Why It Matters

The U.S. Virgin Islands over $2.2 billion in public debt—roughly 50 percent of its GDP—while managing infrastructure deterioration, hurricane recovery delays, and federal Medicaid funding constraints. The rum cover-over tax remains the territory’s largest recurring federal revenue source and survival linchpin.

The territory achieved a major victory with permanent extension of the rum cover-over through 2032. Callwood Associates’ engagement now focuses on implementation and complementary economic development initiatives to diversify the economy and reduce federal dependency.

The strategy leverages Rep. Stacey Plaskett’s (D-VI) unprecedented positioning as the first territorial delegate on both House Budget and Ways and Means Committees.

By the Numbers

The Government of the U.S. Virgin Islands has engaged in federal lobbying for over two decades, filing 200 disclosures totaling approximately $21.1 million since 2003. This fourth quarter 2025 filing represents $90,000 through Callwood Associates LLC.

The territory employs a multi-firm strategy: Winston & Strawn LLP leads with 78 filings totaling $11.1 million since 2003, Squire Patton Boggs has filed 34 times for $5 million since 2017, and Callwood Associates has filed 56 disclosures totaling $3.3 million since 2007.

Kevin R. Callwood has represented the USVI almost exclusively since 2005, logging 67 disclosures for $4.1 million, compensating for lack of congressional staff experience through nearly two decades of territorial tax law expertise.

The Agenda

The territory is lobbying on several critical fiscal matters, primarily securing permanency for the rum cover-over tax that rebates federal excise taxes back to the USVI. Additional priorities include implementing the "One Big Beautiful Bill," broader economic development initiatives, tax policy issues, budget matters, and economic incentives programs.

Past priorities have included:

  • Tax and Economic Development: Rum cover-over provision, Virgin Islands Economic Development Corporation program, and Global Intangible Low-Taxed Income tax relief
  • Healthcare: Federal Medicaid and SCHIP funding
  • Infrastructure: Hurricane recovery aid and disaster resilience programs

Broader Context

The USVI’s lobbying push occurs amid significant federal fiscal pressures. While the territory secured permanent rum cover-over extension to $13.25 per proof gallon through 2032, structural challenges persist with the second-highest debt-to-GDP ratio among U.S. territories.

Eight years post-Hurricanes Irma and Maria, infrastructure recovery remains incomplete despite FEMA obligating over $1.02 billion. The electric utility faces ongoing crises inhibiting economic development, while Medicaid funding presents critical pressure points.

Delegate Plaskett’s 2025 appointment to Ways and Means provides unprecedented influence. She co-led bipartisan legislation in February 2025 extending the rum cover-over provision, directly advancing territorial goals.

Between The Lines

Congress actively advances measures aligned with USVI priorities. S.1986 and H.R.1378 seek rum cover-over extension through 2032. The "One Big Beautiful Bill" carries significant rum industry implications.

Additional bills H.R.364, H.R.858, H.R.366, and H.R.5503 address economic development, tax incentives, fuel taxes, and disaster resilience.

Plaskett’s Ways and Means position gives unprecedented territorial tax influence. She also raised concerns in April 2025 about federal budget cuts affecting the University of the Virgin Islands.

Competitive Landscape

The USVI employs coordinated multi-firm lobbying. Winston & Strawn remains the largest partner since 2003, handling budget, appropriations, tax, healthcare, and transportation. Squire Patton Boggs manages infrastructure and energy concerns since 2017, including hurricane relief and EU tax haven blacklist removal.

Concurrent advocacy targets St. Croix oil refineries, the Virgin Islands Visa Waiver Act, Caneel Bay resort reopening, increased Medicaid funding, and H-2B visa extensions.

The Bottom Line

The USVI maintains its long-standing engagement with Callwood Associates through this $90,000 final quarter filing, continuing a nearly two-decade relationship focused on territorial fiscal priorities. While achieving rum cover-over permanency represents a major victory, ongoing structural challenges—unsustainable debt, incomplete hurricane recovery, and federal budget pressures—ensure continued advocacy remains essential as multiple relevant bills advance through Congress.

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