Office of the Secretary

For Immediate Release: October 12, 1999

Contact: John Wright 202/208-6416
Keith Parsky 202/208-4070

Interior Department and the U.S. Virgin Islands Government
Sign Memorandum of Understanding for Fiscal Recovery

WASHINGTON, DC-- In a show of support for the Virgin Islands, Secretary of the Interior Bruce Babbitt and Governor of the U.S. Virgin Islands (USVI) Charles W. Turnbull, signed a Memorandum of Understanding (MOU) for the fiscal recovery of the U.S.Virgin Islands. This agreement pledges the Department of the Interior's (DOI) support for local initiatives to achieve fiscal recovery and stability.

The USVI is facing a long term deficit in excess of $1 billion and a projected deficit of $98 million this year alone. Secretary Babbitt, recognizing the fiscal state of affairs that the Turnbull Administration inherited, emphasized the need for serious economic reforms, and stressed that local solutions would help secure additional federal incentives.

"In consultation with Virgin Islands Delegate Donna Christian-Christensen, Governor Turnbull and I worked closely on an arrangement that supports and reflects local fiscal reforms, while also reinforcing our shared objectives to protect and enhance the Virgin Islands coral reefs and natural resources," said Babbitt.

The MOU helps to address the serious financial problems faced by the USVI by stressing the need to set critical standards for financial performance, to achieve fiscal recovery and stability. Under the terms of the MOU, DOI supports local decision making, by incorporating the Governor's own performance standards already circulated locally. By entering into this agreement, the Government of the Virgin Islands demonstrates a commitment to reduce liabilities and balance its budget through a strong program of fiscal austerity. As part of its overall plan to reduce the deficit and balance its budget, the Governor agreed and implemented a number of specific measures effective October 1, 1999.

"The challenges before the Virgin Islands government require difficult fiscal reforms that appropriately must be initiated and implemented by the local government," Babbitt said. "This MOU is neither a federal bailout nor a federal takeover. It does, however, set forth certain local performance standards articulated by the Governor which we support and are prepared to encourage and assist from Washington within limited parameters that respect the authority and responsibility of local self-government."

The MOU calls for local government action, which anticipates close cooperation between the Governor and the USVI Legislature. The MOU also contemplates that the Governor will seek the consensus of the USVI Senate on all initiatives generated by the Governor's Fiscal Recovery Task Force. The MOU also restates the Governor's decision that the Fiscal Recovery Task Force will submit a five-year financial recovery plan for the government within 90 days from the execution of the MOU.

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