Puerto Rico’s governor Alejandro García Padilla has issued an executive order that specifies the sources for clawback of debt service funds that he says will pay for operating expenses of the government and to continue to provide critical services to the citizens of Puerto Rico
Executive Order number 46-2015 is dated November 30, 2015, but was released on December 1st following the US Senate Judiciary Committee’s hearing on Puerto Rico .
The agencies that are to be affected directly by clawback of debt service are:
- ACT (HTA – Highway);
- AFI (IFA – Infrastructure);
- AMA (Metro transit); and
- ATI (ITA – Integrated transportation).
A separate clause orders the Department of Tourism to transfer to the Hacienda funds collected for the Convention’s Center.
As justification for the move, Garcia Padilla cites Article VI Section 8 of the Constitution of Puerto Rico:
If at the end of any fiscal year the appropriations necessary for the ordinary operating expenses of the Government and for the payment of interest on and`amortization of the public debt for the ensuing fiscal year shall not have been made, the several sums appropriated in the last appropriation acts for the objects and purposes therein specified, so far as the same may be applicable, shall continue in effect item by item, and the Governor shall authorize the payments necessary for such purposes until corresponding appropriations are made.
The document details the significant steps he says his administration has taken to address the island’s financial crisis.
This administration has taken extraordinary measures to attack the country’s fiscal crisis by reducing spending of the government, increasing revenues, and [implementing] structural changes.
The order specifies that the clawbacked funds be limited only to the amount necessary to pay debt while continuing to provide “security, health, education, and public order”. The funds are to be held in a separate account that can only be used for the repayment of the debt.
Late Tuesday afternoon Dan Hanson at Height Securities estimated that clawbacks for fiscal year 2016 could total $1.01 billion.
For more on today’s hearing, listen to the PRNewsRoundup.com podcast with Kike Cruz, Cate Long, and Gil Hall.