Monday, May 21, 2018

Puerto Rico board says government’s draft budget doesn’t comply with fiscal plan

By on May 10, 2018

SAN JUAN – The Financial Oversight and Management Board for Puerto Rico issued a “Notice of Violation” to the Puerto Rican government Friday, advising it that its proposed budget for fiscal year 2019 requires “substantial changes” and is “not compliant” with the recently certified fiscal plan.

In a letter sent to Gov. Ricardo Rosselló, board Executive Director Natalie Jaresko said the government only provided fiscal year 2019’s General Fund budget, not the full commonwealth budget. She said it requires substantial revisions, and that additional information is needed for the board to certify it before it is submitted to the Legislature for passage.

Governor sends draft 2019 budget to Puerto Rico fiscal board

The board gave the government until Tuesday to submit a corrected budget. If the government fails to make the changes, the board may impose its own budget, in a fashion similar to when it certified a fiscal plan that included its own modifications.

Among the required changes are submitting a full budget with a “detailed reconciliation” of the budget to the new fiscal plan, including the identification of measures affecting revenues and expenditures, as well as special revenue and other funds, the board said in a statement.

“In accordance with PROMESA, to improve fiscal responsibility and to rebuild confidence in Puerto Rico, the Government’s proposed budget needs to go farther in providing transparency, fiscal management and enforcement tools,” said Jaresko, referencing a recent report from the U.S. Government Accountability Office that identified financial mismanagement as a factor in Puerto Rico’s fiscal condition.

U.S. Gov’t Accountability Office: Puerto Rico debt due to poor fiscal management, economic contraction

In a statement after the violation notice was announced, the Secretary of Public Affairs and Public Policy, Ramón Rosario said:

“Today afternoon, the Fiscal Oversight [and Managment] Board (FOMB) notified Governor Ricardo Rosselló Nevares that the budget presented on May 4, 2018 does not comply with the Fiscal Plan developed and certified by said body.

Among the reasons for rejecting the Government’s draft are that an increase of the FOMB’s budget for the upcoming year was not included.

We reaffirm to the FOMB that our budget does not include, nor will it include, additional funds for its expenses, since in the face of the crisis we are living in, an increase to the $60 million that they already have is not justified.

Neither will public policy measures that were rejected by the governor, such as the labor reform and the elimination of the Christmas bonus of public servants, be included.

On the other hand, the FOMB is against the inclusion in the budget of the necessary funds so the police can participate in the Social Security Program and thus have a decent retirement, like the rest of the public servants.

In essence, we reject any attempt by the FOMB to acquire powers it does not possess through joint budget resolutions.

The Rosselló Nevares Administration continues to focus on transforming the Government into a fiscally responsible one, while protecting the interests of the most vulnerable and promoting economic development.”

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