Puerto Rican legislative leaders are debating how much the government should allocate funds to debt service versus other needs in the budget for fiscal year 2016-2017.
Puerto Rico Gov. Alejandro García Padilla proposed a $9.1 billion budget in late May that cut spending for debt service by 86% from the previous year to $209 million.
The debate comes with the fiscal 2016-2017 budget due by the end of the week, the same time officials have signaled a Puerto Rico will default on at least part of about $1.9 billion of bond debt that is coming due. In Washington, Senate leaders are hoping to vote Wednesday on a rescue package that would include a stay on litigation over Puerto Rico's debt and the establishment of a control board to help oversee a restructuring of the island's $69 billion of public sector debt.
The Puerto Rico House of Representatives approved a revised budget on June 21.
The Senate approved a version Saturday, according to Shirley Cordero, spokeswoman for Rep. Rafael Hernández Montañez.
Starting on Tuesday the members of the House and Senate met in a conference committee concerning the budget, Cordero said. They plan to arrive at a reconciled budget on Thursday, submit it then for a vote by both bodies and then send it to the governor for his signature.
The governor's proposed budget allocated $209 million for interest payments on commonwealth debt and nothing for principal payments.
Public authorities, municipalities, and Puerto Rico Sales Tax Finance Corp. (COFINA) may be treated differently, as their debt is not paid from the General Fund.
According to the El Vocero news web site, leaders from the House and Senate are debating how to allocate some of the spending. President of the House Budget and Treasury Committee Hernández Montañez is advocating that more money be used for paying interest on the debt.
The Senate version of the budget increased the amount of money for Puerto Rico's two main pension systems. Sen. President Eduardo Bhatia Gautier is emphasizing the importance of providing funding to the pension plans.
In the House version $500 million was allocated to pay government suppliers, according to a House press statement. The government is now in arrears to the suppliers. House President Jaime Perell- Borrás is trying to defend this money and get more for the government's Department of the Family and centers for child victims of sexual abuse.
These three leaders are among those participating in the budget conference committee.
