Yesterday, while the budgetary uncertainty of the government of Puerto Rico was gaining ground, shortly after 5:00 pm, Governor Ricardo Rosselló Nevares turned to the Legislative Assembly in a new attempt to repeal the Law against Unjust Dismissal (Law 80-1976) and achieve a budget that complies with the agreement with the Oversight Board.
After the almost simultaneous approval of two budgets for the current fiscal year - one by the Legislature and another by the Board - it was uncertain under which scheme the government operated, despite the fact that the PROMESA Law is clear in the primacy of the federal agency.
"The budget of the Legislative Assembly was the one that I signed, and it is the one that is in force," Rosselló Nevares said during a public hearing near noon.
Hours later, he formalized the call for an extraordinary session as a strategy to comply with the agreement reached with the Board, which, among other things, would repeal Law 80.
In a televised message, Rosselló Nevares maintained that the reluctance of the Legislature - particularly the Senate - in endorsing the terms of the pact would provoke lawsuits between the Executive and the fiscal entity, as well as "political controversies that will keep us in the same crisis".
"Faced with this serious situation, I will make an additional attempt to avoid further damage to the vulnerable sectors of our people," he said when announcing that the call is to consider the latest measure on Law 80 approved by the House, with the amendments suggested by Senator Miguel Romero.
Waiting for the Board
Although the governor indicated that the budget he signed would be the one to be implemented, until yesterday, the Office of Management and Budget (OMB) had not assigned to the agencies the corresponding items under the new distribution, confirmed the Secretary of the Treasury, Raúl Maldonado.
"What I am paying now is all the bills that come before June 30 and those bills are from the previous budget ... What I do need the new budget for is all the purchases that will be made from July 1. Until we have a budget in the OMB, I cannot make any payments," said the official.
On Saturday, the Legislative Assembly approved a budget of $ 8.709 billion, which surpasses the version of the Board by $ 48 million.
Maldonado said that there should be a "resolution" between Thursday and Friday. "We have to wait for the position of the Board, since PROMESA imposes a legal obligation on us to use the PROMESA budget," the official acknowledged.
"I have to submit (to the Board) the justification, stating what the money is for," said Maldonado defending the petition, since the money would be used to implement projects to comply with the fiscal plan, such as theOffice of the Commissioner of Financial Institutions.
When will there be a budget?
-We hope that by the end of the week. In addition, we have to wait now that the Governor has made a request to the Legislature to reconsider the issue (of Law 80). If the Legislature validates the agreement, then we would have a budget such as the one submitted by the Executive, validated by the Board.
The Board validates its budget
The executive director of the Board, Natalie Jaresko, warned yesterday that "she will enforce the budget" issued by the agency, although she maintained that she did not want to go to court to validate the authority that PROMESA awarded the Board, since it would result in an unfortunate investment of time and resources.
"We will enforce the budget," said Jaresko, who was surprised to be questioned about the Executive's proceeding to approve the budget version endorsed by the House and the Senate.
"Unfortunately, the courts are the first thing that comes to mind. I am not saying that I am going to go to court tomorrow because it is not what I want ... but I believe that the PROMESA Law is clear about the process to approve and certify a budget ... so our intention is to enforce it," Jaresko affirmed.
She also stressed that the budget can be "amended", and although she hopes that the legislators "want to make the transformation" of labor standards, she stressed that the budget not only failed in the fact that it did not take into consideration the elimination of the Law 80, but it excluded certain mandatory allocations and budgetary controls contemplated in the fiscal plan.
"If the governor says he wants to adjust it in a different way, he can come up with a proposal to adjust in a slightly different manner, as long as we achieve the goals of the adjustment, and he can reassign. The budgets can be amended," emphasized Jaresko.
She pointed out that they continue to believe in the need for a labor reform, including the repeal of Law 80, to make Puerto Rico a jurisdiction with more job opportunities and make the business environment more competitive.
What PROMESA establishes
The former Chief Judge of the U.S. Bankruptcy Court for the District of Puerto Rico, Gerardo Carlo, affirmed that the PROMESA Law prevails over state legislation until the statute is declared unconstitutional.
"One of the strongest powers that the Board has is the authority to approve the fiscal plan and the budget," said the lawyer.
The PROMESA Law establishes in its Section 202 that "If the Governor fails to develop a Budget that the Oversight Board determines is compliant" with the fiscal plan, the Board shall submit its budget, which "is deemed to be approved by the Governor and will be in full force and effect beginning on the first day of the applicable fiscal year".
A year ago, the Executive acted differently regarding the budget issue.
"In a colony, the budget can be enforced to the governor. PROMESA states that, if the budget is fully approved, the governor then proceeds to sign it, but as it was amended by the Board, is deemed approved," said the former representative of the governor before the Board, Elías Sánchez, during the approval of the budget for the fiscal year 2017-2018.
The governor himself acknowledged yesterday that the signature of the budget by the Legislature could be a "symbolic act" in case it is contested by the Board.
"I am afraid it is a symbolic act, because later, if this continues its course, it goes to the courts and a decision is made against the government of Puerto Rico. So, the budget that is used is the Board’s," he said.
"I am not predicting what a court is going to say. I am saying that under the PROMESA reading there are some very clear sentences about the role of the Board regarding the budget," Rosselló Nevares added.
PROMESA does stipulate that the budget may be developed between the governor, the Board and the Legislature, as long as it is established in consensus.
"What the governor has done I think makes a lot of sense because it is giving the Legislature a second chance to verify the issue, is seeking a consensus and respecting the powers of the Assembly," Carlo said.
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