Amid the struggle between the central government and the Oversight Board over the budget, a group of mayors from the Governing Board of the Center for Municipal Revenue Collection (CRIM) met yesterday with Natalie Jaresko, executive director of the federal entity, hoping that meeting would represent an opportunity to expose the problems.
Jaresko told six of the nine mayors of the CRIM governing board who attended the meeting that the Board still has reservations regarding the Administrative Burden Reduction for Municipalities Act (Law 29-2019), which exempts municipalities from paying the government's health plan and pensions through the "PayGo" retirement system.
According to the mayors who spoke to El Nuevo Día after the meeting, Jaresko predicted that the controversy with the government will end in court.
"She told us categorically that it will end in court," said the mayor of Cidra and CRIM board chairman, Javier Carrasquillo, as he left the Board offices in Hato Rey.
Thus, it became clear to mayors that the clash between the central government and the Board is "real" and could have negative consequences.
"Of course it is. This is a reality," said Orocovis Mayor Jesús Colón Berlingeri.
Mayors told this newspaper they understand that this controversy could lead to reverting the benefits for 78 municipalities through Law 29. So far, the administration of Ricardo Rosselló Nevares and the Board still disagree on this statute.
Carrasquillo said that Jaresko told CRIM members that the Board does not oppose Law 29, but the government must provide for its financing or it will not be endorsed.
"The director (of the Board) was firm that this law is inconsistent with the fiscal plan and that the Board would be evaluating its next steps," Edward Zayas, spokesman for the entity overseeing the island's finances, told this newspaper.
The budget recommended by the governor for the next fiscal year - $9.624 billion - includes $286 million in municipal contributions to, through Law 29, inject money into the Municipal Equalization Fund, which allocates resources to municipalities to match their income with that of the previous year.
However, Jaresko has insisted that the budget should be $9.1 billion and that supporting Law 29 involves reallocating funds.
"We are an affected party in the controversy, in the differences of criteria, and it is not really in our hands to determine one thing or the other," Carrasquillo said.
San Juan Mayor Carmen Yulín Cruz - who sued the Board to prevent it from intervening in municipal finances - did not attend the meeting. The mayor of Santa Isabel, Enrique Questell and the mayor of Caguas, William Miranda Torres were not present either.
Bayamón Mayor Ramón Luis Rivera Cruz said Jaresko warned them that if "they do not reach an agreement through dialogue - which is the best option to avoid going to court - then there will be additional expenses."
"She is aware that we are drafting budgets based on Law 29," Rivera Cruz said.
"What she is telling us is 'if this goes to court and they (the Board) win the case, then municipalities would have to make some changes to their budgets, counting on less money,'" she added.
Therefore, he understands that the best thing is for mayors to take measures so that the can manage their budgets without counting on Law 26, in case of an adverse ruling for the government.
Faced with this possibility, Aibonito Mayor William Alicea said he has already set aside $1 million for contingencies and possible adjustments to next fiscal year's budget.
Rivera Cruz said that during the meeting, he spoke of the possibility of looking for "a transition mechanism" in case an agreement takes longer than expected.
El Nuevo Día learned that the Bayamón mayor proposed that a staggered strategy that is maintaining Law 29 for one year, and the following year municipalities contribute to PayGo and, the third year they contribute to pensions and the health plan.
For the mayor of Maunabo, Jorge L. Márquez, the best thing to do is to talk to the Board in order to obtain favorable conditions or terms for municipalities.