Tuesday, June 25, 2019

Puerto Rico gov to propose budget amendments to fiscal board Wednesday

By on May 21, 2019

Gov. Ricardo Rosselló enacts a bill that eliminates municipal obligations. (Courtesy)

Promesa panel had required revision by last Friday, when Rosselló enacted a bill that covers municipal obligations

SAN JUAN – Gov. Ricardo Rosselló said Tuesday that he will be submitting to the Puerto Rico Financial Oversight and Management Board the proposed adjustments to the fiscal year 2020 budget Wednesday evening and then sending them to the Legislative Assembly for evaluation.

The Rosselló administration submitted its version of the budget to the board nearly two months ago, pursuant to the Puerto Rico Oversight, Management and Economic Stability Act (Promesa). However, on May 11, the board rejected it, saying it did not comply with the fiscal plan the congressionally established panel approved May 9.

The board had requested a revised budget by May 17.

Last Friday, the governor enacted several bills, including Senate Bill 1258, or the Administrative Burden Reduction for Municipalities Act, aimed at exempting municipalities from contributing to the Health Insurance Administration (Ases by its Spanish initials) and PayGo pension payments.

The board had said on May 13 that the “the General Fund Government’s submission exceeded the Oversight Board’s FY20 target by approximately $1.5 billion”; the inclusion of $41.2 million in Christmas bonuses; the inclusion of additional emergency reserves beyond $130 million; and low visibility in areas such as professional services and items classified as “englobadas,” or put together.

The board said it determined that for fiscal 2020, the General Fund revenue forecast to be used for budgeting purposes is $9.05 billion and that “other funds” revenue forecast is $3.55 billion. The oversight panel asked for more funding to “fiscal priority areas” such as healthcare, police, firefighters, the Forensic Sciences Institute and Education.

“Prudent fiscal responsibility and discipline are critical elements of the Certified Fiscal Plan,” reads the letter addressed to the legislative leaders and the governor. “This is especially true when it comes to ensuring the Government has sufficient funds to pay for pensions and healthcare. Based on our preliminary review of the Bill, the Oversight Board estimates the potential fiscal impact to be approximately $311 million for FY20 [fiscal 2020] and $1.7 billion over the next five fiscal years (FY20-FY24). This would make the Bill not compliant with the Certified Fiscal Plan, which includes municipalities’ full payment of their obligations to ASES and PayGo.”

Board Executive Director Natalie Jaresko said in the letter that if the governor signed the bill into law, “the formal cost estimate and certification of compliance pursuant to Section 204(a),” needed to be sent for the panel’s consideration within seven days.

On Monday, Rosselló said he has been working with the mayors to identify the source of funds to pay for ASES and PayGo obligations.

He said part of money will come from the “sports betting” legislation that is still in the public hearings process.

A study carried out by Spectrum Gaming Group states that Puerto Rico could reap between $44 million and $66 million annually from online gambling

A separate study, by the Innovation Group, projects $68 million in revenue by 2022.

CB reporters Eva Lloréns and María Miranda contributed.

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