Puerto Rico Gov. Anibal Acevedo Vila today vetoed an initiative to use revenues instead of bond proceeds for the island’s annual $175 million payment to the Government Development Bank for Puerto Rico.
Juanita Colombani, the governor’s spokeswoman, confirmed via e-mail that Acevedo Vila, a member of the Popular Democratic Party, vetoed the measure.
The bill would have forced the administration to use existing revenue generated from a one-time tax as opposed to bond proceeds, thereby cutting the island’s fiscal 2008 general obligation bond bill by $175 million to $250 million.
Members of the New Progressive Party, which controls the Senate and the House, favor tapping into $240 million of revenue the government generated from a one-time 5% tax on retirement withdrawals and decreasing the 2008 bond bill, which has yet to pass the legislature.
In response to the Acevedo Vila’s veto, Senate President Kenneth McClintock said that the governor has taken the wrong fiscal path.
“It’s highly irresponsible because we have been saving money on these different transactions and that money has not been appropriated by the legislature for any other use, and that money should be available for appropriation,” McClintock said. “And there’s no better purpose to appropriate money than to pay back the public debt.”
Chances of lawmakers overriding Acevedo Vila’s veto are slim. McClintock said it would require not only members of the island’s third party, the Independent Party, to support the measure, but also at least one PDP member in the House would need to cross party lines and support the NPP bill.
“And I doubt that that would happen,” McClintock said. “I wish it would, and an attempt should be made, but I’m afraid that that would be unrealistic. So what we will end up having to do is take out a credit card to pay for the mortgage payment and that’s highly irresponsible. It’s highly irresponsible in personal finance and it’s highly irresponsible in their fiscal policy. So we will do whatever we have to do to avoid a default.”
The government currently owes the GDB more than $1.15 billion of public improvements fund debt, including loans the bank extended to the commonwealth to help balance previous budgets. In spring 2006, officials ended the practice of using GDB funds to fill budget deficits and established a payment plan whereby the government would pay the bank $175 million annually towards the debt. Last year, Puerto Rico included $175 million for the GDB in its 2007 GO bond bill, a practice the governor would like to continue.
“You are currently considering authorizing a bond issue that includes an allocation for this purpose and which you have refused to approve,” Acevedo Vila said in a prepared statement. “Once again I urge you to approve this bond issue and act seriously and with fiscal responsibility.”
