Thursday, July 19, 2018

Puerto Rico governor delivers defying speech after controversial fiscal board meeting

By on August 4, 2017

SAN JUAN – In a direct challenge to the fiscal control board, Gov. Ricardo Rosselló stressed that he will not implement a public worker furlough program approved Friday morning by the fiscal oversight board created by the federal Promesa law.

“[A]s governor I do not accept nor will I execute the furlough submitted today by the Financial Oversight and Management Board,” the governor said in a televised message eight hours after the board announced the measure.

The fiscal board said the measure, which cuts two workdays a month, will enter into force on Sept. 1 and will run through June 2018, when the current fiscal year ends, unless the government manages to obtain about $ 218 million in savings from adjustments aimed at reducing its size.

At Friday’s meeting, which lasted two hours, the Cooperatives Supervision and Insurance Corp.’s (Cossec by its Spanish acronym) fiscal plan was approved with amendments and the need to reduce pensions by 10 percent by fiscal year 2020 was reiterated, despite government opposition to implement this measure as well.

During his address, the governor assured he will not decrease the pension benefits paid by the government by 10 percent, as required by the fiscal plan. He also recalled the spending control measures his administration has taken during the past months and pointed to the most recent liquidity numbers, which significantly exceed estimates. Thus, he said the furlough “is unnecessary.”

On Friday morning, the board’s executive director, Natalie Jaresko, indicated that the furlough program would represent a $188 million saving for the government this fiscal year. With respect to either reducing or eliminating public employees’ Christmas bonus, the board will decide on the matter by Sept. 30.

To a question from Caribbean Business, Chairman Jose Carrión replied that he will consult with the board’s lawyers regarding the next steps to take with respect to the administration’s refusal to implement the furlough.

Puerto Rico’s fiscal board approves implementation of furlough program

“I encourage you once again to take the path of good judgement and prudence, instead of the path towards an unnecessary confrontation,” Rosselló said. “Puerto Rico has a government which was elected by the people,” he added when concluding his speech.

The governor further said he would send a letter to President Trump and House Speaker Paul Ryan to inform them of his determination not to abide by the instruction of the fiscal control board.

The administration has stated that, under Promesa, the government can reject the measure because it constitutes a “recommendation,” as defined in by the statute’s section 205. Therefore, with the letter to the federal government, the governor will act pursuant to Promesa and notify the rejection of a board recommendation.

The fiscal board, for its part, argues that the furlough is an essential part of the certified fiscal plan and therefore the section to which the administration refers does not apply. As part of the fiscal plan, the government must abide by the decision.

Meanwhile, the governor’s office informed that La Fortaleza Chief of Staff William Villafañe has instructed all heads of agencies not to implement the furlough.

The following is the full transcript of Rosselló’s message:

People of Puerto Rico,

From the first day I assumed my responsibility to govern Puerto Rico I have spoken with absolute clarity regarding the critical situation in which we received the public finances and how we, together—the Government and the People— will overcome the crisis.

Starting on January 2, we began to take immediate measures to stabilize government operations, establishing controls in public spending, and having as an objective the achievement of efficiency in services. This policy of doing more with less substituted the disorder that prevailed.

The reality imposed by the unfair colonial condition in which Puerto Rico is in leads us to have to cope with the Financial Oversight and Management Board which, by order of the United States Congress, was created and imposed on our People.

In the best spirit of collaboration to move Puerto Rico forward and overcome the financial crisis that affects government operations, we have interacted with the Financial Oversight and Management Board over the past six months.

During that period, we have approved over 50 laws, 15 of which have the objective of complying with the fiscal responsibility plans agreed with the Board.

In the process to achieve the certification of the Fiscal Plan, we proved to the Board that it was unnecessary to take measures that had an effect of laying off over 45 thousand public employees, nor leaving more than 700 thousand Puerto Ricans devoid of their health plan.

We proved that our initiatives to achieve economies in government operations surpassed the requirements of the Financial Oversight and Management Board.

In the deliberations related to the preparation of the budget, we were required to demonstrate the capacity of having a reserve of $291 million in the Puerto Rico Department of the Treasury at the end of the fiscal year. Not only did our government meet that reserve, but the liquidity in the Department of the Treasury on June 30 increased to 1.799 billion dollars, dramatically exceeding the estimate of the Fiscal Plan certified by the Board.

We achieved the approval of a duly balanced budget, which identified the items to guarantee the pensions of our retirees and how to deal with the critical situation of the retirement system.

The results of the measures that we have implemented to obtain the required economies in government operations are evident. Expenditures from the previous budget were reduced by $200 million.

There is a decrease in our government of 20% in political appointments and a decrease of more than 10% for contracts in professional services. The measures of control of expenses that we have adopted and their results are unprecedented.

On the other hand, our administration has defined as public policy the protection of the most vulnerable sectors of our society. I acknowledge and value the sacrifice of our People to contribute to the solution of the crisis.

It is because of this that as governor I do not accept nor will I execute the furlough submitted today by the Financial Oversight and Management Board.

The PROMESA Act, which gives origin to the Financial Oversight and Management Board, defines the field of action which said organism has, and it does not have the faculty to unilaterally impose a measure such as the proposed workday cut for our public employees.

Such cut could have a devastating effect on our economy, which would not only affect the quality of life of over 130,000 families, but would also affect commerce, banking, the food services industry, and practically all commercial activity in Puerto Rico. It would represent a hit of 340 million dollars to our economy.

We are aware of the great challenges we have as a government, and I can affirm that we are complying and surpassing each one of them, which is why this measure proposed by the Board is both unjustified and unnecessary.

Activating our economy and stimulating the creation of more and better jobs in Puerto Rico must be a common objective, both for the government and for the Financial Oversight and Management Board.

The furlough proposed by the Board would provoke the opposite, increasing the crisis and hitting our People unnecessarily, which is why we will not allow it.

To this effect, I am informing you that I will be issuing a direct communication to the president of the United States and to the president of the United States House of Representatives, indicating our position of not accepting the furlough proposed by the Board, as provided by Section 205 of the PROMESA Act.

Our administration made the financial adjustments in the current budget to guarantee the payment of 100% of the pensions of our retirees and to acknowledge the retirement rights our public employees have today. The Legislative Assembly currently has an Administration Bill which would fulfill that guarantee to all our public servants and retirees. We do not agree with the pension cuts announced by the Board, since they would disproportionally affect the most vulnerable, which is why we will also fight against this measure in all forums.

To the members of the Financial Oversight and Management Board, I encourage you once again to take the path of good judgement and prudence, instead of the path towards an unnecessary confrontation.

To our People, I reiterate my commitment to protect the most vulnerable; by administrating public resources with absolute transparency, responsibility, and honesty.

Situations of crisis and moments of conflict also present us with opportunities. This is a clear opportunity to demonstrate the unity of our People, in a fair claim of respect towards a Government that is complying with its responsibility.

Puerto Rico has a government which was elected by the People, to whom I owe myself and for whom I work and will keep working until achieving their greatest goals and aspirations.

May God bless our homeland.

Good night.

  • (Juan J. Rodríguez/CB)


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