Lawsuit: Fiscal board cannot compel Puerto Rico gov’t to implement ‘recommendations’
SAN JUAN – Gov. Ricardo Rosselló fulfilled his promise Thursday and sued Puerto Rico’s Financial Oversight and Management Board for attempting to “usurp” the island government’s powers and right to home-rule.
The lawsuit follows the fiscal board’s rejection of an $8.7 billion budget passed by the legislature, contending it was not compliant with the commonwealth fiscal plan the panel certified, thus the board proceeded to impose its own budget, which cuts funds for municipalities and workers’ year-end pay, known as the Christmas bonus.
The move also came after the Legislature refused to repeal Act 80 of 1976, known as the wrongful dismissal law, to make Puerto Rico an at-will employment jurisdiction.
“The Oversight Board cannot compel the Governor to comply with its policy recommendations, whether those recommendations are free-standing or advanced in a fiscal plan. And the Board certainly cannot force those recommendations on the Commonwealth via a budget. Specifically, the Oversight Board cannot do what it is attempting to do: impose mandatory workforce reductions, change the roles and responsibilities of certain government officials, criminalize certain acts under Puerto Rico law and otherwise seek to micromanage Puerto Rico’s government,” the lawsuit reads.
In its legal action, the government is seeking a court ruling declaring the board lacks the authority to impose policy initiatives on the government through a fiscal plan or budget. Also, that the “substantive policy mandates” in the board’s fiscal plan be declared null and void.
In addition, the governor and the island’s Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish acronym), a plaintiff along with Rosselló in the filing, are requesting a ruling declaring that the “substantive policy mandates” in the board’s budget exceed the oversight panel’s “powers and are null and void,” as well as a ruling “enjoining the Oversight Board from implementing and enforcing the Oversight Board’s rejected policy recommendations.”
According to the document, over the past several months, the board has used the fiscal plan and budget certification processes “to impose its policy preferences on Puerto Rico’s people, micromanage every aspect of budget expenditures, and exercise legislative power the Board does not have, all over the objections of Puerto Rico’s elected Government.”
While Congress gave the board certain powers under the law that created it, Promesa, it was conferred “limited power,” the government argued, adding that while Promesa grants the board the power to certify and oversee compliance with fiscal plans and budgets, the law “preserves to the Government the political and governmental power to make policy decisions.”
The lawsuit further says that despite the board having the power to make policy “recommendations” to the government, “no one can dispute that the Governor is free to reject those recommendations.”
“[O]ne consistent principle is that the Oversight Board cannot impose its policy preferences on the Government both for the Commonwealth or individual instrumentalities,” the plaintiffs say about Promesa.
The law’s discussion drafts in the U.S. House and Senate included provisions similar to those under the District of Columbia Financial Responsibility and Management Assistance Act of 1995, which granted the District of Columbia’s Financial Control Board the power to nullify legislative acts and “compel the mayor and city council to adopt its policy recommendations”; however, Rosselló and AAFAF say in their lawsuit, “Congress discarded these ‘anti-democratic’ provisions, which appear nowhere in Promesa as enacted. Instead, Congress established a supervisory Oversight Board to assist and guide the elected Government, rather than a control board that would functionally supplant it.”
If the governor declines to adopt a board recommendation, Promesa requires that the decision be explained to the president of the United States, speaker of the U.S. House and majority leader of the U.S. Senate.
“To be clear, the Government is not challenging certification. But the Board cannot expand its legal powers by using its fiscal plan to impose policy initiatives on the Government that the Board cannot otherwise implement on its own. Nor can the Oversight Board use its budget approval powers to bootstrap its fiscal plan recommendations to specific expenditure line items as it has done,” the lawsuit reads.