Fiscal board rejects Puerto Rico government’s proposed budget
Says it is ‘not compliant with the revised version of the 2019 Fiscal Plan’
SAN JUAN – Puerto Rico’s Financial Oversight and Management Board has rejected the fiscal year 2020 budget submitted by the commonwealth government March 28 for not being in compliance with the fiscal plan the congressionally established oversight panel approved last week.
“The Oversight Board has determined, in its sole discretion, pursuant to Section 202(c)(1)(B) of PROMESA [Puerto Rico Oversight, Management, and Economic Stability Act], that the proposed Commonwealth of Puerto Rico budget for fiscal year 2020, submitted to the Oversight Board on March 28, 2019, is not compliant with the revised version of the 2019 Fiscal Plan for Puerto Rico as certified by the Oversight Board on May 9, 2019,” the letter dated May 11 reads.
The revised fiscal plan incorporates a number of updates for new information and data, as well as focused investments and fiscal priorities. As a result of the updates to the revised fiscal plan, the board asked the government to submit a new budget that complies with a revised forecast of fiscal year 2020 revenues of $9 billion and to comply with certain payroll and operating expenditure targets.
The board requested the revised budget by Friday, May 17.
In her letter to Gov. Ricardo Rosselló, the board’s executive director, Natalie Jaresko, said the budget violated the fiscal plan due to the following: “the General Fund Government’s submission exceeded the Oversight Board’s FY20 target by approximately $1.5 billion”; the inclusion of $41.2 million in Christmas bonuses; the inclusion of additional emergency reserves beyond $130 million; and low visibility in areas such as professional services and items classified as “englobadas,” or put together.
The board said it determined that for fiscal 2020 the General Fund revenue forecast to be used for budgeting purposes is $9.05 billion and that “other funds” revenue forecast is $3.55 billion.
The oversight panel asked for more funding to “fiscal priority areas” such as healthcare, police, firefighters, the Forensic Sciences Institute and Education.
It also asked for inclusion in the budget of the following items: Municipal Administration Fund (Fondo de Administración Municipal) and its subset of funds; Fondo Especial para el Desarrollo Económico; Municipal Finance Corp.; Sales and use tax (SUT) distributions to CINE; other SUT expenses; PayGo obligations received and paid on behalf of municipalities and public corporations; all rum cover-over payments; federal funds managed by the commonwealth; and funds transferred to the Highways and Transportation Authority.
The board also asked the commonwealth for the inclusion of language that, among other things, requires the submission of certain reports and the revision of revenue and expenditures.