Updated at 3/13 1:51 pm
Puerto Rico’s fiscal board, created through the enactment of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), voted unanimously this morning to certify Puerto Rico Governor Ricky Rossello’s fiscal plan, provided that two amendments are made.
One amendment would institute the Board’s earlier proposal for furloughing most government employees four days a month, with two days for teachers and none for law enforcement officers, at the beginning of Puerto Rico Fiscal Year 2018 July 1st and eliminate the annual “Christmas” bonus for government workers if the Government does not come up with plans to increase liquidity by $200 million and implement its plan to “right-size” its operations in a FY 2018 budget proposal by April 30th. If it does, the cost-savings measures would be delayed until September 1st. A further determination would then be made as to whether the savings measures are needed or to what extent needed.
The other amendment would require an agreement between the Government and the Board to reduce pension costs 10% by 2020 to be reached within 30 days and finalized by June 30th. The board seeks to reform Puerto Rico’s pension system into a defined contribution plan. It estimated that Puerto Rico currently has $50 billion in pension obligations, only 8 percent of which are funded.
At the outset of this morning’s session, PROMESA oversight board chair José Carrión briefly addressed efforts to revise the Governor’s fiscal plan. According to Carrión, the board and the Rossello administration engaged in discussions after Governor Rossello delivered a revised fiscal turnaround plan to the PROMESA board on Saturday, March 11. The revised plan included $262 million in additional revenue and changes to healthcare funding. Negotiations over the follow up proposal are reflected in the proposal released today.
The governor’s initial plan, presented on Feb. 28, was rejected by the board, which claimed the proposal relied on overly optimistic baseline revenue assumptions and economic growth forecasts.
Click here for a copy of the plan revised and submitted today.