Puerto Rico governor to announce billion-dollar budget cut
SAN JUAN, April 29 (Reuters) - Puerto Rico's governor is expected to announce a billion-dollar cut in public spending on Tuesday night as commonwealth government agencies brace for measures that will be taken to produce the first balanced budget in years.
Governor Alejandro Garcia Padilla, who will reveal his plan in an address the legislature, has said everything is on the table except firing public employees. Officials have said a 10 percent across-the-board cut in government agencies is coming.
But with payroll accounting for $6.7 billion of Puerto Rico's current $9.8 billion general fund budget, options for cuts without layoffs are limited. The commonwealth's current consolidated budget, which includes federal funding, surpasses $29 billion.
"With his pledge not to lay off more people, he is navigating between a rock and a hard place," said Robert Donahue, managing director at Municipal Markets Advisors. "I think there will be a little bit of everything."
Officials have denied speculation that the government will try to restructure its debt. Treasury Secretary Melba Acosta and Chief of Staff Ingrid Vila have said the budget will stay current on its $73 billion debt load.
The proposal is expected to include eliminating and fusing about 20 government agencies to save money, according to media reports published Tuesday.
House Treasury Committee Chairman Rafael Hernández Montañez said the commonwealth government would no longer provide subsidies to public corporations, and that new legislation would order their directors to become financially self-sufficient, including renegotiating with contracted suppliers and employees.
"There will be across-the-board adjustments that will be fair to all, but there are a lot of adjustments that need to be made within each agency or public corporation," Hernández said.
In February, when Garcia Padilla pledged to investors to deliver a balanced budget, he said making the government's public corporations self-sufficient is "one of the most significant, greatest challenges" facing Puerto Rico. Continuación...