(André Kang)

The administration of Governor Ricardo Rossello is still evaluating how to proceed facing the operating budget of $ 8.757 billion submitted by the Oversight Board and under which the government has been operating since yesterday.

"The Governor and his cabinet continue to analyze possible alternatives to the scenario we are facing," said Secretary of Public Affairs and Public Policy at La Fortaleza, Ramón Rosario, who issued written statements on behalf of the Executive Branch.

Yesterday, neither the Governor nor the Presidents of House and Senate, Carlos “Johnny” Méndez and Thomas Rivera Schatz, respectively, reacted publicly to the budget imposed by the Board.

Yesterday afternoon, the Governor shared through social networks an image in which he was seen with Méndez and other representatives of the majority party sharing a day at the beach.

"We are evaluating the budget certified by the Board. Certainly, the impact on the budget of the three branches of government and municipalities will require additional adjustments that will limit our ability to provide services," acknowledged Rosario.

He said that some of the biggest concerns of the Executive are public employees and the payment of the Christmas bonus, as well as the elimination of funds for economic development.

The version submitted by the entity in charge of the public finances of Puerto Rico, although greater than the $ 8.709 billion approved by the Legislature, imposes additional cuts of up to $ 345 million after the Unjust Dismissal Law (Law 80-1976) was not repealed, a requirement of the Board to preserve the Christmas bonus for public employees and establishing two funds; $ 25 million for the University of Puerto Rico (UPR) and $ 50 million for the recovery of the municipalities.

The federal entity did maintain several of the items included by the Legislature during the evaluation process, but also redefined some of the items set to agencies such as the Department of the Treasury, the Department of Public Safety (DPS) and the Department of Education.

The consolidated budget totals $ 20.663 billion and includes the items of public corporations, federal funds and other revenues.

"The path has been traced, and although it will be a challenge, we cannot afford to deviate from it. We must all work together," said José Carrión, President of the Board, in written statements accompanying the document.

Possible scenarios

Lawyer Rolando Emmanuelli, PROMESA Act expert, explained yesterday some of the scenarios that could be considered by the Executive, besides complying with the Board’s budget or convening an extraordinary session to consider again the repeal of Law 80 and the possibility of establishing new agreements with the agency.

According to Emmanuelli, although there is always the possibility of going to court under the allegation that the Legislature approved a budget lower than that submitted by the Board, the government's opportunities lie in refusing to implement the budget.

"There would be a confrontation that would generate a controversy in court because, then, the Board would have to go to court and ask it to force the officials to comply with the budget," explained the lawyer.

Under this scenario, the Board would issue a non-compliance certification that, if it fails to generate a reaction from the government, would entail the use of mechanisms PROMESA grants the fiscal entity to force the officials to execute the plan.


"My exhortation is to disobey the Board, but they always tell you that you have to be against the Board and, at the end of the day, they just look for a reasonable agreement that always ends up harming the island," said representative of the Independence Party (PIP), Denis Márquez.

Going to court arguing that the Board could never show the economic growth that the repeal of Law 80 would generate is not an alternative either, said Emmanuelli. "The law allows the Board to establish the budget at its sole discretion. It is a matter in which the legislative deference of Congress is to the Board," he said.

The determination to not implement it would have to come from the Executive Branch, he clarified.

"The political crisis that the government could create by opposing the execution of the budget can be the key to open many doors to work in a consensus process the root problem, which is the colonial issue," said Emmanuelli.

Imposed cuts

As stated earlier by the Board during the approval of the fiscal plan on Friday, the public expenditure scheme contemplates reductions greater than those set in the first version of the document approved by the Legislature.

The budgets of some agencies seem to have increased compared to the current fiscal year, but this is due to the fact that, for the first time, each one was allocated the money corresponding to the payment of their employees' pensions (pay as you go).

"The vision of the Board is the republican vision, a small government with less participation. Their cuts are aimed to the programs, this is a direct cut to reduce staff," said in the House the spokesman of the Popular Democratic Party (PDP), Rafael "Tatito" Hernandez. 

The version imposed by the Board contemplates major cuts for the Department of Education, which ended with an allocation for this fiscal year of $ 2.479 billion, compared to the $ 2.538 approved by the Legislature.

Like most agencies, the most drastic cuts to Education were in payroll and operating expenses, which amounted to $ 87 million altogether.

Meanwhile, a $30 million item was added to "cover services related to the provision of therapies and other services to children requiring special education", a $ 23.8 million item for the payment of the salary increase to teachers and another $ 23.9 million for the increase to directors.

"The fact that the Board itself recognizes these measures must be maintained in the coming years is an achievement that we acknowledge and appreciate," said the Chairman of the Senate Education Committee, Abel Nazario.

The allocation for the Alternative Education Alliance was maintained in $ 10 million, contrary to the $ 12 million proposed by the Legislature. 

The Department of the Treasury was left with a budget of $ 167.8 million, less than the $ 201.5 million from the original proposal of the Board.

The $ 533,000 item was eliminated for the salary increase of $ 125 per month to special fiscal agents and internal revenue agents.

In the case of those items negotiated under the umbrella of the DPS, several suffered drastic cuts, such as the Puerto Rico Fire Department, with a reduction in operating expenses from the $ 576,000 proposed by the Legislature to $ 148,000. The payroll item, on the other hand, decreased from $ 52.1 million to $ 47.4 million.

Likewise, the item of just over $ 1 million for the purchase of protective equipment for firemen was withdrawn from the document. 

The Police lost the payroll amount of $ 587.1 million, as stipulated in the Legislature's version, to $ 570.2 million. As with the teachers, the sum of $ 18.8 million was maintained for the police salary increase. However, $ 6 million for helicopter purchases was discarded.

During the process of public hearings, the secretary of the DPS, Hector Pesquera, warned that by the end of the fiscal year he would have no funds to pay the salary of 1,300 employees. 

The Police’s budget was settled at $ 887.3 million. The Legislature had proposed $ 916.3 million.

Among the allocations under the Office of Management and Budget (OMB) $ 14 million were maintained for the payment of the police Social Security.

The budget of the Governor's Office was also reduced. It will now receive $ 23.5 million, as opposed to the $ 27.2 million from the previous version. The Legislative Assembly will also have to make adjustments by receiving cuts of $ 10 million, in the case of the House, and $ 8 million in regards to the Senate.

The Department of Health faces a reduction from $ 254.9 million to $ 238.1 million, with the most affected item being the payroll. The Legislature had made $ 85.3 million available during the evaluation process, but it was settled in $ 70.9 million.

The $ 7.5 million allocation for the operation of the Diagnostic and Treatment Centers remained in the special items resolution.

The amount allocated for the payment of legal expenses under Title III was reduced to $ 256 million, compared to the $ 271 originally requested. 

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