Puerto Rico Governor Ricardo Rosselló sent a letter this week to PROMESA Board Chairman José Carrión outlining the actions he has taken so far and the actions he plans to take to address Puerto Rico’s debt crisis.
Rossello’s letter began by expressing some degree of agreement, but also taking a stand on points of disagreement:
We thank you for the clarity of your views and agree on certain baseline views of the fiscal situation. However, we are still in the process of obtaining and assessing critical financial information and must note that we have a clear difference in approach and outlook from those expressed in your letter. It is my view, that any fiscal plan premised exclusively on a reduction in the health, well-being, and living standards of the People of Puerto Rico through healthcare delivery cutbacks, current retiree pension reductions of our most vulnerable segments of the population, and layoffs is by its nature unacceptable. It is also inconsistent with PROMESA, which requires the preservation and delivery of essential services and adequate funding of public pension benefits. I firmly believe that we should endeavor to jointly create a fiscal plan that (i) reflects a consensus between my office and the Oversight Board and (ii) meets the statutory requirements for certification by the Oversight Board.
The letter goes on to list a number of Rosselló’s actions, including specific decreases in government spending, the establishment of a Center for Federal Opportunities to address the board’s complaint that “there is no central office to manage federal funds,” and an executive order requiring all government agencies to establish zero-base budgeting.
The letter then details the requirements presented by the fiscal oversight board:
1. Increase government revenues by $1.5 billion annually;
2. Generate approximately $1.5 billion in savings annually by “Right-sizing” the Government;
3. Generate annual savings in health care spending of $1.0 billion;
4. Realize approximately $0.3 billion in annual savings from reduced subsidies to UPR;
5. Reduce approximately 10% in pension costs and related expenses for savings of $0.2 billion;
6. Target $800 million in available funds for annual debt service
Each of these items is then responded to with actions already taken, actions planned, and areas in which Rossello does not accept the requirements. These responses reiterate the governor’s intention to spare the people of Puerto Rico unacceptable hardship while working toward economic growth for Puerto Rico.
The letter concludes, “Our goal is to achieve fiscal responsibility through bold, innovative and reformative efforts. These changes need to always have the best interests of the people of Puerto Rico as a top priority… it is imperative to get access to instruments of economic growth, and equal treatment as a State. If history has taught us anything, it is that these instruments will be critical to the overall success of Puerto Rico.”
Public Affairs Secretary Román Rosario said that the letter demonstrates cooperation and good faith on the part of the new administration, and said further that it is “essential that they respect the actions of the persons who have been chosen democratically.” Rossello has said in the past that he believes that cooperation with the board and fiscal responsibility on the part of Puerto Rico’s government will prevent the fiscal oversight board from interfering in day to day governing.