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Puerto Rico fiscal board ‘negotiated’ furlough with gov’t

By on August 31, 2017

SAN JUAN – The chairman of Puerto Rico’s fiscal oversight board, José Carrión, assured Thursday that the entity created by federal law “negotiated” with the island’s government to implement workday cuts as a contingency measure in the certified fiscal plan instead of furloughing public workers.

Carrión assured that, if the two-day-a-month-cut hadn’t been included in the government’s fiscal plan, the board wouldn’t have certified the document because “we have that power.”

“If we had not considered [the workday cuts] an integral element of the fiscal plan, we would not have certified it. We would have certified our own fiscal plan that would have included similar measures, because the bulk of the cost of government is there [in payroll]. We negotiated to avoid furloughs; limiting working hours was negotiated, and all that will come out in the legal…dispute,” the chairman said in a NotiUno radio interview.

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In addition, Carrión pointed out that the government had to comply with two requirements to prevent the austerity measure: have liquidity and carry out structural changes. The chairman said the government met the former but not the latter, where it fell short nearly $250 million.

“Having money in cash and liquidity issues are not the same as structural changes we have requested,” Carrión said. “The first item was liquidity, and the second was structural changes that gave us a little over $800 million. Those adjustments reached a little over $600 million,” he added. “There were structural changes but they could not reach the number entirely.”

“If they did not reach those numbers, and at our discretion, we could determine to implement these measures, which were agreed to. I suppose, and I’m speculating here, that they [the government] agreed to that because they understood they would achieve [the numbers], and they were close but they didn’t achieve the total.Therefore, it’s time to implement what was agreed upon and get it out of the way as soon as possible.”

Carrión’s made his remarks on the eve of the day when a requested two-workday cut for nearly 130,000 public employees of the executive branch, including public corporations and with the exception of the police, was to begin.

For his part, Gov. Ricardo Rosselló has reiterated on multiple occasions that he will not implement the measure despite the board having already filed a lawsuit in federal court against the government to have it carried out. The governor says the workday cuts are only a “recommendation” from the board and not part of the fiscal plan that he can opt not to take as provided in Article 205 of Promesa.

The government has not yet responded to the lawsuit filed by the board, in which it requests that it be declared that the workday cuts and a 10 percent reduction of public pensions are an integral part of the fiscal plan. The board says the workday cuts must begin Sept. 1 and run through June 2018 or until the required savings are achieved.

“If it [workdays cut] happens or not tomorrow, for the governor has said he will not implement it, we will have to wait for the court to come down with its decision and we’ll go on from there,” Carrión said. “To the extent that this is stretched, it is worse for our public servants because, unfortunately, the dollars from that item we need are going to be needed if it takes this six months, or a month, or whatever. So what it would possibly mean and unfortunately would be that it would exacerbate the reduction of working hours.”

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