Tuesday, August 11, 2020

Puerto Rico fiscal board budget goes into effect for 4th year in a row

By on July 1, 2020

Chairman José Carrión (Jaime Rivera/CB)

Rejects governor’s budget after legislature fails to hash out differences before start of fiscal year, as mandated by Promesa

SAN JUAN – For the fourth straight year in a row, the Puerto Rico government budget that went into effect at the start of fiscal year on Wednesday was the version presented by the federally created Puerto Rico Financial Oversight & Management Board (FOMB), to the exclusion once again of the budget proposal the governor sent to the Puerto Rico Legislative Assembly.

The oversight board certified Wednesday its $10.05 billion general fund budget plan for fiscal year 2021 after the Puerto Rico House of Representatives and the Senate failed to approve a “compliant budget” before deadline Tuesday night — as mandated by the federal Puerto Rico Oversight, Management and Economic Stability Act (Promesa), which created FOMB four years ago.  

The House had approved last week a general fund budget that was almost identical to the oversight board’s plan, but the Senate subsequently approved a version that did not concur because it had funding allotments that were in Gov. Wanda Vázquez’s budget proposal of $10.2 billion but that were absent from FOMB’s budget plan. The oversight board’s consolidated budget for the government of Puerto Rico, which includes special revenues raised by public corporations and federal funding, totals $22.2 billion.

While the House budget plan contained an allocation of $48 million to pay the Christmas bonus to public employees, an item excluded from the oversight board plan, the Senate insisted on $64 million in funding. Both chambers also disagreed on funding for state-owned broadcaster WIPR, the State Elections Commission (SEC), and for a Uniform Remuneration Plan for public employees.

At one point during the budget debate, Senate President Thomas Rivera Schatz called the majority New Progressive Party (NPP) House lawmakers who voted for the budget “ushers” at the behest of the oversight board.

“For the fourth time, we are going to approve a budget prepared by the board in accordance with the fiscal plan. The concept behind the budget is very simple: you cannot spend what you cannot pay for. The government will have to justify expenses… Funding sources must be specified and there must be control of expenses to keep us on track,” FOMB Chairman José B. Carrión III said during the oversight board’s public hearing on the fiscal 2021 budget on Wednesday, broadcast via teleconference.

“Having said that, the budget is quite aligned to the governor’s budget and it supports the priorities of the governor in health, safety and education,” Carrión continued. “This budget is not work we did behind closed doors, but was worked by us in direct collaboration, which has been constant with this administration.”

Section 202 of Promesa mandates the Puerto Rico Legislative Assembly to approve a “compliant budget” and submit it to FOMB before the start of fiscal year. Otherwise, the oversight board’s proposal will be “deemed approved” by the governor and the oversight board issued it a fiscal plan compliance certification, entering into “full force and effect” at the start of the fiscal year on July 1.

FOMB Executive Director Natalie Jaresko expressed her regret that the government of Puerto Rico and lawmakers once again failed to reach an agreement with the oversight board on the commonwealth’s annual budget.

“Unfortunately, for the fourth year in a row and on the fourth anniversary of Promesa, the government and the Legislative Assembly were not able to submit a budget in accordance with the fiscal plan,” Jaresko said during the hearing. “In fact, the Legislative Assembly never sent a budget document for evaluation. There were several meetings to achieve a consensus between the board, the government, the Senate and the House of Representatives but we could not achieve consensus.”

In fact, the FOMB executive director said that the oversight board tried to reach an agreement Wednesday morning on funding for the Uniform Remuneration Plan, which would standardize public job classifications and provide corresponding salary increases, but she said the effort failed due to differences with the government.

Omar J. Marrero, executive director of the Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym) and the governor’s liaison on the oversight board, during the hearing listed the administration budget items that were left out of the fiscal 2021 budget, including funding for full payment of the Christmas bonus to public employees and funding requested for the SEC to hold this year’s primaries and general elections.

The FOMB budget left out funding for parametric insurance that Marrero said was required to comply with the “obtain and maintain” requirements of the Federal Emergency Management Agency (FEMA). It also excluded funding for “the adequate transformation of the Puerto Rico Public Broadcasting Corporation (WIPR) through a process that is consistent with the procedures and regulations of the Federal Communications Commission (FCC),” he noted.

Moreover, the oversight board’s budget fails to allocate funding to implement the Uniform Remuneration Plan “as part of a comprehensive civil service reform to optimize the administration of human resources in the government of Puerto Rico and to further enable the implementation of the Single Employer,” Marrero said, adding that this plan complements the Uniform Classification Plan already implemented, which consolidated 176 individual classification plans into only two plans – one for career service and the other for at-will or trust employees. He said that job classifications were reduced from more than 24,000 to only 1,575, and the functions of employees across agencies were standardized.

“Completion of this reform is needed in order for the Government to be able more  efficiently transfer employees between agencies as part of  the Single Employer mechanism established by Act 8 of 2017,” the official said. “Additionally, the Uniform Remuneration Plan is a necessary measure to provide transparency and equality to compensation between peers.”  

Nevertheless, Marrero said that the administration would work to find “viable alternatives” to implement these measures.

“I anticipate that in the upcoming weeks and months, we will be submitting proposals to the oversight board to reprogram funds within the certified budget to start implementing these measures,” he said.  

The board-certified budgets for fiscal year 2021: 

Puerto Rico Electric Power Authority (PREPA) 

• Puerto Rico Aqueduct and Sewer Authority (PRASA) 

• Puerto Rico Highways and Transportation Authority (HTA) 

• University of Puerto Rico (UPR) 

• Puerto Rico Sales Tax Financing Corporation (COFINA) 

• Puerto Rico Industrial Development Company (PRIDCO) 

• Public Corporation for Supervision and Insurance of Cooperatives (COSSEC) 

• Municipal Revenues Collection Center (CRIM) 

• 10 municipalities in board’s pilot program 

FOMB – Budget – FY2021 Aibonito Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 Barranquitas Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 Camuy Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 Cidra Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 Comerío Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 Isabela Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 Orocovis Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 Quebradillas Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 San Sebastián Municipal Budget as Certified by the FOMB on June 30, 2020Download
FOMB – Budget – FY2021 VIllalba Municipal Budget as Certified by the FOMB on June 30, 2020Download

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