Monday, November 30, 2020

Vázquez administration requests ‘excess’ PayGo funds to cover Christmas bonus deficit

By on November 18, 2020

Gov. Wanda Vázquez (Courtesy)

Jaresko says matter will be discussed in FOMB public hearing on Friday 

SAN JUAN — Puerto Rico Treasury Secretary Francisco Parés Alicea said on Wednesday that the Gov. Wanda Vázquez administration is requesting an authorization from Puerto Rico’s Financial Oversight and Management Board (FOMB) to use “excess” funding that had been earmarked for monthly payments to government retirees to cover a $23 million gap in this year’s allotment for payment of the annual Christmas bonus to public employees. 

During a Puerto Rico government transition hearing Monday, commonwealth Office of Management and Budget (OMB) Secretary Iris Santos said that while payment of the Christmas bonus to public employees this year would cost $63 million, only $40 million were available. She said that her agency made a request to FOMB to use an additional $23 million for this item. 

Puerto Rico Treasury Secretary Francisco Parés Alicea (Juan J. Rodríguez / CB)

Parés said during an interview on Radio Isla on Tuesday that Santos had determined to make up the missing funding for the bonus by reprogramming a portion of the “overestimated” allotment for monthly payments to retired public workers made on a pay-as-you-go basis (PayGo). He said that the oversight board has to approve the reprogramming of funding for budget items. 

FOMB Executive Director Natalie Jaresko said during a press conference on Wednesday that the federally created entity was evaluating the OMB request. 

“The board will be discussing this at a public board meeting on Friday,” she said. “The government has presented us with a reapportionment request, and we will be looking at whether or not that reapportionment request is consistent with the fiscal plan. But the board has not considered it as of today [Wednesday].” 

Fiscal board Executive Director Natalie Jaresko (File)

When asked on the radio program what the administration would do if the request were turned down, the Treasury chief said that payment of the Christmas bonus was a “priority” for the administration, and that “to the extent that there is an adverse decision, we will sit down to see what will be the next steps.” 

“I don’t want to anticipate [anything] because the funds were identified and there should be no controversy,” he said. “I understand that last year that money [for the Christmas bonus] was taken from the same item.” 

Parés denied that taking the money from the PayGo item would leave a deficiency in payments to retirees. 

“Not at all,” he said. 

Gov. Vázquez said in a press release that the requested money “will serve to complete the payment of the bonus to 98,535 central government employees in this moment in which the finances of many families are affected by the Covid-19 pandemic and the terrible impact that it has made on the economy of the country.” 

“We are confident that the board will approve the proposal it was presented for the benefit of thousands of government employees,” the governor said in the statement. “The process of analysis and identification of funds for the payment of the Christmas Bonus started about two months ago. As part of the ordinary procedures, on October 1, we sent a memorandum to all agencies so that they submit the required information on or before October 15 and last Saturday we submitted the official proposal for the consideration of [the oversight board].” 

Greater Revenue

Meanwhile, despite the economic disruptions wrought by Covid-19 pandemic emergency restrictions, Parés said that commonwealth general fund tax collections were coming in above estimates. He said that revenue collections during the months of September and October had come in about $460 million above estimates. 

While the Treasury chief acknowledged that actual revenue collections so far during fiscal year 2021, which began July 1, were below last year’s, he stressed that his agency had lowered tax collection projections in response to the effects of the pandemic, which has forced the government to restrict the number of customers admitted to stores and restaurants. 

Parés said he expects total general fund revenues for fiscal year 2021 to total between $9.6 billion and $9.7 billion. 

“Last year, we were on our way to collect $10.4 billion before this crisis erupted,” he said, noting that general fund revenues reached $11.4 billion in 2019. 

The Treasury chief stressed that tax collections have gradually improved since the lifting of the severest lockdown and shelter-in-place measures in May. He said that tax collections in April were only a fifth of what the agency normally collects during this month.  

“I don’t foresee a fiscal collapse of a magnitude that the government will have to decide which programs it will allow and which it will not be able to offer,” he said, stressing that an economic recovery will depend on how quickly a virus “vaccine will arrive and social interactions will normalize.”  

“The pandemic is the principal factor that has altered revenue collection behavior in Puerto Rico,” he added. 

Asked whether he would be willing to stay on if requested by the incoming administration of Gov.-elect Pedro Pierluisi, Parés said that “it would be an honor to continue as Treasury secretary even if it means postponing personal plans.”  

The 32-year-old certified public accountant was appointed to the post by former Gov. Ricardo Rosselló on May 25, 2019 after he abruptly fired the commonwealth’s then Chief Financial Officer and Treasury Secretary Raúl Maldonado Gautier, after the official revealed in a radio program that he was looking into an alleged “institutional mafia” that had taken hold of the Treasury Department and that had threatened him and his family. 

After Rosselló resigned in July 2019 in response to massive protests, his successor, Gov. Vázquez, retained Parés in her administration.  

Parés said that he believes his year-long experience as head of the Treasury Department had changed the public’s initial perception of him as too young for the job. While he acknowledged that he has not been contacted by Pierluisi, the governor-elect has recognized his work. 

“He [Pierluisi] is evaluating several candidates, including our performance at the Treasury Department,” he said.