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Puerto Rico fiscal board: 24 gov’t resolutions totaling $30 million in spending do not comply with Promesa

By on May 6, 2019

(CB photo)

Requiring notification of any related disbursements by May 15

SAN JUAN – The Financial Oversight and Management Board for Puerto Rico announced that more than $30 million in spending proposed by the Government of Puerto Rico were not part of the budget it certified for this fiscal year and are therefore invalid under the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (Promesa).

The 24 joint resolutions submitted to the board, appropriating about $30 million, “must go through the budget approval process to be valid,” the panel said in a statement, adding that joint resolutions are not exempt from the budget certification process, regardless of legislative approval.

“All government spending, without exceptions, has to be part of the PROMESA budget process,” said board Executive Director Natalie Jaresko. “Such discipline is essential for Puerto Rico’s fiscal responsibility, and to ensure that the government’s own priorities and the services important to the people of Puerto Rico are adequately funded.”

Some of the appropriations date as far back as the 1980s and 1990s, “making it difficult to verify available revenue to fund these expenditures,” the board said, adding that it made the government aware of its non-compliance in a letter dated Feb. 28 and had requested notification of any disbursement of funds.

“As of today, the Government has not submitted the requested information. If the information is not received by May 15, 2019, the Oversight Board will proceed with exercising its authority under PROMESA,” the panel warned.

The board said it remains willing to work with the government to identify areas from which to reapportion budgeted fiscal year 2019 funds if non-budgeted funds have been spent as a result of these joint resolutions.

It recommended that the Legislative Assembly establish a competitive and public process by which municipalities submit capital projects for the Municipal Improvement Funds (MIF) “to increase the transparency surrounding the capital project selection process.”

The board asked the government for a response to these recommendations within 90 days.

The board also determined that spending by the government’s Human Resources Administration and Transformation Office, “as of the third quarter reached $2,500,671,” or “$148,671 above the aggregate full fiscal year amount in the certified budget.”

The board asked the government to explain “such inconsistency” by May 15.

“Puerto Rican taxpayers deserve full visibility of government spending,” Jaresko added.

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