The Puerto Rico government will emphasize spending cuts in its effort to balance its budget, its budget director told The Bond Buyer.
On Feb. 3 Puerto Rico Gov. Alejandro García Padilla committed to presenting a balanced budget to the legislature.
In the coming fiscal year the budget will be balanced, there will be no restructuring of Puerto Rico's debt and the Government Development Bank of Puerto Rico will not lend to the government's general fund, Carlos Rivas, director of the Office of Management and Budget, told The Bond Buyer.
Rivas said the government expects to have 8,000 fewer employees supported by the General Fund at the start of the next fiscal year compared to the start of this fiscal year. Much of this decline will be due to retirements rather than layoffs. The government will have a total of 10,000 fewer employees supported by all government funds, Rivas said.
Because of the lower number of employees and some other factors, the government expects to have smaller starting costs, Rivas said.
Rivas and other government leaders have created a list of possible measures to cut spending to get the budget balanced, Rivas said.
This fiscal year's budget was approved with an $820 million budget deficit. On Feb. 5 the governor sent bills to the legislature to reduce the anticipated deficit by $170 million in the current fiscal year.
By March the García Padilla administration hopes to have largely settled on what will be in the fiscal 2015 budget, Rivas said. The government expects to present its budget to the Puerto Rico legislature in April.
The governor's Popular Democratic Party, has a majority in both the Puerto Rico House and Senate.
In addition to the cuts in spending, there will be some revenue increases, Rivas said. Starting in the next fiscal year, the collection of use tax on imported items will move to ports. This should greatly increase the collection of these revenues, he said.
The Puerto Rico Treasury is also advancing on cracking down on other forms of tax evasion and this should also help revenues in the coming fiscal year, Rivas said.
The government plans to use three approaches to cutting $170 million from the current fiscal year's spending.
It plans to gain $75 million through the use of reserves and contingencies that will not be used this fiscal year for various reasons, Rivas said.
An additional $70 million will be gained through mandating a 2% spending cut to most central government agencies. While Rivas will have the right to override the agency decisions, the agencies will generally make the cut decisions.
The final $25 million will be found through cutting money for special appropriations for programs, Rivas said.
The government has submitted a bill that reduces appropriations, not simply cutting spending, by $170 million. This way agencies will not be able to use the money not spent this fiscal year in future fiscal years, Rivas said.
