Jaresko: Budget to include debt payments, but in due time

By The Star Staff

Financial Oversight and Management Board Executive Director Natalie Jaresko provided details Thursday on the board’s fiscal year 2022 budget and gave assurances that debt payments will be included but only after the commonwealth debt adjustment plan is confirmed.

“We have to respect the judge and the court,” she said. The oversight board recently filed a debt adjustment plan and a disclosure statement that is expected to be in place by December.

Jaresko said the budget will have to be amended to consider debt service payments in the timeframe upon confirmation. Besides debt service, there are other costs related to agreements with the island’s labor unions, and the contingent value instrument, or CVI, a pension trust calculation that will have to be included in the budget.

The governor presented his own $10.3 billion budget, which is $233 million higher than the oversight board’s budget of $10.1 billion. The House of Representatives said it will use the board’s budget as a basis for evaluating the governor’s budget proposal.

Jaresko said the estimated $600 million to $700 million that will be included in the budget to pay debt service will be added upon confirmation of the budget and not now, as the House of Representatives has said it will do.

The oversight board’s General Fund budget is only one of three parts of the total government budget, which uses three sets of funds to operate. The first is the General Fund budget, which pays for daily operations and contains the bulk of revenues. The second is the special revenue fund, which contains money from fees and licenses, and the third is made up of federal funds.

The $233 million difference between the governor’s budget and the oversight board’s budget is because the governor expects Congress to approve a substantial amount in Medicare funds. But Jaresko said the board made the budget expecting Congress to approve Medicaid funding with a $400 million cap.

Regarding the budget, about 72% of the oversight board’s budget has been set aside for public education, public safety, public health and pensions.

The budget has $4 billion for social wellness and related spending. About $649 million from the General Fund budget and $240 million in a special revenues fund will be set aside to support economic development initiatives, Jaresko said.

“The board is keenly focused on economic development,” she said.

Regarding cuts made to the University of Puerto Rico, Jaresko said those were not being negotiated with the governor but that the oversight board was looking at the maintenance of effort, or MOE, language or provisions often used by Congress to try to ensure federal funds supplement rather than supplant state investment. The goal is to use federal funds to cover some of the gaps, she said.

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