Governor pitches $9.64B budget, ‘reconstruction plan’

Written by  //  April 29, 2014  //  Government  //  No comments

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Gov. García-Padilla offers his budget speech at the Legislature Tuesday.

Gov. García-Padilla offers his budget speech at the Legislature Tuesday.

Puerto Rico Gov. Alejandro García-Padilla presented Tuesday a budget that includes about $1.4 billion in cuts, including the elimination of 25 agencies and about 100 schools, among other measures to make “rational uses of public funds.”

The budgetary measures do not contemplate public sector lay-offs.

During a briefing with members of the local media prior to the governor’s address, Treasury Secretary Melba Acosta and Office of Management and Budget Executive Director Carlos Rivas reviewed the main points of the budget to be proposed to the Legislature for approval for Fiscal 2015.

The overall budget will be of $9.64 billion, which includes $500 million in debt that the government will not refinance to pay off, as has been the norm. The proposed budget is about $705 million below the current $9.77 billion for Fiscal 2014, which swells to more than $10.3 billion when a debt component of $575 million is added.

“In this budget, we’re paying off all of the government’s debt,” said Rivas.

To achieve a balance, Rivas said the government is proposing “containing debt and reducing expenses,” which will eliminate automatic increases in assignments to the University of Puerto Rico, the Judiciary branch, as well as expenses associated with collective bargaining agreements, and other recurring costs.

“When you see the cost of operating the government as it is today, the increase associated with all of the previous commitments should have been $1.47 billion, which will not happen,” Rivas said. “We’re taking steps to reduce, correct and adjust that total to save $1.51 billion. We’re proposing a balanced budget without deficit financing.”

The government’s strategy calls for a so-called four-year “reconstruction plan” to promote a transformation into a society boasting a “competitive education system, better quality of health, greater community security, as well as job creation,” the governor said.

“A balanced budget is a good starting point to pay our debt with the past and start paying our debt with the future,” said García-Padilla during his discourse at the Legislature.

Consolidating agencies
Adjustment measures include eliminating 25 agencies by integrating them into other like dependencies to “guarantee a more agile and effective” government. The move will save the General Fund $10 million, he said.

The proposed list of agencies that will be consolidated includes:

  • Energy Affairs Administration will merge with the Telecommunications Regulatory Board under a new entity to be known as the Energy and Telecommunications Commission;
  • The Labor Relations Administration, the Puerto Rico Film Commission and the Youth Affairs Administration with the Department of Economic Development and Commerce;
  • The School of Criminal Justice with the Police Department; the Public Service Appellate Commission, the Investigation, Processing and Appellate Commission and the Labor Relations Board with the Office of Training and Advice on Labor Issues and Human Resource Management (known as OCALARH);
  • The Traffic Safety Commission with the Accident Compensation Administration, known as ACAA;
  • The Employment and Training Enterprises Corporation and the Pre-Trial Services Office with the Department of Corrections;
  • The Industries for the Blind Corp. with the Vocational Rehabilitation Administration;
  • The Women’s Affairs Advocate’s Office with the Department of the Family;
  • The Solid Waste Management Authority with the Puerto Rico Industrial Developmenc Company;
  • The Industrial Commission with the State Insurance Fund;
  • National Parks Co. with the Department of Sports and Recreation
  • The Education Council with the Department of Education;
  • The Health Advocate with the Health Department;
  • The Veteran Affairs Advocate with the National Guard;
  • And the Metropolitan Bus Authority with the Maritime Transportation Administration to form the new Integrated Transportation Authority.

This will be the first phase of a four-year strategy to reduce the number of government agencies to 50. The plan also calls for eliminating about 100 public schools that have been identified as either having low student enrollment or inadequate facilities for education.

As far as the consolidated budget, the García-Padilla administration is proposing a total of $28.1 billion for Fiscal 2015, down from the $29.0 billion for Fiscal 2014.

Carlos Rivas and Melba Acosta meet with reporters prior to the governor's message.

Carlos Rivas and Melba Acosta meet with reporters prior to the governor’s message.

Revenue projections
As far as collections go, Treasury is predicting an increase of $615 million in collections stemming from recurring income, as well as next year’s start of the Powerball lottery in Puerto Rico, which should ring up about about $13 million for the government’s coffers, Acosta said.

Meanwhile, she said the agency is set to begin factoring in about $170 million in sales and use tax revenue, as well as an increase in rum tax revenue of $112 million. Another $370 million associated with a number of measures contained in bills to be submitted with the budget is also expected to come in during Fiscal 2105, Acosta said.

TO VIEW THE PROPOSED RECONSTRUCTION PLAN IN ITS ENTIRETY, CLICK HERE.

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