Puerto Rico Oversight Board directs governor to cut spending 5.2%
The Puerto Rico Oversight Board directed Gov. Wanda Vázquez to cut 5.2% from her proposed expenditures for the coming fiscal year.
Board Executive Director Natalie Jareskosaid in a letter to the governor on Monday that Vázquez’s May 8 proposed fiscal year budget was inconsistent with the board’s May 27-approved fiscal plan.
Puerto Rico’s fiscal year runs from July 1 to June 30.
Jaresko said the governor’s budget allotted $475 million too much in spending for six different purposes.
Specifically, she said the budget included $158 million too much for capital expenditures, $146 million more than needed for a uniform remuneration plan for government workers, $82 million too much for parametric insurance, $64 million more than needed for Christmas bonuses, $15 million too much for liquidation payments for trust employees, and $10 million more than needed for public radio station WIPR.
Jaresko wants capital spending cut to $306 million from $464 million.
Jaresko said the government should project revenues of $10.04 billion for its general fund and $3.28 billion in other funds in the coming fiscal year.
The board’s approved fiscal plan allocates $9.11 billion in generalfund spending, including inter-governmental expenses. Effectively, the board is projecting a 10.2% surplus. The board is projecting a deficit starting in fiscal year 2032, or sooner, and is trying to save money for this eventuality, to pay debt, and to pay for capital projects.
In her letter, Jaresko asked the governor to focus on implementing reforms, in particular to the departments of education, health, public safety, corrections and rehabilitation, and economic development and commerce.
Jaresko also directed the governor to focus on “efficiencies and cost reduction, through agency consolidation, creation of the Office of the Chief Financial Officer, Medicaid reform, enhancing tax compliance and optimizing taxes/fees, and reforming the island’s pension system.”
On Friday, Puerto Rico Senator José Nadal Power had sent a letter to Gov. Vázquez complaining she had not yet formally presented her proposed budget to the legislature. He said her delay gave the legislature little time to review it. Puerto Rico’s legislature is supposed to approve the budget by June 30.
The board has the power to approve budgets different from those of the governor and legislature. This has happened for last three fiscal years.
Nadal Power is the ranking minority member of the Puerto Rico Senate Finance Committee.