Governor must submit budget, fiscal plans in February
By The Star Staff
Gov. Pedro Pierluisi Urrutia must turn in the fiscal year 2021-2022 budget on Feb. 2 after obtaining a three-day extension from the federal Financial Oversight and Management Board (FOMB), and by Feb. 20 he must hand in a proposed updated fiscal plan.
The governor met last Friday with the oversight board and obtained the three-day extension because the board is slated to have a public meeting this Friday.
“It was a productive meeting in which I re-established the government’s priorities and the four core issues, which are: my opposition to cuts in pensions, to municipalities and to the UPR [University of Puerto Rico], and the necessary investment in public service,” Pierluisi said.
“We talked about the mediation process, which is confidential, and I reiterated that the only way that I am going to support a debt adjustment plan is for the payment to be one that is manageable from a fiscal point of view, that it is an amount of debt that we can pay and that we are not going to default on,” he said.
The oversight board is proposing to the island’s creditors a new debt restructuring plan for the commonwealth that will reduce debt service payments to about $1 billion. The board was ordered by the U.S. District Court to at least turn in by Feb. 10 a term sheet for the potential confirmation of an adjustment plan in the commonwealth bankruptcy. A mediation process is in an intensively renewed phase as the board has new members and there is a new governor.
Omar Marrero, director of the Puerto Rico Fiscal Agency and Financial Advisory Authority, noted that “we have the mediation process, and in parallel we have two processes, which is the budget process and the fiscal plan process.”
“The budget process is supposed to be submitted on January 29, however, as there is a public hearing that day, which is next Friday, the budget will be submitted on Tuesday, February 2, with the consent of the FOMB,” Marrero said.
“On February 20, then, we have to submit the government’s fiscal plan or a revised fiscal plan in light of the economic situation in which we find ourselves and with the revised economic projections,” he added.
Asked if the budget exceeded the oversight board’s projections, Marrero replied that there are initiatives that could increase spending and gave as an example the declaration of a state of emergency due to gender violence.
“Today we do not have an optimal government, today we do not have a functional government,” he said. “We have to have it and that is the request.”
Marrero said the island government needs funds to pay the debt. He noted that the government has been paying its Puerto Rico Sales Tax Financing Corp. debt, which was restructured in 2019.
“Restructured debt is paid, debt that has not yet been restructured, we have to restructure it in order to pay it,” he said.
Regarding the fiscal plan, the oversight board says the document needs to be updated to take into account the impact of the global pandemic on the government’s finances. After the governor submits his draft of the plan Feb. 20, he must then on March 26 submit a revised version once the board sends the governor a notice of violation, as needed. The fiscal plan has to be completed by April 23.
For his part, UPR President Jorge Haddock said he was grateful that Pierluisi told the oversight board he would oppose budget cuts to the university.
“For the past three years, the University has made multiple adjustments to face a reduction that exceeds $300 million, without disrupting the quality of teaching, without layoffs or closure of campuses,” he said in written remarks. “It is essential to provide the UPR with a budget that allows it to continue serving students and employees with the level of excellence that has distinguished it for more than 117 years.”
Haddock said he will continue to find new revenues and identify opportunities that reinforce the fiscal stability of all the facilities and units, “but the support of the central government is essential to ensure compliance with the obligations that require the availability of recurring funds.”