Wednesday, May 3, 2006

From combined dispatches

Puerto Rico remains in a state of fiscal crisis after its governor, Anibal Acevedo, walked out of negotiations with the island’s House of Representatives.

The Miami Herald reported that Mr. Acevedo left 10 minutes into a meeting with House leader Jose Aponte Tuesday night after the two failed to reach agreement on a resolution to the ongoing crisis that has led to a shutdown of “non-emergency” government offices.

Mr. Acevedo says the Puerto Rican government’s payroll is facing a $740 million deficit through the end of the June 30 fiscal year. Mr. Acevedo is asking for a line of credit and 7 percent sales tax to end the government shutdown.

Mr. Aponte has refused the sales tax and accused Mr. Acevedo of “hoarding money,” according to the Herald.

After leaving the meeting, Mr. Acevedo told reporters “he disrespected me.”

The government shutdown has lasted nearly a week, leaving 95,000 government workers temporarily unemployed. The island’s school system has been temporarily shut down as well, with an estimated 500,000 students and 40,000 teachers missing the last two weeks of classes.

The Orlando (Fla.) Sentinel reported that Mr. Acevedo and the legislature have reached a temporary agreement to fund 11 of the island’s 43 government agencies through the end of June. The $114 million cash infusion will come from Puerto Rico’s government emergency fund.

Since the shutdown began, hundreds of government employees have shown up seeking unemployment benefits, according to the Associated Press. The unemployment office is one of the few non-emergency agencies left open, with employees seeking up to $133 in weekly benefits.

“I am up to my neck in debt,” Angel David Salgado Rodriguez, a 21-year-old driver for the Housing Department, told the Associated Press. “If this doesn’t get resolved, I am going to look for another job on the side and fend for myself.”

Puerto Rico’s government is the island’s largest employer, with nearly 200,000 people on the payroll. Several of the government’s most basic duties, including the administration of building permits and driver’s licenses, have been shutdown during the crisis, according to the Associated Press.

After strong opposition from the New Progressive Party, Mr. Acevedo publicly announced he would lower the 7 percent sales tax proposal to help Puerto Rico finish its fiscal year. However, the island’s House of Representatives and Senate have not yet sent Mr. Acevedo a budgetary proposal.

Puerto Rico’s credit rating already is on alert status and could be further damaged if the crisis is not resolved soon, Mr. Acevedo said.

“We’re getting dangerously close to a point of stagnation or recession if this goes on indefinitely,” University of Puerto Rico economics professor Argeo Quinones told the Associated Press.

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