Gov. Ricardo Rosselló presented Wednesday a budget of $9.5 billion to Puerto Rico’s Legislative Assembly, which guarantees essential services and pension payments, and which also makes contributory justice for the citizens of the island, he said.
The budget presented is framed within the context of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). It was submitted to the Fiscal Oversight and Management Board on April 30.
In his message, the governor stressed, “one of the most important differences in this budget is that, contrary to the previous ones, it really is balanced.”
“In the past, the government simply took the previous budget and added new expenses. In the past, money was taken from areas, increasing budgeted spending, and hiding debt. That is over,” the governor said while speaking at the Capitol in San Juan.
A fundamental part of the budget project is that it will assume all pension payments from the General Fund, to guarantee the protection of one of the most vulnerable sectors of the island.
“In this budget we are taking responsibility for the pension payments that come to more than $2 billion. So we take a difficult step for the budget, but we guarantee the pensions of all our retirees,” the governor said.
During the first 58 days of the current administration, a fiscal plan was created in response to the fiscal crisis, but it also managed to protect the most vulnerable in Puerto Rico.
The Oversight Board approved the plan and avoided the dismissal of more than 45,000 public employees, protected pensions, and prevented the collapse of the healthcare system in Puerto Rico.
“The measures implemented in this budget are those that we had established in the Fiscal Plan,” Rosselló said.
Faced with the fiscal crisis and to protect the funds deposited in the Treasury Department, which were exposed to legal action from government creditors, the government resorted to requesting protection of Title III of PROMESA, ensuring the continuity of the pension payments and the government’s operation.
This action also ensures that the terms of Puerto Rico’s debt continue to be renegotiated in order to regain credibility in the Government and protect the funds necessary to continue providing the services to the people.
The governor also stressed that so far, the Department of the Treasury has paid $140 million in tax refunds. A large part of that money was retained by the previous administration from citizens who responsibly fulfilled their tax contributions.
Likewise, the first executive reported that the accrued collections in the Treasury for the month of April surpassed the projected amount of $230 million, also fulfilling the reserve of $200 million required by the Oversight Board.
Tax reform on the way
Rosselló also stressed the need to simplify the island’s tax system through a reform that will be submitted to the consideration of the Legislature.
The reform will include contributory relief for salaried individuals that will total more than $200 million, expanding income lines and reducing the effective rate.
On the other hand, more than 400,000 taxpayers will not have to file tax returns, because when implementing a withholding policy on their salaries, their tax liability will be covered.
Likewise, self-employed workers who render for professional services will have the possibility to opt for withholding at source, to eliminate their obligation to file a tax return.
As part of this tax reform, the first $12,500 in income for every individual will not pay taxes and will increase the exemption for pensioners from $15,000 to $25,000, reaffirming once again the commitment of this administration to retirees.
In addition, a credit of $100 per dependent will be established for those incomes up to $80,000 per year.
Likewise, the tax known as B2B (Business-to-Business) will be reduced by half, from 4 to 2 percent, as the first phase for the total elimination of that tax.
“With these measures we are simplifying and modernizing the tax system, so that it is fairer for the citizen and, in turn, helps with the Treasury Department’s efficiency,” said Rosselló.
“With the new system the citizen will have the option to replace the tedious process of filling out and filing a form, with the simple action of touching a button,” Rosselló said.The proposed General Fund budget unveiled Thursday.
Emphasis on fiscal discipline
During his presentation, the governor emphasized fiscal discipline and the savings achieved in the budget presented Wednesday. In it, there is a reduction of 9.1 percent in government operating expenses. In addition, the marketing and advertising expenses are reduced by 32 percent.
There was also a reduction of 40 percent in the purchase of materials, 13 percent in the administration of the payroll, and 47 percent by means of subsidies and donations.
In the area of education, Rosselló took the opportunity to inform the group of teachers in the fields of Math, Science, English, and Spanish, qualified as surplus and who voluntarily agree to work in the schools that need them the most, that through an initiative by Education Secretary Julia Keleher, federal funds were secured to grant them a $1,000 bonus.
Regarding healthcare, the governor mentioned that a preventive system will be developed to educate patients about the care of their health and modernize the services through the implementation of a single medical record. He also indicated that the budget items for healthcare will be increased.
Rosselló said the Police will be modernized, integrating the technological advances and the training with the members of the force. Likewise, a community police will be developed; the resources of the state police will be integrated with the municipal police, and the public safety problem will be addressed in a complete way, through the new Department of Public Safety that groups seven agencies of the central Government.
To ensure transparency, the governor said that, “now we will have a budget with visibility, where there will be no hidden budget lines and where people will see how and where the money is used. In addition, our budget will be available to all citizens at fortaleza.pr.gov and our social networking platforms.”