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Legislators Spare Themselves An Unkind Cut

by Robert Becker

June 29, 2001
Copyright © 2001 THE PUERTO RICO HERALD. All Rights Reserved.

Faced with the challenge of balancing its first budget, the Puerto Rico Legislature took a deep breath, and punted.

For the first time, the Legislature failed in its constitutional obligation to present the governor with a balanced budget. The final details are still being worked out in conference committee, but the House and Senate have, in rubber stamp fashion, passed the tough decisions on to Gov. Calderón.

The Legislature, controlled by Calderón’s Popular Democratic Party, was looking at a last-minute $205 million deficit. That came atop a 2000-2001 fiscal year deficit of $245 million, which will be paid off through long-term borrowing.

Calderón’s budget planners had projected expenses for fiscal year 2001-2002 of some $7.6 billion, against anticipated revenues of $7.4 billion. With a June 30 deadline racing towards them, the legislators passed a budget with the deficit with an authorization included to allow Calderón to do the necessary cutting.

The instrument was a 4.2 percent cut to be applied to all commonwealth agencies, with a few exceptions which I’ll get to in a moment.

The commonwealth budget is huge, reflecting the intervention of the central government into nearly every corner of Puerto Rican life. This year’s consolidated budget is $20.59 billion. It includes the $7.4 billion general fund revenues which the legislature has been concerning itself with, plus the budgets of Puerto Rico’s mammoth public corporations, its infrastructure projects, federally-funded programs, debt services and myriad other expenses.

New Progressive Party legislators, who are in the minority, threatened to sue Calderón over passage of the unbalanced budget. Their threat is unlikely to go anywhere. But the budget shenanigans have opened wounds even within the PDP.

Franciso Zayas Seijo, the chairman of the House Finance Committee, laid the blame for the fiasco on Calderón’s own budget planners. He said that Juan Agosto Alicea, president of the Government Development Bank, and Treasury Secretary Juan Flores Galarza had failed to give legislators proper warning about the $205 million shortfall.

Zayas had reason to grouse. He had been working for four months with budget figures presented to him by Agosto Alicea and Flores, only to have them changed at the last minute as the House was preparing to vote last week on the budget.

In a burst of unusual candor, Zayas said that the administration’s budget miscalculations had done “great political harm to the Popular Democratic Party.”

Zayas, who represents the PDP stronghold of Ponce, explained that PDP supporters who had expected to get government jobs as of July 1 will be left out in the cold -- or in the warm tropical sun -- because of the cuts that will have to be made at government agencies.

“There is a great uneasiness among our people,” he told reporters.

Zayas’s comments provided a rare inside look at how Puerto Rico’s political spoils system works. It was, first of all, a clear acknowledgment that getting a job with the new government was first and foremost a matter of party loyalties, qualifications notwithstanding. It also showed how such political considerations, at least from the standpoint of legislators, were tightly woven into the budget process -- an exercise which, at least on paper, is supposed to be done in the general public interest.

Calderón, to her credit, was willing to take on the politically messy job of balancing the budget -- in effect, cleaning up the mess created by her own planners. “I will straighten out the finances of this country,” she declared before embarking on a lobbying trip to Washington, D.C. in search of tax incentives for Puerto Rico. Given the antipathy towards Calderón in Congress over her Vieques stance, she was less likely to be successful in convincing Congress once more to give Puerto Rico special treatment.

When the dust had cleared in San Juan, most commonwealth agencies were lined up for their dose of austerity castor oil. Among the exceptions were the Comptroller’s Office and the Government Ethics Office, politically popular because of their corruption-fighting image; the education and agriculture departments, the recipients of Calderón campaign promise largess; and the PDP-dominated courts system, which have complained for years about starvation budgets doled out by the former Rosselló administration.

There were two other agencies exempted from the cuts that made no claims about fighting corruption nor past penury. Members of both the House and the Senate, who enjoy an unmatched compensation package of salaries, perks and chauffeured vehicles, spared themselves the pain of the budgetary knife.

Robert Becker, Managing Editor of The San Juan Star, writes the weekly Puerto Rico Report column for the Puerto Rico Herald. He can be reached directly at:

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