Big Win on Rum Cover-Over; But Trump’s Bill Brings Major Challenges to USVI

M.A. Dworkin

USVI - In the weekly Press Briefing held at Government House on St. Thomas, Governor Albert Bryan Jr. expressed concerns over the mixed impact that President Donald Trump’s Big Beautiful Bill will have on life for many Virgin Islanders. 

The Governor responded to the signing of the new federal tax and spending package - dubbed nationally the “Big Beautiful Bill” - by acknowledging both the critical wins and the looming challenges its passage into law will bring to residents of the U.S. Virgin Islands. While the bill delivers long-fought victories that USVI administrations have championed for years, it also introduces new pressures that will strain already stretched public resources. 

“I have been doing my best to forewarn our leadership and our people that these changes will require more of all of us and we have to be prepared to lead. This is not a moment for celebration - it is a moment that calls for clear-eyed leadership,” stated Governor Bryan. “The gains in revenue and tax relief are real, but they are accompanied by reductions in federal support for vulnerable residents and new financial burdens that our government must now absorb.” 

Key impacts on the Virgin Islands:

1. Rum Cover-Over Increase - A win with limits: The bill raises the rum cover-over rate from $10.25 to $13.50 per proof gallon. This increase will generate an additional $18 to $22 million annually for the Territory. These funds are essential for supporting our pension obligations and stabilizing the Government Employees Retirement System (GERS). However, the refusal to make the increase retroactive means years of lost revenue are unrecovered - money that would have made a critical difference in the solvency of GERS and the lives of our retirees.

2.  Reduced Federal Support for Housing, Food, and Healthcare: The bill reduces funding for Section 8 housing assistance for the Territory by an estimated 9%, and begins to shift Medicaid and SNAP program costs onto local governments. Most importantly the freezing of the Section 8 programs means no new vouchers in a time where rent is rapidly rising and availability of housing is limited. Many will lose their vouchers or see decreased levels of funding. With more than 30% of our population relying on some form of public health or nutrition assistance, this is a direct hit to the stability of families and seniors already living on the edge.

3. Social Security Tax Relief for Seniors - Bittersweet News: The bill eliminates certain Social Security payroll taxes for working seniors, a welcome benefit for Virgin Islanders over 62 who are struggling to keep up with rising costs. At the same time, this will reduce income tax revenue to the Virgin Islands Government. That means fewer dollars to pay for services like health care, road repair, and public safety - services that our people depend on every day. We don’t expect the impact to be a huge disruptor in funding but we are currently trying to gauge the impact.

4. Rising Costs with No Relief - The $37,000 Minimum Salary Mandate: The bill does nothing to address the financial strain many Territories now face from federally influenced policies, including the required increase in government minimum salaries to $37,000 per year. Governor Bryan expressed deep concern about how this mandate - combined with falling federal contributions - will impact the Territory’s budget. “We support fair wages and we stand by our public workers,” Governor Bryan said. “But when wage mandates rise while federal support falls, the burden shifts squarely to our people. That’s not sustainable.”

5.  Opportunity Amid Pressure - New Economic Development Tools: The bill also creates new access to infrastructure and development programs that the Virgin Islands intends to fully pursue. These include funding for tourism, energy modernization, and workforce development. But many of these programs are competitive and require upfront investment - funds that will be harder to commit under shrinking revenue streams. The bill also included new work requirements and recertifications for SNAP and Medicaid recipients. In this time with 4% unemployment in the Territory, we welcome the workforce participation. These changes could cause workers to delay retirement plans and increase the worker participation rate. Unfortunately, all these new requirements will be implemented by the Department of Human Services, which will need more employees to process. These costs have also shifted back to the Territory as a result of the bill. 

“We are standing at a crossroads,” the Governor concluded. “We must fight harder than ever to protect our most vulnerable while still positioning the Virgin Islands for long-term growth. This moment demands unity, not politics. It demands compassion for those who will feel these changes first. And it demands courage to speak honestly about the road ahead.”

Governor Bryan will convene a fiscal emergency working group next week to assess the full impact of the bill and begin preparing policy adjustments to preserve core government services and protections for the people of the Virgin Islands.