The Puerto Rico legislature approved a $9.6 billion General Fund budget without debt service, leaving it to the Oversight Board to say where money for bond payments will come from in fiscal 2018.
Puerto Rico’s approved fiscal plan calls for $404 million to be paid for debt service in the coming fiscal year, which starts July 1.
Gov. Ricardo Rosselló’s proposed budget on May 31 also had no debt service. A spokeswoman for Puerto Rico Rep. Rafael Hernández Montañez said the version of the budget approved Sunday morning had no debt service.
It is possible that some Puerto Rico government entities will pay $404 million of debt service, or some value higher or lower than this, from other sources than the General Fund. Since the governor’s introduction of his budget, the government and the Puerto Rico Oversight Board have declined to talk about the amount of debt service they anticipate Puerto Rico paying in fiscal year 2018.
Both the governor’s proposed General Fund budget and the legislature-approved General Fund budget included $9.562 billion in spending. The latter figure is from a Senate written statement. For revenues, $9.172 billion is expected from net income from taxes and fees and $390 million from funds and the sale of assets found in the government’s three pension systems.
The Senate approved the budget 21 to 9, with Popular Democratic Party and Independence Party senators and the one non-affiliated senator voting against it.
The legislature-approved consolidated revenue budget is for $25.569 billion, a 0.4% decrease from the current fiscal year.
According to the El Vocero news website, a spokesman for the governor said he would sign the Senate-approved budget on Monday or Tuesday.
The new budget includes $2.04 billion for the government’s pension systems, a sharp increase from previous years. All three systems are expected to run out of assets this year.
The $9.56 billion General Fund budget would be a 6.4% increase over the current fiscal year’s budget. Excluding the new $2 billion for pensions, the budget’s spending is down 21.8%.
Most of the budget took shape in discussions between Rosselló and the board in May. The latter has insisted for months that the government approve a budget that would be structurally balanced, excluding scheduled debt service.
On Sunday Senate Minority Leader Eduardo Bhatia Gautier complained that “since April 30 of this year [the governor and majority New Progressive Party members of the legislature] have kept in absolute secrecy the taxing and spending measures that will affect Puerto Ricans.”
Assuming that Rosselló approves the budget, the Puerto Rico Oversight, Management, and Economic Stability Act requires the board to approve it before it would go into effect. The board has the power to approve its own Puerto Rico budget if chooses.
Last week the board told the governor that he must suspend the government’s Christmas bonus and furlough workers. The governor responded that PROMESA gave him authority over personnel decisions and that he wouldn’t go along with the board’s direction.
Over the weekend, the governor indicated he was willing to face off with the board on the topic in court, according to El Vocero. According to a written statement from the governor’s office, Rosselló said of board president José Carríon III, “It is regrettable that a Puerto Rican agrees to lead a junta that he consciously considers to be undemocratic, and even worse, an imposition on Puerto Rico. Recognizing that and participating in that organization contributes to extending the colonial crisis in our island.”