Experts in bankruptcy proceedings and lawyers believe that the intervention of the Oversight Board on the expenses of the Legislature and the Judicial Branch marks the intention of the federal agency to manage a good part of the government operations, maximizing the powers granted by PROMESA.
According to some interviewees, the most recent decisions of the Board - which even require that branches of the Puerto Rican government submit expenses reports - point to the federal entity starting to take a similar course to that of some agencies that oversaw the finances of various American jurisdictions.
For example, an amendment to the law that established the Board that controlled the finances of Washington D.C. allowed the agency to dismiss heads of agencies and appoint officials, according to a report by Brookings Institution.
These administrative faculties led the board in the federal capital to be seen more aimed at "controlling" raher than supervising.
"The powers of the board in Detroit were different, since it was not a 'federal' board appointed by Congress, but by the local government. In the case of D.C. (which was federal), the board had broader powers than in Puerto Rico and was a true 'control' board. The 'power of control' of the Board in Puerto Rico comes from its broad and exclusive powers to certify and monitor budget and fiscal plans," said former bankruptcy attorney Gerardo Carlo.
These budgetary powers, however, serve to leverage the will of the body created by PROMESA, explained expert bankruptcy lawyer, Rolando Emmanuelli.
"Requesting this information in light of the powers that they have is important when issuing public policy adjustments," Emmanuelli said.
"There is no doubt that this level of specific request on the operation and management of the Legislative Assembly is micromanagement. If the expenses of the Legislative Assembly have a budgetary impact, the Board has scope at this level of detail," said Constitutional Law expert Carlos E. Ramos González.
Specifically, the Board asks both governmental powers for liquidity reports, balance sheets in bank accounts, information on employee attendance and expenses.
Emmanuelli understands that these interventions are a direct consequence of the determination of Laura Taylor Swain - judge in bankruptcy cases under PROMESA Title III - who in a way validated the Board's ability to direct the public policy of the government, as stated in fiscal plans and certified budgets.
"The Washington board regarded itself as a control board, and the one here does not. It was alleged that it had more powers, but I think that the judge closed that breach with her decision," said Emmanuelli.
These powers are framed in PROMESA, which, in turn, are based on the territorial clause and the plenary powers of the US Congress over territories such as Puerto Rico.
"PROMESA was passed under the territorial clause of the US Constitution. In the light of the fiscal emergency situation in the island, Judge Swain harmonizes the different interests that came into the creation of PROMESA, in her decision that is framed within the powers of Congress detailed in the territorial clause," said Ramos González.
The limits of PROMESA
Carlo, for his part, highlighted the limits of this legislation. For example, the law does not grant the fiscal agency the power to legislate, to dismiss officials or to veto appointments, as occurred in Washington D.C.
Nor can it stop the flow of subsidies or freeze salaries, as could the fiscal agency that operated in the 1970s in New York City.
Swain's decision came amid a controversy over the current budget. The government of Puerto Rico alleged that the board had exceeded its powers when attempting to dictate public policy through the fiscal plans and budget that they certified, when that faculty belonged to elected officials.
With the determination of the judge, the version of the budget that the Board certified at the end of June came into force, and not the one signed by Governor Ricardo Rosselló Nevares. The decision reaffirmed the powers of the fiscal body over the decisions of the current administration.
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