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Judge to hear arguments in Puerto Rico budget suit against fiscal board July 25

By on July 9, 2018

SAN JUAN – U.S. District Judge Laura Taylor Swain will hear at a July 25 omnibus hearing a complaint Gov. Ricardo Rosselló filed against Puerto Rico’s Financial Oversight Management Board to stop it from “micromanaging” the government and “usurping” home-rule authority.

The lawsuit, filed last week, is the result of wrangling over the budget. The fiscal board rejected an $8.7 billion budget passed by the island’s legislature, contending it was not compliant with the fiscal plan the panel had certified for the commonwealth. The board then proceeded to impose its own budget, which cuts funds for municipalities and workers’ year-end pay, known as the Christmas bonus, as well as funding for the University of Puerto Rico.

The differences emerged after the legislature refused to yield to the fiscal board’s request to repeal Act 80 of 1976, known as the wrongful dismissal law–to make Puerto Rico an at-will employment jurisdiction.

The court agreed to a government request to accelerate the addressing the lawsuit. The board has until July 12 to answer the complaint, and if it opts to seek a dismissal, the government will have until July 17 to file a reply, after which the board would have until July 20 to file a response.

In the event the board answers the complaint, the government may move for judgment on the pleadings or seek summary judgment by July 16 and the board will have until July 20 to respond, with any reply due July 23.

“In either event, the Court will hear oral argument on the motion in connection with the omnibus hearing scheduled for July 25, 2018,” the court’s order reads.

In the adversary complaint, the government is seeking a court ruling declaring the board lacks the authority to impose policy initiatives on the government through a fiscal plan or budget. Also, that the “substantive policy mandates” in the board’s fiscal plan be declared null and void.

The lawsuit says that despite the fact the board has the power to make policy “recommendations” to the government, “no one can dispute that the Governor is free to reject those recommendations.”

If the governor declines to adopt a board recommendation, the law that created the fiscal panel, Promesa, requires that the decision is explained to the president of the United States, speaker of the U.S. House and majority leader of the U.S. Senate.

The fiscal board cannot compel the governor to comply with its policy recommendations, whether those recommendations are “free-standing or advanced” in a fiscal plan, the government reiterates in its filing.

“And the Board certainly cannot force those recommendations on the Commonwealth via a budget. Specifically, the Oversight Board cannot do what it is attempting to do: impose mandatory workforce reductions, change the roles and responsibilities of certain government officials, criminalize certain acts under Puerto Rico law and otherwise seek to micromanage Puerto Rico’s government,” the lawsuit reads

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