Extraordinary Session Approves Retirement, GDB Bills
Editor’s note: The following article originally appeared in the August 17 print edition of Caribbean Business.
SAN JUAN — Four bills of utmost importance for Puerto Rico were approved during the Legislature’s extraordinary session, convened through an executive order issued by Gov. Ricardo Rosselló Nevares, which began July 31 and ended Aug. 10.
The controversial Retirement Systems reform bills, the restructuring of the Government Development Bank (GDB) and a price increase on licenses to operate adult entertainment machines were approved by the New Progressive Party (NPP) majority during the marathon session, despite reservations outlined by the Popular Democratic Party (PDP) minority, in addition to a new version of the bill to restructure the Science, Technology & Research Trust’s board of governors.
The bill that restructures the GDB was not free of controversy before passing without amendments in the Senate and with some technical amendments in the House. It now goes to La Fortaleza for the governor’s signature. NPP Rep. Antonio Torres Soto explained that some of the bill’s key points include a change in the disbursements made to municipalities—which are still pending, awaiting another bond issue by the GDB Debt Restructuring Authority, an agency that would be created once the bill is turned into law.
During a tense moment in the proceedings, PDP Rep. Manuel Natal Alvelo shouted his objection to the bill’s approval while House Speaker Carlos “Johnny” Méndez, of the New Progressive Party, denied him a turn to debate.
In other matters, the Senate and the House approved—with a vote of 17 in favor and eight opposed and 29 to 14, respectively—the bill that intends to reform the government and judicial employees’ retirement systems.
When the governor signs it, the bill would establish the “Act to Guarantee Payments to Our Retired Workers & Establish a New Defined-Contribution Plan for Public Servants,” which is expected to reform the retirement systems according to the provisions of the government’s fiscal plan by establishing a “pay as you go” system to handle payments made to pensioners.
The new system, required by the fiscal control board, assumes the general fund will pay—directly and on a regular basis—retired workers’ benefits each year, or more than $2 billion according to projections.
However, the bill does not provide for a 10% reduction in pensions on or before 2020, as required and reiterated at the oversight board’s recent meeting in Fajardo. The government, for its part, assured it will not abide by this directive and will seek to honor pensions in their entirety.
Huge increase in slot machine licenses
The slot machines bill passed in the Senate with 23 votes in favor and seven against, and in the House with 27 in favor and 12 against. It amends Section 3050.02 of Act 1 of 2011, known as the “Internal Revenue Code for a New Puerto Rico” and establishes a price increase—from $100 to $3,000—on coin-operated slot machine licenses as of July 1, 2017.
With this bill, the government expects to collect $69 million as part of the new revenues in its current $9.562 billion budget.
Once it becomes law after Rosselló signs it, the Puerto Rico Treasury Department must calculate the exact number of this type of machine is operating throughout the island, which was one of the arguments used by minority legislators to oppose the bill.
PDP Sen. José Luis Dalmau Santiago questioned the criteria Treasury will use to supervise these machines since the agency does not even know for certain how many machines are currently in operation.
“Nobody in the government knows how these machines operate. If they ask [Treasury] how many registered machines they have, they don’t know. And they pay municipal permits [on the machines] and a record must be kept on all those permits. There are people who say there are 20,000 [machines] and others say there are 30,000. Some say there are more illegal machines than legal ones. So, how do you create this bill and say it’s going to raise $69 million? Where did you get the information if the Puerto Rico Treasury itself doesn’t know how many machines are registered?” Dalmau questioned during debate of the bill in the Senate.
Puerto Rico Legislature approves raising gaming machine license fees
Meanwhile, the amendments proposed by the Science Trust’s board of governors were approved by both legislative bodies and are expected to become law Aug. 21—according to Daniel Colón, one of the private-sector trustees who is a member of the entity’s board of governors.
As Colón had previously explained, the proposed amendments sought to change the Science Trust’s governance and some of its faculties. The entity currently operates with 11 trustees; six of whom are chosen by the private sector and the other five are government representatives. The approved amendments mean the trust can now increase the number of its private trustees from six to nine.
“The situation has changed now due to the financial crisis and the outcome of the GDB, from where the trust’s disbursements came. In other words, there are a number of issues that catalyze one wanting to make these amendments, but the end result is that it was decided to increase the number of private-sector trustees to give greater representation to different components of that sector, which we believe can benefit the trust,” Colón said.
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