Puerto Rico Gov. Ricardo Rosselló confirmed he will hand over a new revised Fiscal Plan to the Financial Oversight and Management Board on Thursday that will exclude the layoffs of public employees, a labor reform and a reduction in pensions.
In a letter addressed to the Oversight Board, Rosselló emphasized while the Puerto Rico Oversight, Management and Economic Stability Act allows the federally appointed agency to certify the Fiscal Plan, the same statute establishes that the Board cannot usurp the government’s legislative and operational powers.
“The government will not allow the takeover of these powers, and therefore cannot be compelled to implement many of the suggested revisions,” the governor said in the letter.
Rosselló maintained that there is a commitment to increase labor participation, but rejected the elimination of the Christmas bonuses, mandatory vacations and sick leave by law because the Oversight Board insists on eliminating them without giving little to no consideration on labor compensation, like the increase in minimum salary increase and proper training for labor force.
For this reason, the governor announced that the revised Fiscal Plan that will be submitted will not contain a labor reform proposal and will only include the Earned Income Tax Credit (EITC) and the work participation requirement to be eligible to the Nutritional Assistance Program.
“The Board continues to insist on an average reduction of 10 percent of pension benefits in all government retirement systems. However, any change in pension benefits requires legislative action,” Rosselló said in the letter.
“The government opposes these additional measures to reduce pensions because they impose a disproportionate burden on the workers and retirees of Puerto Rico,” he added.
In addition, in the letter, the governor lists several of the Oversight Board’s proposals that he opposes and that would also require legislative action such as the revision of the so-called “Crudita” petroleum tax, and the change of fiscal policy to demand that all state income flows through the General Fund instead of Special Revenue Funds.
“The Board cannot compel the Legislative Assembly to make such a change in tax policy. Under the Puerto Rico Constitution, that policy is only within the power of the Legislature,” the governor said.
In addition, Rosselló rejected proposals that interfere with the government’s operational powers: the limitation of the use of vehicles based on license numbers because this endangers the mobility of citizens to their workplaces.
Furthermore, he insisted that he will develop regionalization, counties and the voluntary mobilization of jailed prisoners to institutions in other jurisdictions of the United States, because these proposals will produce significant savings in the government’s day-to-day operation.
“The government of Puerto Rico firmly believes that the suggested revisions [by the Board] would significantly depress macroeconomic growth, which is an important cornerstone of the Fiscal Plan,” Rosselló added in the seven-page letter.
Although there are many areas of alignment in the discussions with the Financial Oversight and Management Board, Rosselló decided that “as governor, I will not allow the Board to again seek the exercise powers it does not have.”
“Should the Board decide to certify a fiscal plan that exhibits an overreach of its powers, know that the elected government will exercise its discretion when implementing those measures it considers proper and in the public well-being,” he said.
“We suggest the Board refrain from taking actions that will cause more detriment to the task the Board was mandated to execute,” he concluded in the letter.