Just days before the Oversight Board certifies the new economic and financial projections of the fiscal plan, the entit's Executive Director Natalie Jaresko asked Governor Ricardo Rosselló Nevares, mayors, and executives of public corporations to resolve once and for all the controversy surrounding contributions to the "Pay-Go" system.
Without specifying what consequences the government might face, Jaresko indicated that, so far, the central government has paid the pensions of thousands of public employees with funds from the General Fund, but municipalities and agencies have not sent their share, according to Law 106-2017.
Jaresko set a deadline for the government to resolve the Pay-Go controversy on June 30.
Almost two years ago, when the Retirement Systems Administration (RSA) and the Teachers Retirement System (SRM) became insolvent, the Board and Rosselló Nevares gave way to Law 106. The statute established that all government entities would separate a part of their budget for the Pay-Go system.
Jaresko said they do not want to repeat that process, reiterating that while she understands objections from mayors and agencies, they have to reach a final agreement before June 30.
Last year, El Nuevo Día revealed that the government did not comply with the law. Then, a group of pensioners went to the Department of Justice to demand responsibility for the non-compliance, but it is unknown what action, if any, the entity took.
La semana pasada, la JSF escribió al gobierno para indicarle que tomara medidas a fin de que las instrumentalidades que adeudan sobre $300 millones al Pay-Go cumplan con los pagos.
Last week, the Board sent a letter to the government urging it to take steps to ensure that instrumentalities owing over $300 million meet Pay-Go payments.
However, the issue is not limited to pensions payment.
Yesterday, Jaresko said that agencies and municipalities have fallen back into the habit of withholding money from public employees salaries that must go to their retirement plans and do not send it either. When the money used for retirement is not transferred on time, it results in a loss of income for public employees, because this money is not invested as often as it would be necessary, according to the savings goals determined.
In the early 2000's - when the government created the so-called System 2000 - RSA withheld millions of dollars from workers' pay and, instead of investing it and guarding, they spent it on the payment of current pensions. To date, neither the RSA nor any government official has disclosed how much these withholdings owned by thousands of employees amount to, or where they were
Joint resolutions
On the other hand, Jaresko insisted yesterday on the fact that the Rosselló Nevares administration acted against PROMESA by reallocating $30 million to municipal projects - through 24 joint resolutions - without the Board´s authorization.
Jaresko said that “all government spending, without exceptions, has to be part of the PROMESA budget process. Such discipline is essential for PR’s fiscal responsibility.”
Minutes before the press conference at the Board headquarters, in another meeting with journalists, Rosselló Nevares shared his position on the controversy.
"We are going to execute and make sure that the objectives and priorities are fulfilled. Mechanisms are secondary when the objective and capital come first," the governor said.
And added that they should "allow the government to continue to do its job. I hope that this is not an incentive seeking how to set obstacles so they can implement and force their public policy. That would simply be unacceptable."
Asked about the governor's position, Jaresko made it clear that joint resolutions are part of the budget process established in PROMESA, in which the Board has the final say.
Last February, the Board revoked 24 joint resolutions that authorized the use of resources in the Municipal Improvement Fund and earmarked items from the special dividends that the Joint Underwriters Association has paid to the Department of the Treasury. The Board's decision is based on the premise that the funds in controversy come from allocations prior to the current fiscal year and there is an explicit determination by the Board that prevents funds from previous years from being used in the current budget.
This Sunday, the Board President José B. Carrión, in light of PROMESA Section 205, recommended Rosselló Nevares and the legislative leadership the creation of a "competitive process" to allocate resources in the Municipal Improvement Fund, rather than following a discretionary process. The letter intends to force Rosselló Nevares to take a stand on the joint resolutions invalidated by the Board. That is because PROMESA Section 205 requires Rosselló Nevares to explain to U.S. President Donald J. Trump (a critic of Puerto Rican officials) why he would not accept such a recommendation.
Jaresko's call comes just days before the Board certifies the new projections of the fiscal plan, a decision that would take place next May 9 during a public meeting at the Convention Center.
In addition, the Board seems to be tightening the noose around the Rosselló Nevares administration in fiscal matters at a time when President Trump has not yet formalized the nomination of the current Board members, despite the announcement the White House made last week.
Reporter Gloria Ruiz Kuilan collaborated with this story.
