Puerto Rico governor files suit against Oversight Board budget

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Puerto Rico Gov. Ricardo Rosselló went to court Thursday to challenge the budget imposed by the Oversight Board for the fiscal year that started this week, saying the panel had overstepped its authority.

Rosselló filed an adversary complaint in the U.S. District Court in Puerto that's handling the Title III bankruptcy cases to defend the budget approved by the local legislature.

The board defended its authority, citing the 2016 legislation intended to help the island manage its economy and restructure its debt.

“The Financial Oversight and Management Board for Puerto Rico approved and certified a commonwealth budget for fiscal year 2019 in compliance with the certified fiscal plan and in accordance with [the Puerto Rico Oversight, Management, and Economic Stability Act] to put Puerto Rico on the road to recovery. The Oversight Board will vigorously defend against any suit attempting to thwart the carrying out of the budget and fiscal plan.”

On June 30 the board approved its own version of the budget by unanimous written consent and declared it to be the valid budget for Puerto Rico. The budget allocated $8.758 billion for the General Fund and $20.664 billion for Puerto Rico’s consolidated budget. The budget was supposed to go into effect on Sunday, July 1.

Rosselló said that he would ask a court to establish that the board’s fiscal plan and budget are recommendations. He also said he would seek a “declaratory judgment and an injunction” on the board’s attempt to usurp the local government’s right to home rule by including components in the budget that control public policy.

The board-approved budget eliminates money for the government’s longstanding Christmas bonus, for a municipal aid program, and several other purposes supported by the governor.

The board had agreed with the governor to funding these things in exchange for a promise from him that the island would go to at-will employment by rescinding a law from 1976, Law 80. Under the leadership of Senate President Thomas Rivera Schatz, the Puerto Rico Senate refused to rescind Law 80.

While this led to strained relations between Rosselló and Rivera Schatz in late June, on Thursday Rivera Schatz released a statement about the governor’s plan to sue the board stating, “We must put a stop to the Napoleonic pretensions of the fiscal control board. We have and must defend the people of Puerto Rico. That's the right thing, governor. I congratulate you.”

“Puerto Rico has a democratically elected government,” Rivera Schatz said. “We don’t accept an imposed and abusive government.”

On June 30 the board also approved budgets for the Government Development Bank, the Puerto Rico Highways and Transportation Authority, the University of Puerto Rico, the Puerto Rico Aqueduct and Sewer Authority, and the Puerto Rico Electric Power Authority. The governor didn’t indicate whether he planned to challenge these budgets in court as well.

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