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Puerto Rico fiscal board willing to go to court over furlough

By on June 30, 2017

SAN JUAN – The chairman of Puerto Rico’s fiscal control board, José Carrión III, said Friday he is willing to go to court in case the entity can’t reach an agreement with the Government of Puerto Rico on a public employee furlough as well as the elimination of the Christmas bonus.

The fiscal entity created by the federal Promesa law believes the government has failed to present in detail plans to implement the certified budget and fiscal plan, as required. That is the only way Gov. Ricardo Rosselló could prevent the workday reductions come Sept. 1.

Oversight board Chairman José Carrión, left, speaks with the Government of Puerto Rico’s representative before the federal fiscal entity, Elías Sánchez, during the board’s eighth public hearing, on June 30, 2017. (Juan J. Rodríguez/CB)

The extreme austerity measures would only occur if the government doesn’t fulfill the board’s requirements. The proposal is not a “recommendation,” as the government claims, but an “integral part” of the certified fiscal plan, the board said.

“We hope to reach an agreement. If not, we would find ourselves in a judicial process,” Carrión assured during a press conference after the board’s eighth public hearing, its fourth in Puerto Rico, in a hotel in Miramar surrounded by police.

The board’s legal adviser, Jaime El Koury, explained that “the amendments made to fiscal plan [to certify it] are an integral part of the fiscal plan.” Even if the government sees them as recommendations, “to us, they are a legal part of the fiscal plan,” he added.

Puerto Rico’s fiscal board certifies island’s FY18 budget

Meanwhile, board member Ana Matosantos emphasized that that the only reason a furlough won’t be enforced July 1 is because “the government complied” with the requisite to have “an additional $200 million in liquidity.”

“We aren’t in agreement that some of the implementation plans that will be submitted will achieve those savings,” so the board understands that the threat of having to reduce working days in September is still in effect, Matosantos said.

“We have a discrepancy with the government. We are not yet at the point where that requires more action, beyond the government being prudent and prepare a contingency plan…. We are trying to be responsible and we simply want to let the people know that there is that possibility from our perspective, and we differ with the government,” Carrión warned.

Government Confident in Complying with Board

After the board members’ remarks, the government’s representative in that body, Elías Sánchez, assured that the Rosselló administration will be “diligent” to complete the requirements and avoid the furlough.

Sánchez stressed that the government already assigned budget allocations for the next fiscal year, so no agency can spend more than assigned, and that will be possible because there will be no special appropriations at other times of the year or bond issuances to balance the budget.

He added that the specifications required by the board in the implementation plans will be detailed little by little, as they are a “work in progress.”

“It’s about going into each of the agencies at the granular level to compile that data in terms of all expenses, something that the Government of Puerto Rico has never done…. Some goals were set for us; we have been achieving them. The measures will produce the result, but we will anyway put all the effort to provide  evidence in more detail each day,” he added.

In the past, the board has asked the government to be clear with the people about the possibility of aggressive austerity measures, since it believes officials have failed to communicate the seriousness of the fiscal crisis. The allegations have been denied by the Rosselló administration.

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