29–006 

113TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 113–110 

TO CREATE THE OFFICE OF CHIEF FINANCIAL OFFICER OF THE GOVERNMENT OF THE VIRGIN ISLANDS, AND FOR OTHER PURPOSES 

JUNE 17, 2013.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HASTINGS of Washington, from the Committee on Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 85] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Natural Resources, to whom was referred the 

bill (H.R. 85) to create the Office of Chief Financial Officer of the 

Government of the Virgin Islands, and for other purposes, having 

considered the same, report favorably thereon without amendment 

and recommend that the bill do pass. 

PURPOSE OF THE BILL

The purpose of H.R. 85 is to create the Office of Chief Financial 

Officer of the Government of the Virgin Islands. 

BACKGROUND AND NEED FOR LEGISLATION

The U.S. Virgin Islands (USVI) is an organized, unincorporated 

territory of the U.S. It is an unincorporated territory because Congress has selected only certain provisions of the U.S. Constitution 

to apply to the territory. The USVI is an organized territory due 

to federal legislation—an Organic Act. The first USVI Organic Act 

was enacted in 1936 and a revised Organic Act was approved in 

1954. The Organic Act is analogous to a state constitution and is 

intended to serve as a basic charter of government for the territory 

until the USVI adopts its own constitution. The Organic Act made 

comprehensive and complete provisions for the legislative, executive and judicial branches of government, including imposing limitations upon them. Only Congress can make changes to the Organic Act, whereas, if the USVI adopts its own constitution, 

changes could be made locally without Congressional action. To 

date, the USVI has held five constitutional conventions, the latest 

in 2004. However, none of the efforts have resulted in the adoption 

of a constitution. 


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The Organic Act did not authorize or establish a chief financial 

officer for the USVI government. It does require the Governor to 

present, at the opening of each regular legislature session, a message on the state of the USVI and a budget of estimated revenues 

and expenditures. The Governor is also required to establish and 

maintain accounting and internal control systems to allow for the 

full disclosure of financial actions and provide for the accountability and accounting of all funds, property and other government 

assets. The USVI created an Office of Management and Budget to 

perform these functions. 

The Assistant Secretary for Insular Affairs of the Department of 

the Interior testified in the 112th Congress that territories are facing deficit situations which arise due to disputes between the executive and legislative branches over revenue projections. This ‘‘estimation discrepancy’’ leads to revenue management issues, resulting 

in the accumulation of harmful debt over a period of years and the 

charges on such debt interferes with the territory’s ability to solve 

current fiscal issues. 

According to a 108th Congress Natural Resources Committee report (H. Rept. 108–645), several years of hurricane damage, the decline of tourism, and the replication of services more easily provided in the mainland had led to economic instability in the USVI. 

H.R. 3589 was introduced in the 108th Congress to establish a 

Chief Financial Officer (CFO) to control spending in the territory 

to lessen the annual budget deficits that were growing the territory’s overall debt. H.R. 3589 passed the House of Representatives 

by voice vote. Bills in the 109th and 110th Congresses (H.R. 62 and 

H.R. 2107, respectively) which were similar to H.R. 3589 also 

passed the House of Representatives by voice vote and without objection. 

As the issue evolved over the years, and due to concerns raised 

by the Department of the Interior, USVI Governors (Governor 

Turnball and Governor de Jongh) and local officials, language that 

was seen as giving the CFO excessive power was removed. In the 

112th Congress, the House of Representative passed the modified 

version of the bill, H.R. 3706, by voice vote. While the USVI Governor still opposed the bill, the Department of the Interior stated, 

‘‘In the view of the Department of the Interior, the duties contained 

in H.R. 3706 would constitute only de minimus interference with 

self-government in the Virgin Islands, while addressing other 

issues of mistrust between the executive and legislature and possibly the public. Thus, the Department of the Interior has no objection to the enactment of H.R. 3706.’’ 

With regard to USVI revenues and expenditures, Governor de 

Jongh provided in his testimony during the 112th Congress that, 

‘‘expenditures have declined from a total of $960 million in FY 2008 

to an estimated $832.5 million in FY 2012. Meanwhile, during the 

same period, revenues declined from $928.7 million in FY 2008 to 

$801.7 million in FY 2012.’’ According to the 2009 Annual Audit, 

the latest audit the Department of the Interior has for the USVI, 

federal funding sent to the USVI totaled $247 million, which in 

that year included American Recovery and Reinvestment Act funding (compared to the 2008 audit with a federal grant figure totaling 

$167 million). The USVI also receives annual funding from the Office of Insular Affairs at the Department of the Interior that is not 


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included in the annual audits. In 2012, the USVI received $6.6 million in grant funding and a rum tax remittance of $256 million. 

The USVI is no different than the other U.S. territories with regard to challenges it faces in developing its economy, and increasing its revenues. Economic constraints including geographic isolation, limited land resources, small population, limited pool of expertise, and locations subject to severe storms (hurricanes and typhoons) can make it difficult to attract or keep businesses. The Department of the Interior’s Office of Insular Affairs, through its annual appropriations and coordination with other federal agencies, 

works to empower the territories to overcome these constraints and 

develop opportunities for business development and revenue 

growth. The Natural Resources Committee annually oversees these 

efforts and the progress of each territory. 

H.R. 85 was introduced by Delegate Donna Christensen on January 3, 2013. The bill text is the same as H.R. 3706, introduced in 

the 112th Congress. The bill would require the Governor of the Virgin Islands to appoint a CFO, with advice and consent from the 

USVI legislature, picked from a list created by a USVI Chief Financial Officer Search Commission. If the legislature does not confirm the Governor’s choice within 90 days, the Governor can appoint an acting CFO. If a CFO has not been appointed within 180 

days, the Commission, by majority vote, is required to select an 

acting CFO. If the acting CFO then serves 180 days without further action, the acting CFO becomes the CFO. The acting CFO 

could be removed for cause, or if the legislature confirms a CFO 

through advice and consent. 

The duties of the CFO would be: to develop and report on the financial status of the USVI government; to prepare and certify each 

year spending limits for the annual budget, including estimates of 

all revenues brought in by the territory, without regard to sources, 

and whether or not the budget is balanced; and to revise and update standards for financial management, including inventory and 

contracting for the USVI government and each agency. To do this, 

USVI department heads are required to provide all documents and 

information requested by the CFO. 

The CFO would be appointed for a 5-year term and would be 

paid at a rate determined by the Governor, but not less than the 

highest rate of pay for a cabinet officer or any CFO serving in a 

government or semi-autonomous agency. The bill would require a 

referendum to be held closest to the 4th year of the 5th year term, 

to allow the voters to determine if the CFO position should be permanent. 

The USVI Chief Financial Officer Search Commission would be 

comprised of eight members appointed no later than 30 days after 

enactment of this Act. Its charge would be to recommend candidates for nomination for USVI CFO. The Commission members 

are required to have business, government or financial expertise. 

One individual would be appointed by each of the following: the 

governor; the president of the legislature; St. John St. Thomas 

Chamber of Commerce; St. Croix Chamber of Commerce; President 

of the USVI University; Central Labor Council of the USVI; St. 

John at-large Member; and the President of AARP Virgin Islands. 

The Chairperson of the Commission would be the Chief Justice of 

the USVI Supreme Court or his designee. Current government emVerDate Mar 15 2010 04:34 Jun 18, 2013 Jkt 029006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR110.XXX HR110

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ployees would be prohibited from being appointed, except in the 

case of the Central Labor Council appointment. The Commission 

would be required to meet 15 days after all the members are appointed and report its recommendations no later than 60 days after 

its first meeting. The Commission would terminate upon the nomination and confirmation of the CFO. 

COMMITTEE ACTION

H.R. 85 was introduced on January 3, 2013, by Delegate Donna 

Christensen (D–VI). The bill was referred to the Committee on 

Natural Resources, and within the Committee to the Subcommittee 

on Fisheries, Wildlife, Oceans, and Insular Affairs. On April 24, 

2013, the Full Natural Resources Committee met to consider the 

bill. The Subcommittee on Fisheries, Wildlife, Oceans and Insular 

Affairs was discharged by unanimous consent. No amendments 

were offered, and the bill was then adopted and ordered favorably 

reported to the House of Representatives by unanimous consent. 

COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of rule XIII 

of the Rules of the House of Representatives, the Committee on 

Natural Resources’ oversight findings and recommendations are reflected in the body of this report. 

COMPLIANCE WITH HOUSE RULE XIII

1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the Rules of 

the House of Representatives requires an estimate and a comparison by the Committee of the costs which would be incurred in carrying out this bill. However, clause 3(d)(2)(B) of that rule provides 

that this requirement does not apply when the Committee has included in its report a timely submitted cost estimate of the bill prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974. Under clause 

3(c)(3) of rule XIII of the Rules of the House of Representatives and 

section 403 of the Congressional Budget Act of 1974, the Committee has received the following cost estimate for this bill from the 

Director of the Congressional Budget Office: 

H.R. 85—A bill to create the Office of Chief Financial Officer of the 

Government of the Virgin Islands, and for other purposes 

CBO estimates that enacting H.R. 85 would have no significant 

effect on the federal budget. H.R. 85 would require the Governor 

of the Virgin Islands to appoint, with the advice and consent of the 

legislature of the Virgin Islands, a Chief Financial Officer (CFO) 

who would serve for a five-year period. The legislation also would 

require the territory to hold a referendum during a scheduled election on making the CFO position a permanent part of the Virgin 

Islands executive branch. Finally, H.R. 85 would establish a commission to recommend candidates for the CFO position. Enacting 

H.R. 85 would not affect direct spending or revenues; therefore, 

pay-as-you-go procedures do not apply. 

Requirements on the Governor of the Virgin Islands and the 

Board of Elections of the Virgin Islands are intergovernmental 

mandates as defined in the Unfunded Mandates Reform Act 


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(UMRA). Based on information from representatives of the Virgin 

Islands, CBO estimates that the costs would be small and well 

below the annual threshold established in UMRA ($75 million in 

2013, adjusted annually for inflation). The legislation contains no 

private-sector mandates as defined in UMRA. 

The CBO staff contacts for this estimate are Matthew Pickford 

(for federal costs) and Melissa Merrell (for the impact on state and 

local governments). The estimate was approved by Theresa Gullo, 

Deputy Assistant Director for Budget Analysis. 

2. Section 308(a) of Congressional Budget Act. As required by 

clause 3(c)(2) of rule XIII of the Rules of the House of Representatives and section 308(a) of the Congressional Budget Act of 1974, 

this bill does not contain any new budget authority, spending authority, credit authority, or an increase or decrease in revenues or 

tax expenditures. CBO estimates that enacting H.R. 85 would have 

no significant effect on the federal budget. 

3. General Performance Goals and Objectives. As required by 

clause 3(c)(4) of rule XIII, the general performance goal or objective 

of this bill is to create the Office of Chief Financial Officer of the 

Government of the Virgin Islands. 

EARMARK STATEMENT

This bill does not contain any Congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined under clause 9(e), 

9(f), and 9(g) of rule XXI of the Rules of the House of Representatives. 

COMPLIANCE WITH PUBLIC LAW 104–4

This bill contains no unfunded mandates. 

COMPLIANCE WITH H. RES. 5

Directed Rule Making. The Chairman does not believe that this 

bill directs any executive branch official to conduct any specific 

rule-making proceedings. 

Duplication of Existing Programs. This bill does not establish or 

reauthorize a program of the federal government known to be duplicative of another program. Such program was not included in 

any report from the Government Accountability Office to Congress 

pursuant to section 21 of Public Law 111–139 or identified in the 

most recent Catalog of Federal Domestic Assistance published pursuant to the Federal Program Information Act (Public Law 95–220, 

as amended by Public Law 98–169) as relating to other programs. 

PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

This bill is not intended to preempt any State, local or tribal law. 

CHANGES IN EXISTING LAW

If enacted, this bill would make no changes in existing law. 

Æ 


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