Puerto Rico Gov. Alejandro García Padilla signed a $9.56 billion general fund budget Tuesday, hours before Moody's Investors Service downgraded his commonwealth's general obligation rating three notches to B2.
The general fund budget is balanced between revenues and expenditures, if one counts $270 million in capitalized interest gained in a March GO bond sale. It would be the commonwealth's first balanced budget in 22 years. Without the capitalized interest, there is a 2.8% deficit.
This deficit is a drop from a 13.1% deficit in fiscal 2013 and a projected 7.9% deficit in fiscal 2014.
The government anticipates spending about $790 million less than it anticipated spending in the fiscal year that ended June 30, a 7.6% reduction.
This figure treats the fiscal 2014 budget as having a spending total of $10.35 billion, which includes debt service restructuring. The official budget was $9.77 billion and did not include debt service restructuring.
Puerto Rico's fiscal year began Tuesday.
"For the first time in more than two decades, costs will be in line with revenues," García Padilla said. "We have achieved this without laying off public employees and without new taxes."
The general fund budget includes $4.91 billion for operating expenses of the executive, legislative and judicial branches. It includes $3.87 billion for special appropriations and $775 million for debt service payments.
In the budget for fiscal 2015, the government increased its payments for debt service by $580 million compared to fiscal 2014.
"The budget is the best instrument to address priority areas of my administration including education, health and safety while still seeking to create jobs and investment in Puerto Rico," García Padilla said.
The governor also signed a $28.13 billion fiscal 2015 consolidated budget Tuesday.
Moody's downgrades, which also extended to other debt-issuing entities of the Puerto Rico government, followed the commonwealth's enactment of a law that will allow public corporations to defer or reduce payments on outstanding bonds.
