Fiscal board chairman, for now, withholds support for debt deal enabling bill
By The Star Staff
Financial Oversight and Management Board Chairman David Skeel has declined to throw his support behind a bill that would enable the restructuring of some $35 billion in central government debt.
Skeel told island lawmakers in a letter dated Oct. 1 but made public Monday that he will wait for the final version of legislation that would enable the issuance of bonds needed to effectuate the seventh amended plan of adjustment before making a decision. The oversight board provided a draft bill to the Legislature last month.
“You have all the information necessary to pass legislation that will be acceptable to the Oversight Board,” Skeel said in response to a letter from the lawmakers that was also dated Oct. 1. “Accordingly, the Oversight Board will await the final legislation passed by the House and Senate before providing further comment.”
Last week the House passed the enabling legislation, which is now before the Senate.
House Bill 1003, however, removed references to pension cuts and instead opted to put all efforts into defending the Dignified Retirement Act, which bans pension cuts, and is being challenged in the courts by the oversight board.
“Yes, the retirement issue will be worked on, but after Judge Laura Taylor Swain makes a decision on the lawsuit that this House is leading along with other organizations to continue the defense of the Dignified Retirement Law.” House Treasury Committee Chairman Jesús Santa Rodríguez said.
Last week, the committee held a public hearing in which Gov. Pedro Pierluisi Urrutia’s fiscal cabinet supported the bill but teachers’ unions had divided opinions.
Teachers Federation President Mercedes Martínez Padilla opposed the debt deal for proposing cuts to pensions.
“After a life in public service and making a fundamental contribution to Puerto Rican society, the teachers of our country deserve a dignified retirement,” she said. “Our call is for this bill to be withdrawn.”
The Puerto Rico Teachers Association stressed to the Legislature that it should continue its defense of zero cuts under the Dignified Retirement Law. In addition, its spokesperson presented arguments in favor of articles of the legislation aimed at increasing the threshold of cuts to pensions.
Debt deal confirmation hearings are slated for November. While the seventh debt adjustment plan covers about 90% of Puerto Rico’s total debt and pension liability, the oversight board still must restructure the $9 billion debt of the Puerto Rico Electric Power Authority and, separately, the debt of the Highways and Transportation Authority.
The legislation, introduced by House Speaker Rafael Hernández Montañez and numerous Popular Democratic Party legislators last week, will restructure the government’s debt under Title III of the Puerto Rico Oversight, Management and Economic Stability Act and restore 100 percent of pension cuts for government retirees.
The implementation of the plan support agreement calls for the issuance of around $7.4 billion in new general obligation (GO) bonds and the creation of a contingent value instrument (CVI) in exchange for existing bonds.
House Bill 1003 authorizes the issuance of the new GO bonds and CVI to implement the debt deal agreed to with the creditors.