Sunday, July 12, 2020

Puerto Rico gov’t confronts fiscal board over furlough program

By on June 22, 2017

Gov. Ricardo Rosselló (Juan J. Rodríguez/CB)

SAN JUAN – Citing extensive sections of Promesa and the legislative intention of Congress in drafting the federal law, Puerto Rico Gov. Ricardo Rosselló told the island’s fiscal control board that the commonwealth is not obligated to accept the implementation of a furlough program, nor the elimination of the Christmas bonus, as pushed by the seven-member fiscal panel.

Hours after the governor said he had not received communication from the board over the matter, a letter sent Thursday acknowledges that the governing body had recently notified its intention to maintain the reduction of working hours of public employees beginning July 1, as established during the board’s March 13 meeting.

The spending-control measures were approved as part of the commonwealth’s certified fiscal plan, and its suspension was conditioned upon the government’s compliance with certain conditions.

“I wish to advise the oversight board that its recent demand that the Government immediately implement (the furlough program and the elimination of the Christmas bonus) does not comport with Promesa section 205,” reads the letter, which adds that the board’s executive director, Natalie Jaresko, had recently notified the administration the “intent” to implement these measures.

Puerto Rico gov’t works on cash reserve to avoid furlough

According to Gov. Rosselló’s letter, section 205 of the federal Promesa law “is intended to give the Government sole discretion whether or not to adopt the oversight board’s recommendations.” It adds that the administration has “flexibility” to reject measures that are “unsound.”

Moreover, the governor warns about the negative effect the furlough program would have on the island’s macroeconomic projections, an effect that is not contemplated under the government’s certified fiscal plan and runs counter to Promesa.

Gov. Rosselló adds that his administration has complied with the conditions imposed by the board to prevent the measures from coming into force, including a cash reserve of $200 million and plans that show how the government will implement the various spending cuts identified on the fiscal plan.

“In contravention of Promesa section 205, the oversight board is now trying to strong-arm the government into accepting the expenditure controls,” the letter further reads.

In a written statement accompanying the release of the letter, the governor said that although the board cannot impose the measures without the government’s consent, “I am hopeful that this issue can be satisfactorily resolved.”

The most recent clash between the commonwealth and its fiscal board comes amid statements by local legislative leaders that signal differences with the fiscal panel over the island’s next budget with just days away from the deadline for its approval. If the board fails to certify by June 30 a spending plan submitted by the government, it can impose its own version of the budget come the beginning of the new fiscal year, or July 1.

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