AAFAF objects to fiscal board conclusions on pensions and local law preemptions
By The Star Staff
The Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish initials) has objected to the Financial Oversight and Management Board facts and conclusions memorandum, which seeks to defend the plan of adjustment to restructure some $33 billion in Commonwealth of Puerto Rico debt.
Most of AAFAF’s objections were related to defending the current pensions and opposing the oversight board’s plans to preempt local laws to execute the plan.
The oversight board said the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) preempts any Commonwealth law providing for the future accrual of defined benefits and future cost of living adjustments, including, without limitation. Absent preemption, the amount of Commonwealth revenues that would need to be spent on the teachers’ and judicial pension benefits in fiscal year 2022 is $984 million.
“Although PROMESA section 4 provides that PROMESA shall prevail over any general or specific provisions of territory law, State law, or regulation that is inconsistent with [PROMESA], such inconsistency can only be established after the Board’s exercise of its fiscal plan and budgetary powers under PROMESA sections 201 and 202 (and only after the Board seeks to enforce those powers under PROMESA sections 203 and 204), or through the implementation of a plan of adjustment confirmed under Title III of PROMESA,” the entity said.
AAFAF also objected to language regarding Acts 80-2020, 81-2020, and 82-2020 that helped protect pensions.
“Each of these laws was enacted more than a year prior to commencement of the hearing on confirmation of the Plan, and approximately 14 months prior to the date on which the Board was required to submit declarations in support of the Plan. But the Board opted to provide no evidence in support of its claims of preemption, and none is contained in the record. In fact, the Board did not include Acts 80-2020, 81-2020 and 82-2020 (in the list of preempted laws) until after the close of evidence during the confirmation hearing,” AAFAF said.
As AAFAF has already argued in its objection to the Inclusion of Acts 80, 81 and 82 in the list of preempted laws, under PROMESA guarantees the Government the right to access the judicial system to defend its laws.
“Accordingly, Acts 80, 81, and 82 should be removed from the preempted statutes listed on Exhibit K of the Plan and Exhibit C of the Confirmation Order, and all references to those statutes should be removed from paragraph 145 of the Proposed Findings and Conclusions. In addition, paragraph 145 should state that the only Puerto Rico laws preempted by the Plan are those expressly listed on Exhibit K of the Plan and Exhibit C of the Confirmation Order (excluding Acts 80, 81, and 82), and if the Board seeks to prevent the implementation or enforcement of any other Puerto Rico laws as preempted by the Plan then the Board must make the requisite evidentiary and legal showing upon notice and a hearing,” the entity said.