Monday, July 16, 2018

Puerto Rico oversight board to amend fiscal plans in reaction to gov’t ‘noncompliance’

By on June 29, 2018

SAN JUAN – The Financial Oversight and Management Board for Puerto Rico announced Friday its “intent to recertify” fiscal plans for Puerto Rico and certain government instrumentalities.

In a letter to Gov. Ricardo Rosselló, Senate President Thomas Rivera Schatz and House Speaker Carlos “Johnny” Méndez , the board stated that it will make changes to the commonwealth’s fiscal plan as a result of the Legislature’s “failure to pass labor reform, in part by repealing Puerto Rico’s Wrongful Discharge Act, also known as Law 80.”

The law’s repeal was a requirement of the amended fiscal plan certified by the board on May 30, a condition agreed to with Rosselló, instead of requiring that island workers’ statutory year-end bonus, the so-called Christmas bonus, be made voluntary for employers, as well as that vacation- and sick-leave days not be cut to no more than seven days each.

“The New Fiscal Plan includes a blueprint of structural reforms and fiscal measures that, if implemented, would give Puerto Ricans what they need and deserve – a growing economy with more and better jobs, resilient infrastructure, and an effective and efficient public sector,” fiscal board Chairman José Carrión wrote in the letter. “Although, structural reforms are still essential to stem the loss of jobs and businesses on the Island and overcome Puerto Rico’s long-term financial crisis, without a comprehensive labor reform, the path forward becomes more difficult,” he says in Friday’s release.

The board intends to recertify a fiscal plan to reflect the impact of the Legislature’s “inaction on labor reform” by reverting to measures called for in the April 19 plan, including “right-sizing cuts” to “make the public sector more efficient and affordable.”

The plan will maintain all the other “critical structural reforms needed to improve the business climate on the Island, attract new investment, and create jobs,” the board said. These include reforming the energy sector to “provide reliable and affordable electricity to residents and business, a limited labor reform with the implementation of an Earned Income Tax Credit (EITC) and welfare-to-work programs, as well as measurable Ease of Doing Business reforms, among other important fiscal initiatives,” the board’s release reads.

In addition to the amendments to the commonwealth’s Plan, the board will also make “technical changes to the University of Puerto Rico Fiscal Plan,” such as eliminating a $25 million fund for scholarships, as well as to the Highways and Transportation Authority’s fiscal plan, “in line with the adjustments to the Commonwealth Plan.”

Puerto Rico Capitol leaders decry fiscal board move

A $50 million annual fund for municipalities is also on the chopping block.

The letter concluded that the board will review the general fund budget that is due to be submitted by the Legislature before the end of this fiscal year, July 30.

“Should the Board determine that the budget is not compliant with the New Fiscal Plan, the Board will certify a budget for the Commonwealth of Puerto Rico, the University of Puerto Rico, the Highway and Transportation Authority, the Puerto Rico Electric and Power Authority, the Puerto Rico Aqueduct and Sewer Authority, before July 1st, 2018,” it assured.

The board will hold a press conference on the matter Friday at 3 p.m.

Read the full text of the board’s letter here.

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