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Puerto Rico Legislature would delay final approval of FY18 budget

By on June 23, 2017

Amid an impasse over budget cuts required by Puerto Rico’s financial control board, the commonwealth’s budget bills would be heading to conference committee, which would delay its final legislative approval, according to the chairman of the House Treasury & Budget Committee, Rep. Antonio Soto.

“We are going to consider the budget in the House and it is going to be approved, but it is very likely that there will be an amendment in the Senate, so that the [bills] stay alive, and the budget goes to a conference committee,” Rep. Soto said Friday.

As for the fiscal board, the idea would be to have the governing body receive the version slated to be approved by the House late Friday, and identify any changes it requires.

“We are going to keep the [budget bills] alive in a conference committee and, if there is any change [asked by the board], it would be considered and incorporated,” Rep. Soto added.

The upper chamber is expected to hold Saturday an initial vote on the budget bills.

When asked about the impasse with the seven-member fiscal board established by the federal Promesa law, the legislator said that the entity requested cuts to the Legislature’s budget allocations.

“The board at one point understood that there should be a [budget] cut to the Legislature. What happens is that the budget presented by the executive [branch] didn’t include the operational expenditure of $21.6 million of the Office of Legislative Services [OSL by its Spanish initials] and the [Legislature’s] Superintendency. We have explained to [the board] that this money is to operate the OSL, the joint commissions and the Superintendency and they agreed for it to be restored, although they are asking for an additional [budget] cut to the Legislature,” Rep. Soto explained.

He pointed out that the budget of the island’s Legislature already has a reduction of $11 million when compared to the current budget, so lawmakers understand that “is enough.”

Both chambers have until June 25 to initially vote on the budget bills, while the commonwealth’s Constitution sets a June 30 deadline to have the spending plan approved by the Legislature and signed by the governor.

Yet, as allowed by Promesa, if the fiscal board fails to certify the budget adopted by the Puerto Rico government on or before June 30, the entity may put in place its own budget version, which would come into effect July 1, when the new fiscal year kicks off.

The House Treasury committee chairman stressed that the lower chamber’s budget version complies with the island’s certified fiscal plan, “is balanced and guarantees the services that people receive” from the government.

Puerto Rico’s general fund budget is expected to top $9.562 billion.

Matching federal funds

Rep. Soto added that the House would consider in the budget three different funds to be used for the matching of federal funds, despite objections raised by the island’s financial control board.

“[The board] questioned three matching funds. One is for [the] Health [Department], to update the record exchange information systems […] and for that we allocated $2.5 million, which represents the amount needed for the 90 to 10 match [of federal funds]. [The board] questioned that item and we kept it in the budget, but we sent them the supporting document so it can keep the allocation,” Rep. Soto said.

As for vocational rehabilitation, the Legislature kept the $4.3 million allocation that would grant access to $13 million in federal funds.

“In the case of municipalities, which is a new fund, we allocated $5 million. There are members of the board who establish that this is a subsidy to the municipalities and we have established otherwise. The matching works 80 to 20. If we have $5 million, we would get an additional $20 million [in federal funds],” the lawmaker stressed.

He further explained that the municipalities’ matching fund will be under the custody of the Office of Management & Budget, while mayors would have to deliver their proposals to OMB and have them certified by the governor’s Office of Federal Affairs, to make sure the documentation is “well prepared.”

Some differences resolved with the board

Rep. Soto indicated that lawmakers agreed with the fiscal board that the general fund budget allocation for the University of Puerto Rico (UPR) would top $670 million, which represents a $163 million cut compared to the current fiscal year.

Moreover, the House’s budget version would keep a $20 million allocation for schools maintenance, although it would now be under the Education Department’s operating expenses and not OMB. Another $3.5 million has been assigned for the operation of 44 Montessori system schools.

As for local Justice Department’s budget, an additional $8.5 million were assigned to the agency.

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