Puerto Rico hasn't made an allotment for debt service seven days into the current fiscal year.
Gov. Alejandro García Padilla signed the fiscal 2017 budget on Friday, the first day of the fiscal year and one day after President Obama signed legislation known as PROMESA to address the territory's debt crisis.
People familiar with the Governor's action say the budget takes the form of three bills: RCC 893, RCC 894, and RCC 895. It totals $8.987 billion, down from $9.8 billion approved for the fiscal year 2016 budget.
In past years money for debt service and contributions to the employee retirement systems was included in the main budget bills. However, this year the debt service has been placed in a separate bill. As of Wednesday, the governor hadn't signed that measure, according to Maria Rosario, spokeswoman for the Puerto Rico Office of Management and Budget.
"So long as the PROMESA stay [on litigation concerning Puerto Rico debt payment] is in place, the governor has no incentive to pay debt service and every incentive to instead use those funds for pensioners and employees," said Municipal Market Analytics partner Matt Fabian. "MMA assumes debt payments will be minimal until the eventual fiscal control board is seated and takes action."
According to two sources, the debt service bill allocated a total of $450 million for bond payments. El Vocero news web site reported that $370 million of this was to go to pay general obligation bonds and $80 million for Public Building Authority debt. The bill also includes $1 million to repay debt for the use of helicopters.
A July 4 El Vocero story headlined, "Payment to Bondholders is Under a Blanket of Uncertainty," quoted Director of the Office of Management and Budget Luis Cruz Batista saying the governor hadn't yet received the debt service bill.
On July 1, Puerto Rico House of Representatives Minority Leader Jenniffer González Colon complained that while the governor described the fiscal 2017 budget as $8.987 billion, it was actually $9.633 billion. In addition to the three signed budget measures the governor still needed to sign the debt measure bill, a $170 million spending bill for the employee retirement system, and a $25 million bill for providing social security for the police, she said.
On July 6 Rosario said that the governor had approved money for the main employee retirement system.
A Puerto Rico Treasury Department memo posted to a Puerto Rico government web site on the governor's proposed budget in late May indicated that the Puerto Rico Sales Tax Finance Corp. (COFINA) would make its bond payments in the current fiscal year. However, in early June Puerto Rico chief financial officer Melba Acosta Febo told The Bond Buyer that she was unsure if COFINA would make all of its payments in fiscal 2017. On Wednesday Rosario agreed, indicating that the government may not make all of its COFINA payments this fiscal year.
On May 23 in his proposed FY2017 budget, the governor called for spending $209 million for payment of the commonwealth's debt. In June the Puerto Rico Senate and House of Representatives increased the amount budgeted for debt.
The governor's press office hasn't responded to requests for information on the debt service measure. Though the office puts out several press releases each day, it has yet to release one on the adopted budget. Nor has any other Puerto Rico administrative department sent out a press release on the topic.
