Puerto Rico governor rejects budget in challenge to board

SAN JUAN, Puerto Rico — A disagreement over which budget Puerto Rico will use this fiscal year has deepened as the governor of the U.S. territory on Monday signed the version approved by legislators instead of the one implemented by a federal control board over the weekend.

Gov. Ricardo Rossello said the board's budget is not in Puerto Rico's best interest and that he is prepared to defend his decision, leading many to believe the issue might end up in court as Puerto Rico tries to restructure a portion of its $70 billion public debt load amid an 11-year recession.

"I'm going to use all the tools I have in my arsenal to be able to defend the people of Puerto Rico," he told reporters.

However, Rossello acknowledged that Puerto Ricans struggling after Hurricane Maria could still be hit by new austerity measures.

"I fear this is a symbolic gesture," he said, referring to the signing of the legislators' version of the budget. He added that a judge could rule in favor of the board.

Natalie Jaresko, the board's executive director, told a round table of reporters Monday afternoon that she was not aware of Rossello's actions and said the board will talk with government officials before taking any steps.

"We will do everything within our means...to enforce the budget," she said. "Courts are the first thing that comes to mind."

However, she added that going to court would be "an unfortunate use of energy, efforts and taxpayer funds."

Rossello later held a televised public address in which he called for an extraordinary legislative session in the hopes it would help overcome the differences between the board and his administration. He said legislators would consider several measures including one that would reduce tax rates for individuals and corporations and another that would repeal a law that affords protections to workers who might have been unfairly dismissed. The board had said that if legislators repealed that law, it would help boost the island's economy and would allow it to grant certain concessions that Rossello's administration was seeking, including keeping a Christmas bonus.

Rossello's announcement comes a day after the board that oversees the island's finances approved an $8.76 billion budget that cuts government spending by $345 million, including a $24 million cut for the legislature, which would operate with $111 million for fiscal year 2019. It is the smallest approved budget since fiscal year 2004 and allocates $1.5 billion to education, $790 million to public safety and $413 million to corrections. It was not immediately clear how those allocations compared to previous budgets, since the one implemented by the board was structured differently. The budget aligns with the board's fiscal plan and the austerity measures it contains, including a sharp increase in tuition at Puerto Rico's largest public university and deep cuts to employees' vacation and sick days.

On Monday, government officials said that some 4,500 public employees have signed up for a type of buyout plan aimed at reducing spending without resorting to layoffs.

The governor said he hopes the island's Senate and the board can still reach an agreement that benefits the 3.3 million people of Puerto Rico, many of whom fear they will face even greater economic hardship in the future. More than 2,000 customers still remain without power more than nine months after the Category 4 storm hit, causing what is estimated to be more than $100 billion in damage.

"We will not rest until all of Puerto Rico is illuminated," Walter Higgins, CEO of Puerto Rico Electric Power Authority, said in a statement Monday.