenges. Lack of primary care physicians employed at the clinics has been a major challenge. Physician recruitment and a cumbersome hiring process are the major contributing factors for clinics being understaffed. We believe our not-for-profit community health centers may be the ultimate solutions on providing public health care services in the community. We will meet with them and report back to you and offer our recommendations.

Despite increases in preventable chronic diseases, the Department of Health has not responded with an increased effort in health promotion and prevention strategies. There has not been a significant coordinated health prevention effort across the divisions of public health to increase awareness in the community. The department has been slow in disseminating information on emerging health issues affecting the Virgin Islands.

An overall revamping of the Department of Health's health promotion and prevention strategies would assist in improving the overall wellness of our people. It would also result in decreased emergency room visits and hospital admissions, as well as reduce costs to our government in providing subsidized health care services.

Another area of critical concern is in the delivery of adequate mental health services. It is no secret that this territory has taken a backward step on the issue of mental health, leaving those who need care to walk the streets, languish in our prisons, or enter the revolving door of a criminal justice system that is ill-prepared to address their needs. As a community, we have earned an "F-" in the care and services we provide to the mentally ill. What seems to escape us all, is that tomorrow anyone of us may need access to these services.

Our mental health system has been diminished into virtual non-existence. We have no mechanism - either physical or legal - to address those who enter the criminal justice system but who are deemed incompetent to stand trial as a result of serious mental defects or disease. We have no forensic or residential facility to serve those for whom such facilities have been deemed medically necessary. We have inadequate community health systems in place to address the ongoing needs and monitoring of those with mental disease who attempt independent living, to ensure they continue their medical regimens so important to their well-being. We provide no comfort, and display little empathy to the families of the mentally ill, assuring them that their loved ones are safe.

The absence of a systematic approach to mental illness, or laws that govern our response and protect the rights of the mentally ill, result in uncertainty in our criminal justice system. This often leaves the judicial system with the untenable choices of holding the mentally ill in prison or releasing them to the streets, without proper care or process.

Senators, I look forward to working with you to develop and implement legislation to address these critical issues. We must adopt laws providing guidance to the judiciary and the criminal justice system, mandating a specific course of action for mentally incompetent defendants.

If we are successful in addressing this most important issue, our success will go a long way on improving the quality of life for us all.

The Virgin Islands is currently facing a systemic health care crisis of unprecedented proportions. Our hospitals continue to experience sharp increases in the level of uncompensated care which is provided to persons who are indigent, uninsured, or under-insured, and self-pay patients who gradually lose their ability to pay their medical bills.

Uncompensated care costs the Governor Juan F. Luis Hospital $46 million annually. The Roy L. Schneider hospital annual uncompensated care costs is $12 million.

Taking care of those who cannot provide payment for medical services cost the territory - minimally - $58 million last year. As a community, we are mandated - indeed, it is our moral duty - to provide adequate health care to all, regardless of a person's social standing or financial means.

We believe that the leadership of the Governor Juan F. Luis Hospital is working boldly and expeditiously to comply with the terms, as outlined by the Center's for Medicare and Medicaid Services. As I also noted earlier, our government has been unable to identify and provide the additional $10.3 million dollars so the hospital can implement the necessary CMS mandates.

My Administration is going to work with you and partner with you to identify the best way to provide this funding. The Schneider Regional Medical Center is also in need of our assistance. It is seeking an additional appropriation to rectify some serious personnel issues affecting the nursing staff there.

Our task now is to identify a sound strategy that will bridge the gap and offset the continuous uncompensated care we provide. We have set our eyes on utilizing all available options afforded to us under the Affordable Care Act and will work to have additional coverage under that act extended to the Virgin Islands.

Our territory has also experienced the erosion of our private health insurance market, whereby there are no individual health insurance plans available for purchase.

Approximately 33,000 of our residents are uninsured or underinsured and are seeking coverage, either via their employer, a spousal employer plan, or public coverage via Medicaid or Medicare.

We will immediately take steps to secure our share of the Tax Equity and Fiscal Responsibility Act of 1982. These funds are provided to all American jurisdictions, as a hospital Medicare reimbursement program.

However, the territory's hospitals have not received any of the Medicare reimbursements available under this act, because they have not applied for any of the benefits in a timely manner. We believe that additional reimbursements may be recouped, retroactive to 2012, and could result in an immediate infusion into our health care system of up to $26 million.

We will move to see that this is done immediately and that the re-basing is applied for by the Roy L. Schneider Regional Medical Center for fiscal year 2014 base as well.

I have directed the commissioner designee of the Department of Human Services to move expeditiously to rectify the presumptive Medicaid eligibility process. This will dramatically reduce the bad debt in both hospitals. It will also allow the territory to realize an increase in the match on our Medicaid recipient cost, from 57.2 percent to 65 percent. This could result in an additional $2 million for the territory.

My administration believes that continuing the Medicaid Expansion program, via a phased-in approach, is a reasonable short term option to solving many aspects of our health care system crisis.

However, in the long term we will seek parity with every other American living under the U.S. flag.

American citizens living in the Virgin Islands are simply tired of being treated as second-class citizens by our national government. We are tired of having to uproot ourselves in our senior years to move to the mainland to access medical benefits.

As we grow our economy and provide opportunities for our people, many persons will no longer qualify for Medicaid, so we can't base our health care strategy for federal dollars for health services on the Medicaid program.

To address the eroded private health insurance options in our market, Lt. Gov. Potter has tasked his Director of Banking and Insurance to encourage private insurers to offer individual products in our market, in order to provide low cost and adequate coverage from which our population can choose.

It is our goal to create an efficient territory-wide health care system to increase efficiency and reduce duplication of efforts and costs. I pledge to you all, health care is a priority of Government House.

Among the many meetings and discussions that Lt. Gov. Potter and I have had since taking office on Jan. 5, was a meeting at Government House with the board of directors and the executive management team of the Water and Power Authority.

The quality of life or growing our economy in the Virgin Islands is not going to occur until we have affordable power and water for all residents and businesses.

This means that WAPA must reduce its administrative costs, meet critical timelines and deliver on its promise to convert to less expensive fuels. WAPA is headed in the right direction, but it must understand that time is of the essence. WAPA faces its challenges as well. As I noted, this government owes WAPA in excess of $40 million, and WAPA can be assured that it will be paid.

But, WAPA also has to get its act together. Strides have been made in instituting a conversion of WAPA's power generation from oil to propane, but what we learned was that WAPA has still not received the required permits from the U.S. Army Corps of Engineers to turn the conversion on, to receive propane at both the Richmond and Krum Bay WAPA plants.

Without receiving these permits, there will be further delays in lowering the cost of electricity for all Virgin Islanders and our economy. This, too, is unacceptable.

I have pledged my personal assistance, as well as that of my administration, to work with WAPA's management and officials at the Corps of Engineers to secure the permits needed for us to convert to a cheaper source of producing electricity. I am asking our delegate to join us in this effort as well.

The reduction in rates thus far has been due to market forces. In the Virgin Islands we know all too well this is not a reliable strategy to manage electric costs. The conversion must be completed and implemented. The people of the Virgin Islands have waited long enough for relief. They have asked me to tell you that there is no more room or tolerance for any new excuses. They simply want the job done.

For WAPA and its senior management team to survive, WAPA must undertake a sincere commitment to re-brand itself as a service provider, genuinely working for the people of the Virgin Islands, who are their customers.

WAPA, make it your priority to bring the territory relief sooner rather than later.

The GERS is an entity that we created to provide security and comfort to public service employees following the sunset of their careers. This institution contributes to the well-being and viability of our community. It provides secured retirement for our public sector retirees. We cannot permit this institution to fail. I was annoyed to learn that retirees, after decades of public service, are forced to the brink of bankruptcy while waiting as long as two years to receive their retirement benefits. In at least one instance, we have identified retirees who, after two years of retiring, are still waiting for the first check. Many of these retirees have had to rely on and borrow money for basic sustenance from family and friends.

Unfortunately, some of them are now receiving social welfare benefits for mere survival. This is a situation that is being repeated across this territory. Our retirees are routinely advised that when they apply for their retirement benefits, they must be prepared to take care of their living expenses and sustain their families - without accessing their benefits - for at least nine months! This government is primarily the cause of this and this is unacceptable! We must do better.

Currently, the government owes employer contributions of $2.18 million to the GERS system for those who have retired but cannot receive their annuity. Senators, again, I am asking for your help so we can take action to pay this amount within the next 30 to 60 days, even if we make the payment in several installments.

We must stop forcing our retirees to the Welfare lines and meet our obligations to our people. We can do better!

I will not entertain any proposal to fund any public-private partnerships to anyone until we resolve these basic obligations to our people. If we can't take care of the easy issues, we won't be able to handle the tough ones.

Many Virgin Islanders are concerned with the viability of the GERS. I am concerned about the viability of the GERS. What once was a safety-net that workers could rely on upon retirement has now become much stress, with many wondering if their retirement checks will come.

My fellow Virgin Islanders, Lt. Gov. Potter and I have been on the job about three weeks. We still have a few cabinet appointments to fill. As we said during our campaign, there is no easy road going forward. Our challenges require courage and hard work. The team we have assembled to lead our departments and agencies and our senior staffs, do possess the training, experience and know-how to help move this territory to a better place. But just as important, we need each of you, our citizens, to help push change forward.

Tonight, I recognize that I did not cover every topic, department or agency. What I have attempted to present is a snapshot that adequately portrays some of the areas of greatest concern.

I want each of you to know that Osbert and I are committed to staying the course and making the difficult decisions that will get the Virgin Islands to a better place.

We are looking forward to working with each of you in this body - listening to your ideas; listening to the voices of all of our constituents, and seeking common ground upon which we can build a brighter future for our people.

Notwithstanding the difficult challenges confronting the territory, these present for the Mapp-Potter Administration, opportunities to grow trust, opportunities to align priorities, opportunities to diversify and, most of all, opportunities to build.

I ask the people of this territory to keep us in your prayers. Ask the good Lord to shower us with strength, guidance and courage, because we are going to need it. Thank you all for listening. God bless the Virgin Islands, and God bless the United States of America.