Puerto Rico Debt Payments Almost 20% of Next Year’s Budget
SAN JUAN—In the next fiscal year, the Puerto Rico government would have to pay $1.78 billion in total debt service payments, an amount that is around 19.5% of the proposed government budget of $9.1 billion, according to government sources.
In the current fiscal year, debt service is 12% of the budget of $9.5 billion. In 2013, debt service was 6% of the $9 billion budget. In 2012, the debt was 7% of the $9.2 billion budget.
The Legislature began this week hearings on the government’s $9.1 billion budget for 2016-17 Fiscal Year, which is $700 million less than the original budget approved for this year before it was adjusted. The budget package is comprised of 11 measures.
One of the most controversial measures is House Bill 2961, because it would amend the 2006 Fiscal Reform Act to require that all monetary earmarks given to entities will be fixed according to the fiscal state of the government and not as established by special laws.
“There will be no debt or obligation resulting from any difference between the amount that has to be provided and what is provided,” the bill states. For example, if the government were required by a special law to earmark $5 million to a program in the Family Department, it would be able to allocate a lower amount under the proposed legislation.
Another highly controversial measure in the budget package is House Bill 2962, which would suspend all monthly payments to the Amortization and Redemption Fund for General Obligation (GO) bond payments. The government has been since 1976 setting aside GO payments in the fund. The government would stop all deposits to the fund unless it is able to obtain $1.2 billion in tax-revenue anticipation notes, or TRANs, the bill states, something that is highly unlikely.
The government owes $1.78 billion in total debt payments that include $24 million owed by the Treasury Department, $21.4 million by the Land Authority, $408 million by the Aqueduct and Sewer Authority, $322 million in public debt, $64.4 million by the University of Puerto Rico, $10 million by the courts, $545 million by the Electric Power Authority, $1.4 million by the Infrastructure Financing Authority, $20.8 million by the Puerto Rico Industrial Development Company, $17.6 million by the Public Housing Administration, $31.2 million by the Housing Financing Authority, $283.4 million by the Public Buildings Authority, $3.8 million by the Infrastructure Financing Authority and $30 million by the Convention Center District Authority.