“Paying the debt in its totality would have meant taking health benefits away from more than a million people, or having to fire countless police officers and closing the Centro Medico” health facility, Gov. Garcia Padilla said during a televised address. Or, he said, repaying debts fully would mean “going without school transportation and garbage collection.”
The island’s legislature has until June 30 to approve a budget for the 2017 fiscal year, which begins July 1. If the spending plan is not approved, Puerto Rico will use the current year’s spending plan as a framework.
Gov. Garcia Padilla’s proposed budget doesn’t rely on loans to fill the deficit and doesn’t include any tax increases, he said. It is $192 million less than the revised $9.3 billion fiscal 2016 budget, according to the report.
The fiscal 2017 budget is Gov. Garcia Padilla’s last, as he is not seeking re-election. Island officials predict Puerto Rico’s economy will continue its four-year trend of contraction by shrinking an additional 2 percent in fiscal 2017.
Puerto Rico and its agencies owe $2 billion on July 1, including $805 million for general obligations, which Gov. Garcia Padilla has said numerous times that the government does not have the money to pay. The governor’s administration is working on reducing the island’s $70 billion debt burden by asking investors to accept losses on their securities, according to Bloomberg.
Gov. Garcia Padilla announced his budget plan as federal lawmakers work on a bill that would allow the island to restructure its debt. The bill would create a federal board to manage the debt restructuring and oversee the commonwealth’s budgets. The House Natural Resources Committee could vote on the legislation on Wednesday.
“We need congressional action with even more urgency today than when I last addressed the country on April 30,” Gov. Garcia Padilla said, according to the report. “We simply can’t sit here with our arms crossed waiting for something to happen. That’s the point of this budget.”
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