Puerto Rico rejects pension cuts sought by federal board

SAN JUAN, Puerto Rico — Puerto Rico government officials said Friday they will not bow to demands from a federal control board overseeing the island's finances that they implement cuts to a struggling public pension system as part of an upcoming fiscal plan to help pull the U.S. territory out of an economic crisis.

Gov. Ricardo Rossello told reporters the biggest disagreement between his administration and the board is over a proposed average 10 percent cut to pensions of more than $1,000 a month paid by a system facing nearly $50 billion in liabilities.

Christian Sobrino, the governor's representative to the board, defended the government's revised fiscal plan and said it would generate a $5.5 billion surplus in upcoming years and help reverse the economic slump while avoiding the elimination of vacation or sick days and reductions in maternity leave, among other things he said the board has proposed.

"We're not talking about business as usual here in Puerto Rico," Sobrino said. "The fiscal plan recognizes the island's fiscal and demographic spiral. If we don't stop it, the game is over. Puerto Rico will be a footnote in the history of the Caribbean."

The board had been expected to vote on the revised fiscal plan Monday, but it announced Friday that it was postponing the vote, without providing a new date. The board has the power to implement its own measures if it disagrees with those proposed by the government.

Sobrino warned that the board is considering some measures which would have a detrimental effect on an island mired in an 11-year-old recession as it struggles to rebound from Hurricane Maria and restructure a portion of its $73 billion public debt.

Some members of the U.S. Congress also weighed in Friday on the upcoming fiscal plan, with 35 of them signing a letter voicing opposition to privatizing much of Puerto Rico's Department of Correction and Rehabilitation. They said the move would increase the island's deficit and lead to higher rates of recidivism.

Many in the U.S. territory of 3.3 million people are wary of the overall proposed fiscal plan and fear they will struggle economically more than before even as they try to recuperate from Hurricane Maria. Nearly 100,000 power customers remain in the dark six months later, and more than 130,000 people are estimated to have left the island since the storm, according to one study.

Anger also is building after Rossello submitted a labor reform measure Wednesday that in part calls for reducing vacation and sick days from 15 days a year to seven and eliminating a Christmas bonus that most public and private sector employees have received for decades. The measure also would increase the minimum wage from $7.25 an hour to $8.25 by 2021.