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Puerto Rico fiscal board seeks dismissal of gov’s lawsuit

By on July 12, 2018

SAN JUAN – The Puerto Rico Financial Oversight and Management Board on Thursday sought the dismissal of Gov. Ricardo Rosselló’s lawsuit, which seeks to stop the panel from implementing public policy by enforcing its own budget, and urged the court to allow it to enforce its mandates under federal law to bring Puerto Rico out of its fiscal problems.

“This adversary proceeding arises, not from the Oversight Board’s unlawful attempts to usurp Puerto Rico’s political and governmental powers and right to home rule,” as the governor’s lawsuit contends, “but from the Governor’s attempt to undo the Congressional insulation of the Oversight Board from political pressure, and infringe upon the Oversight Board’s core areas of responsibility, while obstructing its ability to fulfill the mandate that Congress gave it,” the board’s motion reads.

Rosselló’s legal action came after wrangling between the budget approved by the board and another passed by the Puerto Rican legislature, which the governor enacted. The differences emerged after lawmakers failed to repeal Act 80, known as the unjust dismissal law, which affords protections to workers.

The fiscal board said the measure needed to be eliminated to help attract investors, and if repealed, the panel would not slash vacation and sick-leave days or eliminate a year-end bonus for public employees.

Even though the board said it had to certify its own fiscal plan and budget, it nevertheless incorporated “the bulk of provisions formulated in collaboration with the Governor.”

The governor argues that the Puerto Rico Oversight, Management, and Economic Stability Act (Promesa) does not require the government to adopt policy recommendations made by the board, but it says the provisions the governor objects to were not recommendations and the governor is challenging its “core authorities.”

“Adopting a recommendation in a fiscal plan takes it out of the universe of recommendations that can be rejected under Promesa Section 205. Here, each of the provisions that the Complaint challenges was expressly included in the certified Fiscal Plan, was not characterized by the Oversight Board as a recommendation, and directly relates to an enumerated provision of Promesa,” the board says.

The board said that despite the governor’s protests to the contrary, it is a challenge to the board’s certified fiscal plan and budget for the government.

According to Promesa, the court lacks jurisdiction to go over fiscal plans because they cannot be challenged.

“If the Complaint is not such a challenge, then it is a request for an advisory ruling,” the board said, reiterating that Congress insulated it from challenges to fiscal plans.

“In response to decades of fiscal mismanagement, excessive borrowing, and a lack of political will to address Puerto Rico’s fiscal crisis, Congress enacted Promesa and established the Oversight Board with the purpose of providing a method for the Commonwealth to achieve fiscal responsibility and access to capital markets. To fulfill its mandate, Congress entrusted the Oversight Board with the responsibility and sole discretion to determine whether a Fiscal Plan proposed by the Governor satisfies the requirements of Promesa,” the board further said.

“To insulate the Oversight Board’s certification determinations from political pressures within the Commonwealth, and to prevent delays in carrying out the Oversight Board’s critical mission, Congress made the political and governmental powers of the Commonwealth subject to the Oversight Board’s mandates under titles I and II and prevented challenges to the Oversight Board’s certification determinations,” the panel assured.

The Oversight Board says it has engaged in attempts at reconcile differences and asked the court to”affirm its most solemn duties of certifying and enforcing the Fiscal Plan and Budget.

In its release, board Executive Director Natalie Jaresko said the panel “has made clear that it will vigorously defend itself against any suit attempting to thwart the Board from carrying out its mandate under PROMESA.”

“This filing is a necessary step in that defense. Certifying and enforcing the Fiscal Plan and Budget are the essential responsibilities and powers of the Board. Protecting those responsibilities and powers is critical to the Board being able to do what Congress asked it to do,” she added.

A court hearing is scheduled orf July 25 in San Juan.

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