Puerto Rico Governor Rejects Budget in New Clash With Federal Control Board

The Puerto Rican flag flies in front of Puerto Rico’s Capitol in San Juan, Puerto Rico.  (AP Photo/Ricardo Arduengo, File)

By DÁNICA COTO, Associated Press

SAN JUAN, Puerto Rico (AP) — Puerto Rico’s governor announced Thursday that he was rejecting a proposed $12.4 billion budget filed by a federal control board overseeing the island’s finances and would submit his own version as the U.S. territory emerges from bankruptcy.

The announcement is the latest clash between the board and Gov. Pedro Pierluisi, who criticized it for insisting on reducing government costs by nearly $100 million.

“We’re not going to give up in our fight,” he said.

Pierluisi said estimated future collections are high enough to offset government costs and that he would submit a separate budget on Friday.

A spokeswoman for the board said there would be no immediate reaction.

The budget that the board submitted to legislators on Wednesday would have been the first balanced one since Puerto Rico filed for the largest municipal bankruptcy in U.S. history after announcing in 2015 that it was unable to pay its more than $70 billion public debt load. The debt was accumulated through decades of mismanagement, corruption, and excessive borrowing.

The board noted that its proposed budget dedicates almost 70 percent of revenue to education, public safety, health, pensions, and economic development. It also contains pay increases for public workers that have long demanded them.

“The budget is consistent with Puerto Rico’s path to fiscal responsibility and provides the government with the stability that is critical in this time of global economic uncertainty,” said board chairman David Skeel.

The board has stressed that it will remain in place by law until four consecutive budgets are approved.