Puerto Rico’s Rosselló uses budget speech to attack board

Bonds

Puerto Rico Gov. Ricardo Rosselló used much of his annual budget speech to attack the island’s Oversight Board.

In the governor’s speech delivered Sunday, he said the board has been inaccurate in its financial predictions and that he wouldn’t participate in any cuts to pensioner benefits.

Puerto Rico Gov. Ricardo Rosselló said the Oversight Board’s proposed measures have been based on incorrect projections.

In a summary of his term in office, Rosselló recounted several examples of the board trying to force measures that have turned out to be unnecessary.

On Jan. 18, 2017, the board sent him a letter saying government pensions would have to be reduced and that required actions that would lead to the “dismissal of tens of thousands of employees” and reduction of salaries of remaining employees, Rosselló said. “We demonstrated that they were unjustified measures by presenting alternative fiscal responsibility measures that didn’t go against the people.”

“Time has proved us right,” the governor continued, saying that his government had reduced the government by 23,000 people without layoffs.

In August 2017 the board ordered a reduction in working hours for central government workers. The governor said he didn’t put this into effect, and again time has proven him right.

In June 2018 the board certified a fiscal plan that included the elimination of the Christmas bonus but the governor went ahead and paid it. Subsequent history has shown that the bonus needn’t have been cut, he said.

The governor presented a series of bar graphs that showed that the board’s projections have been too pessimistic about General Fund revenues, budget year surpluses, and cash position for 2017, 2018, and 2019.

Along with criticizing the board, Rosselló used much of his speech to promote his accomplishments in office, perhaps with an eye to the gubernatorial election scheduled for November 2020.

He said his proposed budget is focused on police and public safety, education, and health. Rosselló said he was proposing pay increases for police, more money for their retirement, and money for new police equipment.

The governor said he is looking to increase teacher pay, channel money for their retirement, restructure the Department of Education, and provide money for university scholarships.

For health, the governor said he is providing money so that the populace will have flexibility in their medical choices.

While the governor’s General Fund budget proposes $9.4 billion in spending, the board’s budget proposes $9.07 billion. Both the board and governor have sent their budgets to Puerto Rico House of Representatives and Senate for their consideration. The leaders of the Puerto Rico House and Senate are in the same party as the governor and they have said they will consider the governor’s version.

The Puerto Rico Oversight, Management, and Economic Stability Act gives the board the power to approve its own budget regardless of the governor’s and legislature’s actions. While the board is saying spending for the biggest public pension system must be cut by 10%, it is also saying that this cut should be postponed to fiscal year 2021.

In response to the governor’s speech, opposition Senator José Nadal Power said the budget rested on a federal funds and other recovery money, a “bonanza” that followed the 2017 hurricanes. The economic results are not the result of the governor’s own initiatives.

While the governor mentioned that the federal tax reform passed by Congress in December 2017 hurt Puerto Rico, Nadal Power said the governor didn’t mention that the specific problem for Puerto Rico was due to the work of his partner in Congress, Resident Commissioner Jenniffer Gonzalez Colón.

The board declined The Bond Buyer’s invitation to respond to the governor’s comments.

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