Puerto Rico legislators yesterday were set to pass a $7.6 billion spending plan for fiscal 2010, which begins today, with the budget then heading to Gov. Luis Fortuño's desk for his consideration.
Officials anticipate the governor will sign the fiscal 2010 budget, his first budget bill after taking office Jan. 1, as it is similar to the proposal he submitted to the legislature in late April. While the plan is smaller than the $9.48 billion fiscal 2009 budget, officials will rely on $2.5 billion of deficit spending through sales tax bond proceeds to help finance temporary spending measures such as a program to help laid-off government workers find other employment and a $500 million local stimulus plan.
House Speaker Jenniffer Gonzalez yesterday said the lower chamber was working on one final issue regarding the allocation of funds to a joint commission.
"We're going to agree today on the budget, as the budget has already moved through the controversial issues of the legislature," Gonzalez said.
Both chambers approved the fiscal 2010 budget last week, though the Senate on Thursday added amendments to the budget bill that require House approval. Gonzalez is anticipating that Fortuño will sign the fiscal 2010 budget. The governor and legislative leaders are all members of the New Progressive Party.
"It is the same budget that the governor filed," she said. "We just made [allocation] adjustments to the agencies and have technical corrections to the bill, but it's the same amount of money and the same principles that the governor submitted to us. So there's no issue."
Last month, lawmakers decreased a $1.08 billion allocation for "debt service" to $894 million. That allocation includes $520.6 million for principal and interest payments on general obligation debt, service payments to the Puerto Rico Aqueduct and Sewer Authority and the Puerto Rico Electric Power Authority, and payments to the Government Development Bank for Puerto Rico for loans it has extended to the commonwealth to help balance prior budgets.
The $894 million allocation includes projected savings from restructuring outstanding GO and commonwealth-backed debt to ease debt service payments in fiscal 2010 by pushing out maturities.
The GDB, the island's financing arm, will also look for refinancings that offer present-value savings, according to Fernando Batlle, GDB's executive vice president for financing and treasury.
Puerto Rico has $9.97 billion of GO and appropriation debt. Total public debt among the central government and bonding authorities is more than $50 billion.
Moody's Investors Service and Standard & Poor's rate the commonwealth Baa3 and BBB-minus, respectively, both with a stable outlook.
Along with the budget, lawmakers were working on a property tax increase proposal to bring in $230 million of new revenue per year.
The governor's plan includes increasing property taxes for homeowners for four years while the legislature prefers including corporations in the property tax hike, decreasing the rate increase, and implementing the boost for one-year, with an option to continue the incentive for a second year, according to Rep. Angel Perez, vice president of the House Treasury and Financial Affairs Committee.