Monday, September 24, 2018

Judge Swain says Promesa provides awkward power-sharing structure

By on August 7, 2018

SAN JUAN – While Promesa establishes an “awkward power sharing structure” between the Puerto Rico government and the island’s Financial Oversight and Management Board in budget decisions, U.S. District Judge Laura Taylor Swain, nonetheless, says the board can adopt recommendations it makes for a budget even if the governor has rejected them.

“Consistent with this structure, Promesa also provides that a budget or fiscal plan that is certified by the Oversight Board is ‘deemed approved by’ the Governor,” she said. “Something that is ‘deemed approved’ by the Governor need not actually have been approved by the Governor.”

Her remarks are part of the opinion she issued Tuesday regarding the budget wrangling between the board and the government. With his lawsuit, Gov. Ricardo Rosselló tried to put a stop to board attempts to impose policy recommendations contained in the budget regarding the payment of employees’ statutory year-end bonus, known as the Christmas bonus, as well as other worker benefits.

Judge Swain declined to rule on some of the challenged issues. She said there was no “cause or controversy” as to whether the fiscal plan improperly mandates agency consolidations because the government and the board had agreed at a hearing that the recommendations were non-binding.

The judge declared she lacked subject-matter jurisdiction over the Chrismas bonus issue because the parties had agreed that the current budget does not eliminate them or impose a hiring freeze. Therefore, “there is no ripe case or controversy as to the Board’s ability to make such measures mandatory. Nor does there appear to be any justiciable controversy as to the other enumerated salary and benefit measures, which appear to be consistent with current Commonwealth law.”

Rather, she said, the payroll amounts provided were insufficient to cover employees, plus their Christmas bonus. “It’s the Governor who has to make some difficult choices, because he’s the one who has to answer to the people. The Oversight Board is just, here’s how much money you get. If people have to be let go, if Christmas bonuses don’t get paid because of that, that’s on us. That’s on the chief executive officer of Puerto Rico to make a determination on how to implement that budget guideline,” the opinion reads.

While the board can adopt policy recommendations even if the governor rejects them in a budget, the board lacks the power under Promesa to enforce them, according to Promesa, the judge said.

“Any fiscal plan provision adopting a recommendation over the Governor’s objection can be certified only after the Governor has had a formal opportunity to make his objections public and, indeed, to communicate any such objections to Congress and to the President,” as stated in Promesa, she added.

Those bodies could take negative legislative action or exercise powers affecting the composition of the board if they believe the governor had a better argument.

“Furthermore, the Oversight Board, in adopting a policy over such objections, faces the challenge of managing implementation of the policy in a way that garners the genuine cooperation of Puerto Rico’s elected government and the citizens of the island who voted for them…. Although a budget approved and adopted by the Oversight Board as compliant with a certified fiscal plan becomes law insofar as it is in full force and effect without further action on the part of the Governor or the Legislature, and inconsistent Commonwealth laws are preempted, the Oversight Board has not been given power to affirmatively legislate. Thus, with respect to policy measures that would require the adoption of new legislation or the repeal or modification of existing Commonwealth law, the Oversight Board has only budgetary tools and negotiations to use to elicit any necessary buy-in from the elected officials and legislators,” she explained.

The governor noted that Judge Swain’s ruling is proof of the limits of the island’s colonial status.

“We must put an end to this undignified relationship which allows Congress to discriminate against us and take actions—without or consent,” Rosselló, who was abroad, said in a statement issued after news of the opinion.

“The federal court ruling states that our public employees won’t receive their deserved Christmas bonus unless the Government takes unjustified, draconian measures against our very own employees, which include massive layoffs. We are adamantly opposed and will not comply with the decision.

“We proposed measures that would generate the savings required by the Oversight Board yet protected our most vulnerable population and our public servants. Our proposal also defended the University of Puerto Rico’s budget, municipalities, and funds needed for Puerto Rico’s economic development,” the governor wrote, adding that he will consider the possibility of appealing the determination.

Meanwhile, the board issued a release saying it welcomed the court’s decision to “uphold its authority to approve and certify Fiscal Plans and Budgets for the Commonwealth and its instrumentalities,” and urged the government to “fully implement” them.

It also was pleased with “the Court’s separate decision granting its motion to dismiss the lawsuit brought by the Puerto Rico Legislature,” which sought to curb the board’s authority as well.

Puerto Rico fiscal board seeks dismissal of gov’s lawsuit

Lawsuit: Fiscal board cannot compel Puerto Rico gov’t to implement ‘recommendations’

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