Puerto Rico’s Oversight Board rejected Gov. Ricardo Rosselló’s proposed fiscal year 2020 budget.
The board said the proposed budget is inconsistent with the fiscal plan that it approved on Thursday. Board Executive Director Natalie Jaresko made this statement in a letter sent to the governor on Saturday.
The board is seeking General Fund revenue and spending figures of $9.05 billion. By comparison the current fiscal year General Fund budget is for $8.76 billion. The governor has proposed a General Fund of $9.53 billion.
On Jan. 30 the board proposed a spending level of $8.03 billion for the General Fund. The board couldn’t immediately explain why it has increased its proposed spending level by roughly $1 billion.
However, in its letter the board does explain that it has revised its own proposed spending levels to include about $250 million more for healthcare, $220 million more for police, and $60 million more for a few other priorities.
In the letter the board is specifying personnel and non-personnel spending levels for numerous agencies. The board is directing the governor follow these in the coming fiscal year’s budget.
As part of the budget the board is directing the governor to eliminate the annual Christmas bonus to employees, totaling $41.2 million.
The board is objecting to the governor proposal to allocate more than $130 million for an emergency reserve.
The board is rejecting spending on “other” professional services beyond the 10% threshold that the board set.
Under the Puerto Rico Oversight, Management, and Economic Stability Act, the board is supposed to work with the governor to create a budget. The budget is also supposed to be voted by the legislature. However, under PROMESA the board has the power to approve any budget it wishes.
While the board had planned to cut spending on the main pension plan by 10% in the coming fiscal year, the board has now shifted this cut to the following fiscal year, which will start July 1, 2020. Since the government has exhausted the fund supporting this pension, the government is paying the pensions on a pay-as-you-go basis. In the current fiscal year pensions are expected to absorb 26% of General Fund expenditures.
According to the El Vocero news website, since the board’s approval of the fiscal plan the governor has said he will not cooperate with the reduction of pensions or the cutting of the Christmas bonus.
In Saturday’s letter the board asked the governor and his team to submit an updated budget that responds to its letter by May 17. Jaresko said she hoped to complete a fiscal year 2020 budget by June 30. The new fiscal year starts on July 1.
In addition to the General Fund, the board is working on creating a Consolidated Budget for the Commonwealth. It is calling for an Other Funds revenue forecast of $3.5 billion.
By May 17, the board is seeking along with a General Fund budget the governor’s proposed spending for the Puerto Rico Electric Power Authority, Puerto Rico Aqueduct and Sewer Authority, Puerto Rico Public Building Authority, and for the Employees Retirement System pension plan.
