The Board has "the last word"

Regardless of the moves made by the Legislature, Governor Ricardo Rosselló Nevares acknowledges the power PROMESA conferred the Oversight Board to set the island´s budget. 

Having that clear, he expects the Unjust Dismissal Law (Law 80-1976) to be repealed in order to enforce his agreement with the entity in charge of the island´s finances. By doing so, the governor seeks to pave the way to participate in the adjustment plan in the debt restructuring process in federal court, as he acknowledged yesterday during an interview with El Nuevo Día, immediately after training with members of the US Army. 

However, Rosselló is also considering a possible scenario -which will be defined this week- in case the agreement was broken, the Board imposed its budget and he had to face them in court to ask for the money for the Christmas bonus, vacation and sick leave of public employees. But he recognized that he does not know what the result may be.

So far, the agreement depends on Senate bill 1662 that yesterday received the endorsement of the governor and was under the scrutiny of the Board and government economists.

If it became law, the Governor would only focus on one legal battle against the Board: opposing the reduction in pensions for government retirees. The average cut is 10 percent, but it can reach up to 25 percent and is included in the certified fiscal plan. Reductions would begin next year.

In this scenario, all eyes are fixed on the budget discussion and the elimination of Law 80.

What do you think about what has happened –for the time being- regarding the budget and the repeal of Law 80?

-What has happened is that if there is no agreement with Law 80, the budget changes. There is a difference of more than $ 300 million. Until June 27 (June) finishes and we see whether there is a (budget) resolution or not, the truth is that it is an exercise that may be somewhat academic. What I am saying is that there is information flowing around the priorities of the government, the priorities of the Legislature. But let's say that if by the middle of this week there is no resolution regarding the agreement we had reached, the Board will revert back to the previous fiscal plan and then it will have another budget. In other words, whatever they may be discussing there (in the Legislature), except for the priorities, can change substantially. 

You just said "it is an exercise that may be somewhat academic", does that prove the power of the Board -through PROMESA- to invalidate the work of the Legislature?

-That is part of the discussion. PROMESA is very clear: they have the last word regarding the budget. Essentially, the final number changes, that is, whatever they are discussing now, if the agreement is broken, that final number changes.

On Thursday, the House approved a $ 8.782 billion budget for the next fiscal year, that is $33.2 million higher than the one submitted by the Board before the Legislature, which reached $ 8,749 billion. Before the approval, Rosselló had expressed concern about budget items that were reduced by the Board and that, in his opinion, required changes.

Why defend an agreement that involves a budget with which you have reservations?

-Because the issue is (pause) ... who in PROMESA has the power in law to complete the budget. Just as I have established that they do not have the power in law to determine public policy, that is up to me and the Legislative Assembly, I have also said that PROMESA is very clear: the Board has the last word regarding the budget. Therefore, within this parameter, what we wanted to do is a budget, to build it and then the Board adds its changes.

How do you justify that there is an increase in your Office while there would be a lack of funds in some agencies?

-Because it is not more money for my Office. In fact, my Office has had cuts and savings. It´s that my Office is going to have a number of things that were in other agencies. For example, the office for the “chief financial officer” is part of the fiscal plan. That represents certain expenses. The Puerto Rico Innovation and Technology Service is part of our public policy. All these expenses were formerly elsewhere and now they are centralized in the Executive Branch to comply with the public policy of innovation and oversight of fiscal spending.

With what has happened so far, especially concerning Law 80, do you consider that the unmistakable path is going to court?

-It depends on what happens with the agreement. Undoubtedly, if there is an agreement, the way to court is more limited. The only major conflict that truly lies ahead is pensions and, on the other side, the debt restructuring process that, even when we may have differences, there is a way to get there.

And if the Board was to eliminate the items for the Christmas bonus, vacation and sick leave of public employees, would you go to court?

-Yes, I have always said so. The unfortunate thing is that we will be spending $ 20 to $ 25 million a month in litigation processes without being sure of the result. PROMESA is a new project. The second one, which is very relevant for the people, is that the debt restructuring process has not started yet and, instead of visualizing finishing this in a year and a half or two years, we are talking about many years. It will possibly take eight years or a decade to solve it, because the Board is the only one who can submit an adjustment plan. We have been working with them, with certain differences on that adjustment plan. But this is very clear, we do have an agreement, the only difference is pensions where we can talk or go to court for a single component. 

The debt restructuring process and also whether the island will continue to be protected against appropriations of its government funds will depend on the content of this adjustment plan.

Meanwhile, Rossello stressed that Senate bill 1662 "brings together some of the concerns of the Board and the Senate," so it could be the key to avoid that litigation. The measure would repeal Law 80 and create a wrongful dismissal insurance by paying the premium to the State Insurance Fund Corporation.

Yesterday, José Luis Cedeño, spokesman of the Board, said that "for the time being," they will not be commenting. Senate President Thomas Rivera Schatz said that there is no room for the elimination of Law 80 in that body. Last Thursday, the Governor accused the senatorial leader of "blocking".

Don't you think that your expressions against the senator make you look bad, since you said you were a team?

-My expressions have been very clear and I maintain what I said. It was time to take some actions for the benefit of Puerto Rico. We worked with the President of the Senate on three different occasions. Work had been done to reach this agreement. At the last minute, the agreements failed and I think he does not understand the repercussions it has for the people.  We have agreed regarding other matters, but this was a critical one. I have already established my position. Let someone else focus on small fights. I am going to focus on contributing and pushing forward. Nobody here will intimidate or scare me or my work team away. Nobody will intimidate me or scare me away. Let it be clear that, no matter the obstacles, we will continue moving forward.

While we go to press, the budget was still being discussed in the conference committee to consider the amendments submitted. Meanwhile, regarding Law 80, none of the measures that emerged to address the issue were considered.

The island is in the recovery phase, you estimated that $ 94 billion would be needed and only about $ 6 billion has been received. Will those federal funds come to the island?

-I think we are on track. Certainly FEMA's disbursement has been slow, but now a new phase is coming and it is important for people to know that they are the HUD (Department of Housing and Urban Development) funds, the CDBG funds. By mid-August we should be doing what is called the "drawdown" of the $ 1.5 billion that were initially allocated. We hope that by the beginning of January or the end of December we can already have access to the (additional) $ 18.5 billion.

Would that money launch your possible re-election?

-They are small discussions. Here we must discuss big issues, such as what we can do with Puerto Rico. Those funds represent an opportunity we did not have before. That is the truth.