Governor Rosselló presents Budget 2018-2019 before the Legislative Assembly

(May 22, 2018 - San Juan) After cutting 22 percent, compared to the last budget of the previous Government, Governor of Puerto Rico Ricardo Rosselló presented before the Legislative Assembly the budget for the fiscal year 2018-2019, amounting to $8.730 billion, as well as the consolidated budget of $25.323 billion.

The chief executive informed that $7.015 billion will be allocated for government operations.

Rosselló urged the Legislature to evaluate what has been achieved after a dialogue session with the Financial Oversight and Management Board to prevent the federal entity from eliminating the Christmas bonus for public and private employees, to reduce holidays and sick leave to which employees of the private sector are entitled, as well as the funds that municipalities need.

"No one should hope that these disputes are subject to the mandate of a federal court. No one", sentenced the governor during his speech in the Chamber of the House of Representatives.

"I ask for your trust so that we can take this important step together. So that those families that are seeing us in their homes and are considering leaving Puerto Rico, see in this budget agreement an initial step for a new opportunity to stay here, in their homeland", added Rosselló.

The chief executive informed that the payment to pensions is guaranteed. And through what was discussed with the Financial Oversight and Management Board, the disbursement of $78 million approved by the Legislature for the municipalities during the current recovery period, is also guaranteed.

The Municipal Economic Development Fund of $50 million per year is also created and the implementation of the New Tax Model for Puerto Rico is guaranteed.

The agreement also includes the allocation of an additional $25 million for the University of Puerto Rico and the creation of the new Emergency Fund, necessary to face any catastrophe in our Island.

As part of the agreement with the Financial Oversight and Management Board, it is necessary to legislate in order to nullify Law 80, but it is ensured that no other law or worker rights will be affected.

“Ladies and gentlemen legislators: you know everything that is at risk. I already exercised my responsibility and I fully trust in the commitment you have with Puerto Rico. All plans and agreements have their strengths and weaknesses.

This one unites us in the vast majority of its parts and could disunite us in a single area. My call to you is that we achieve this agreement together and take the step towards the first year of the economic growth of Puerto Rico in a decade”, said the governor.

The chief executive stressed that the budget agreement contemplates the salary increase of $1,500 per year for all teachers in the public system. It also guarantees the annual salary increase of $1,500 for the Police.

Likewise, Rosselló stated that after an agreement for the budget is reached, the necessary changes will need to be continued for the reconstruction of a new Puerto Rico, for which he established several priorities.

“The priorities are well defined: The reconstruction of Puerto Rico and the biggest transformation in the history of what is known as the government. What does not work, will be changed so that it responds in a more agile and efficient way to the people; and what works, will be modernized to make it better”, he stated.

In addition, the chief executive detailed the different reforms, among which the digital reform stood out in order to have a modern and technologically updated government to facilitate services to citizens. Also, the education transformation that was established to change to a system that has the students as its most important reason.

On the other hand, as the governor explained, the new tax model aims to redistribute the tax burden, doing justice to the worker and the middle class, by stimulating economic development and investment in our Island.

In addition, Rosselló explained that the work bonus will be created, where the employee can receive, in addition to the Christmas Bonus, between $300 to $2,000 per year. Also, for the first time since its creation, the Sales and Use Tax (IVU, for its Spanish acronym) will be reduced to processed foods from 11.5% to 7%; besides gradually eliminating the tax known as the Business to Business (B2B).

"This, to fulfill our promise to reduce and eliminate the unnecessary taxes that the previous administration left us", said Rosselló.

The governor highlighted the importance for Puerto Rico of the Plan of Action submitted for the use of the Community Development Block Grant (CDBG) funds allocated by the federal government as a consequence of the damages caused by Hurricane Maria.

According to what was informed, starting in August, the awarding and development of projects—which in the first phase will exceed the $1.5 billion that will be used in a period of two years—will start.

“Through the correct use of these resources, $817 million will be allocated for the rehabilitation of homes, with the relocation of communities from vulnerable areas to safe areas, developing the necessary infrastructure for these projects,” Rosselló explained.

The governor added that “120 million dollars will be used to provide financing for the construction of new housing projects. Similarly, over $19 million will be allocated to meet the specific needs of the homeless and survivors of gender violence.”

The Plan of Action of the CDBG funds includes over $150 million for the financing of commercial projects, investment in infrastructure, and programs for the development of new businesses.

The second phase of the CDBG funds provides for the allocation of an additional $18.5 billion, for which the local Government is in communication with the federal Government to proceed with compliance of what is required, through another Plan of Action that will define priorities and projects of critical infrastructure for the Island.

“The allocation of these federal funds represents our connection to the future; It represents a unique opportunity to activate our economy and transform the lives of thousands of families facing difficult conditions today”, expressed the governor.

“I reaffirm to the people of Puerto Rico that our Administration will be focused on ensuring that these funds are used correctly and those who attempt to challenge this warning will have to face the full weight of the law”, he added.

However, the chief executive said that the solution to the economic and financial problems of the Government cannot rest on federal allocations that come as a result of the damage caused by a hurricane.

“The root of the problem lies in the inequality suffered by the American citizens who live in Puerto Rico. It is a civil rights problem that cannot be ignored, neither in Puerto Rico nor in Washington. It is a problem that is solved with statehood,” concluded the governor.