Monday, October 14, 2019

Fiscal board invalidates several Puerto Rico spending bills

By on February 27, 2019

Fiscal board Executive Director Natalie Jaresko (CB file)

SAN JUAN – Puerto Rico’s Financial Oversight and Management Board has repealed 24 budget resolutions totaling over $30 million in expenditures because they did not comply with the fiscal plan.

In a letter, board Executive Director Natalie Jaresko said fiscal discipline and “responsible budgets are important safeguards for the prosperity of Puerto Rico”; therefore, the government’s recently submitted “appropriations or reprogrammings,” which total more than $30 million, were “preempted” by the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) and therefore are considered “invalid.”

None of the Joint Resolutions “is contemplated by the certified budget for the Commonwealth for fiscal year 2018 or 2019, nor were they approved by the Oversight Board,” Jaresko wrote, reiterating that Promesa grants the board the “power to certify budgets” and that the panel requires that the governor submit to it enacted laws within seven business days.

That “responsibility and authority,” she said, was upheld by the U.S. District Court for the District of Puerto Rico and the U.S. Court of Appeals for the First Circuit, quoting the former, which held that “a prior year authorization for spending that is not covered by the budget is inconsistent with PROMESA’s declaration that the Oversight Board-certified budget for the fiscal year is in full for and effect, and is therefore preempted by that statutory provision by force of Section 4 of PROMESA.”

The board requested that the administration of Gov. Ricardo Rossello’s chief financial officer, Raúl Maldonado, certify to the board “what actions the Government may have already taken in connection with these Joint Resolutions” by March 8, including “any encumbrances or disbursements” made.

“The Board has no inherence; it is not part of the Fiscal Plan where all these assignments were consistent, both by the PROMESA Law and local laws. In this, again, the Board is wrong,” Rosselló reportedly said later Wednesday.

The move comes a day after Rosselló told a U.S. Senate committee that the board’s powers had to be defined because the panel was meddling in the government’s day-to-day operations.

In a statement, the governor’s representative to the board, Christian Sobrino, said that the panel’s letter on the joint resolutions was published “suddenly and without prior consultation.”

The resolutions, he said, “were approved as provided by applicable law and were submitted to the [board], as it had requested. Most of these resolutions provide funds for works and capital improvements of the Municipalities. Likewise, the resolutions were presented together with a compliance certification of the budget and the fiscal plan as required by the PROMESA law.”

He further states that the board’s letter “does not provide an explanation or reason why such resolutions fail to comply with the fiscal plan, the budget of the General Fund or any local statute,” nor for why the JSF understands that the compliance certifications are incorrect. A quote about the general powers of the [board] does not demonstrate how the exercise of such powers are appropriate in this case.”

Sobrino said “the attempt to invalidate actions authorized by law and for which the [board] has never requested any action or expressed opposition when similar actions were executed in previous fiscal years” was inappropriate and that the administration does not know why the board “has determined to ignore its own precedents.”

He added that every resolution mentioned will be reviewed to then prepare “a formal communication regarding the Government’s position.”

Read the full text of Jaresko’s letter here.

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