Although it is an expeditious process, Puerto Rico will have to wait for about a month and spend loads of money in order to find out whether the budget for this fiscal year will be certified by the Oversight Board or if the governor will sign it.
Yesterday, just a day after filing a lawsuit against the Board for the first time, the Fiscal Agency & Financial Advisory Authority (FAFAA) asked Judge Laura Taylor Swain -who presides over Title III cases- to address the injunction request filed against the entity within three weeks.
Until the Court resolves the legal issues submitted in the lawsuit, the government will remain in “a fiscal limbo” and the elected government will not know which budget will rule the operations of the fiscal year that on July 1, 2018, reads FAFAA’s motion.
According to the agency in charge of ensuring the implementation of PROMESA at the Puerto Rican government level, if the controversy between the Board and the government on the budget implementation is delayed, this will affect the process of preparing an adjustment plan to renegotiate the island´s public debt.
The motion also states that as long as this dispute continues, the rights of the government and the people of Puerto Rico will be jeopardized. It also reiterates that the Board intends to "take control of the government," by abusing its powers to certify fiscal plans and budgets.
Immediately, the Board´s lawyers Martin Bienenstock and Hermann D. Bauer, partners at Proskauer & Rose and O'Neill & Borges, respectively- objected to Swain the schedule proposed by the government pointing out that it is "unrealistic."
Last Thursday, Rosselló Nevares sued the Board for the first time, claiming that the federal agency "usurps" the powers that (despite passing PROMESA) Congress preserved for elected officials of the Puerto Rican government. The lawsuit seeks for Swain to establish which budget prevails and to prohibit the federally established entity to modify or adopt public policy incorporating such strategies or decisions in the fiscal plan or budget.
Multi-million dollar cost
Yesterday, at a press conference in Bayamón, where a program of improvements to the island's highway system was announced, Rosselló Nevares admitted that the lawsuit filed against the Board could imply significant legal services costs, but assured that it is necessary to defend the prerogatives of the elected government of Puerto Rico.
Rosselló Nevares did not detail how much the lawsuit -now under the consideration of Swain- would cost, but he recalled that, under the current state of law, the government pays not only for its lawyers, but also the lawyers of the board, and if bondholders want to give their opinion, it also has to pay the lawyers of bondholders.
"This can rise to tens of millions of dollars a month... Yes, (the legal action) has consequences on the government's liquidity," admitted the Governor on the economic impact of the new lawsuit.
The different versions of the budget included over $250 million separated for legal expenses related to PROMESA Title III lawsuits, but that figure does not include the cost of the adversarial process initiated by Rosselló Nevares.
According to FAFAA urgent motion, the Board would have until July 12 to answer the government's request. Four days later, FAFAA would file an appeal for summary judgement motion. Then, the Board would have another four days to respond the request and the government would make a final attempt on July 23.
If necessary, FAFAA suggested Swain to include the oral arguments at the July 25 hearing.
The Board answers
The Board rejected the schedule suggested by FAFAA and proposed that instead of written arguments on the controversy being submitted on or before July 23, the Board should have until July 18 to determine if they answer the lawsuit or they do a counterclaim and then parties meet to agree on the work schedule and discuss it at the July 25 general hearing.
The Board stated that it is not appropriate, as a reference to determine the discussion schedule, to use the process that was followed in the controversy over the Electric Power Authority (PREPA) Transformation Officer since the issues raised by Rosselló Nevares regarding the Board’s faculties are of more significant importance.
"The alleged 'uncertainty' about which budget is the operational one is of the claimant own making," said the Board, adding that PROMESA states that the only fiscal plans and budgets are those certified by the federal entity.
For the Board, even knowing these facts, the Governor signed an uncertified budget that has no effect, referring to PROMESA sections 201 and 202.
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