Insurance and Property Amnesty Bills Move on to Rules

ST. CROIX, Virgin Islands, June 7 -- The U.S. Virgin Islands legislature issued the following news release:

The Committee on Finance chaired by Senator Clifford F. Graham met on Tuesday in the Frits E. Lawaetz Legislative Conference Room, Frederiksted. Testimonies were given regarding Bill No. 30-0007 making mandatory rental automobile insurance coverage secondary to any valid automobile liability insurance held by driver/renter. Testimonies were also given on Bill No.30-0066-an act waiving all fees, penalties and interest levied on property taxes for a period of ninety (90) days.

Invited testifiers on Bill No. 30-0007 were John McDonald, Director, Division of Banking and Insurance, Sal Sanpere, Owner, Olympic Rent-A-Car and Manuel Gutierrez, Owner, Centerline Car Rental. On Bill No. 30-0066 the invited testifiers were Delbert Hewitt, Deputy Chief of Staff, Office of the Lt. Governor, Ira Mills, Tax Assessor, Office of the Tax Assessor and Dr. Eugene Petersen, a Private Citizen.

In his testimony, McDonald said the Bill was timely since there has been much discussion in the insurance industry in the Virgin Islands with regards to whether the liability insurance policy for rental vehicles is primary or secondary. He added that this was especially important since there has been an increase in the number of mediums available to drivers of rental vehicles to satisfy the compulsory automobile liability insurance section of the Virgin Islands Code.

Important to the Division of Banking and Insurance according to McDonald, is that, if the legislation is passed, the Division would like the Legislature to consider language indicating if a driver's personal automobile insurance does not pay the claim within 30 days of the claim being filed, payment can be filed with the mandatory liability insurance policy for rental vehicles providing the driver did not sign a waiver. He said the suggested language is encouraged in order to not to impose an additional burden on third party claimants in the Virgin Islands.

According to Gutierrez's testimony on Bill No. 30-0007, the current statute is silent as to whether the rental car driver's personal auto liability policy or whether rental car company's liability policy that is mandated by statute for all rental vehicles, is primary when a driver of a rental vehicle gets in an accident.

Gutierrez told the committee that making the rental car driver's personal auto carrier primary is equitable. He said before State Farm writes a policy they investigate the driving history of the applicant. If the driver has had accidents, State Farm charges a higher premium to reflect the greater risk or even refuses to write the policy if the risk is too great. According to him, rental car companies have no ability to investigate the driving history of someone that comes to the rental counter. Under these circumstances, it is equitable to make the driver's personal auto policy primary.

The Bill was amended in the nature of a substitute by Senator Terrence Nelson. It strike the present language it its entirety. It now reads that if a rental vehicles driver has any other valid and collectible liability insurance in addition to the mandatory liability policy for rental vehicles, the minimum mandatory liability insurance policy for rental vehicles shall be secondary to the other insurance. The committee unanimously voted for the Bill and it was sent on to the Rules Committee for further consideration.

Bill No. 30-0066 sponsored by Senators Kenneth Gittens and Janette Millin Young calls for the waiving of delinquent property tax fees from 2008 to 2011 for a period of ninety days. In their testimonies both Hewitt and Mills stated that the Office of the Lieutenant Governor, Property Tax Division does not support the legislation for three (3) reasons: (1) property tax revenues are being collected at a higher level and property owners are paying at a higher level than in previous years; (2) property tax revenues are already budgeted to support government operations Fiscal years 2013 and 2014 and the General Fund can be negatively affected by this legislation, and (3) since July of 2011 the Office of the Lieutenant Governor has been offering payment plans for delinquent accounts and payment incentives on current bills to properties and they have been responding positively to these initiatives.

According to Hewitt and Mills, the proposed waiver, which will amount to $3.9 million, can potentially contribute to a negative change in the budgeted projection. They added that it will be counterproductive at this time to institute changes that may negatively affect the collection of property tax revenues. Passage of this measure would seem to be an unfair gesture to the majority of taxpayers who have performed a very tangible civic responsibility to accommodate those few who have not.

Dr. Petersen testified that he supports the Bill. He said the Bill will generate immediate cash flow into the treasury of the Virgin Islands. He added that many businesses use this measure of amnesty on delinquent accounts when they need to increase cash flow in times of slow business or emergencies.

According to Dr. Petersen, this amnesty should be a onetime occurrence for those that participate and take advantage of this amnesty. He said to insure that future taxes be paid on time, any taxpayer that receives this forgiveness cannot in any future years, on the same property, receive another amnesty.

This, he added, will insure that individuals do not purposely withhold their taxes in the hope that another amnesty period will be forthcoming.

Senator Cole moved an amendment to Bill No. 30-0066 by inserting a section of the Virgin Islands Code which refers to the government accepting real property in lieu of payment of real property taxes. The Bill was unanimously voted out to the Rules Committee for further consideration.

Committee members at Tuesday's hearing were Senators: Clifford F. Graham, Donald G. Cole, Judi Buckley, Terrence A. Nelson, Nereida Rivera-O' Reilly and Clarence Payne, III. Non-Committee members were Senators Diane Caperhart, Alicia "Chucky" Hansen and Kenneth Gittens.

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