Sunday, December 16, 2018

Puerto Rico fiscal board warns governor about failure to seek its approval for rules, laws

By on December 3, 2018

SAN JUAN – Puerto Rico’s Financial Oversight and Management Board chided the government in writing Monday for failing to submit rules, regulations and executive orders for the panel’s approval before issuing them.

Over the past several months, the board said, the government has not always fulfilled its obligations under the federal Puerto Rico Oversight, Management, and Economic Stability Act (Promesa) and it wants to “rectify this situation cooperatively as soon as possible.”

On Aug. 6, the board adopted a policy that requires the government to submit rules, regulations and policies, including executive orders, for its approval to ensure they are consistent with the fiscal plan.

In the last month, you have signed three executive orders – 2018-044, 2018-046, and 2018-049 – that pertain to employee compensation or benefits, and therefore are subject to the Policy. Moreover, each of these executive orders increased employee compensation or benefits. None of these executive orders were sent to the Oversight Board ‘before issuance’ for our ‘prior approval.’ Accordingly, Section 204(b)(5) empowers the Oversight Board to “take such actions as it considers necessary to ensure that such . . . executive order . . . will not adversely affect the territorial government’s compliance with the Fiscal Plan. Accordingly, Section 204(b)(5) empowers the Oversight Board to “take such actions as it considers necessary to ensure that such . . . executive order . . . will not adversely affect the territorial government’s compliance with the Fiscal Plan,” the board wrote to Gov. Ricardo Rosselló.

The fiscal panel reminded the governor and other officials copied that Section 204(a)(1)-(2) provides that “not later than 7 business days after [the Government] duly enacts any law . . ., the Governor shall submit the law to the Oversight Board” together with a “formal estimate . . . of the impact, if any, that the law will have on expenditures and revenues” and a “certification” opining whether the law is “significantly inconsistent with the Fiscal Plan.”

Signed by Chairman José Carrión, the letter says that the “last time we received a law, formal estimate, and certification from you was on August 29, 2018 with respect to Law 142. Since then, the Government has duly enacted almost 100 more laws, all of which were enacted more than 7 business days ago. Accordingly, you have failed to comply with Section 204(a)(1)-(2) for almost 100 laws because for none of those laws did you send the law, formal estimate, or certification. We raised this same issue with you in a letter, dated September 13, 2018, concerning Act 204-2018. Yet, we have not received a law, formal estimate, or certification pursuant to Section 204 since then.”

Section 203(a) of Promesa was also pointed out to the governor, reminding him it stipulates that he must submit to the board a report describing “budget to actual” no later than 15 days after the last day of each quarter of a fiscal year, and any other information requested by the entity. The purpose of the disposition is to hold the government accountable to the certified budget and alert the board of any deviations from the certified budget, the panel assured.

The Government did not submit complete Section 203(a) budget to actual reports for the Commonwealth, PREPA [Puerto Rico Electric Power Authority ], PRASA [Puerto Rico Aqueduct and Sewer Authority], UPR [University of Puerto Rico], or HTA [Highways & Transportation Authority] for fiscal year 2018. Last year, the Oversight Board consciously gave the Government additional time to comply with this requirement due to the destruction caused by Hurricanes Irma and Maria. However, more than enough time has passed for the Government to be able to timely comply with Section 203(a). For the first quarter of fiscal year 2019, we received partial Section 203(a) reports from the Commonwealth, PRASA, and HTA, and nothing from PREPA or UPR,” the board said.

To make this reporting as easy as possible, the board said, it created templates for the form Section 203(a) budget to actual reports must take.

“Please complete and submit these templates – filling in the ‘actuals’ and ‘variance’ columns – for fiscal year 2018 year-end and fiscal year 2019 first quarter by December 21, 2018,” the board asked. In addition, it further requested, “please create templates for PREPA, PRASA, UPR, and HTA based on these Commonwealth templates, including the same level of detail, and complete and submit them for fiscal year 2018 year-end and fiscal year 2019 first quarter by December 21, 2018.”

As you know, these mandates in PROMESA are not optional. The Oversight Board asks you to comply with each of them immediately so that the Oversight Board does not have to take action to enforce compliance,” the board stressed.

 

 

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