The disagreements between the Fiscal Control Board and the central government over legislation inconsistent with the promises of the Promesa law came to life again with the three measures signed to extend retirement benefits, which the regulator does not rule out challenging in court.
In an interview with THE SPOKESMAN, the executive director of the fiscal body, Natalie Jaresko, opined that laws 80-2020, 81-2020 and 82-2020 were signed by Governor Wanda Vázquez without an accurate analysis of their long-term economic viability. Based on the board’s analysis, the three statutes could increase government spending by $ 8.3 billion over the next 30 years.
“Since last June the government has been required to demonstrate the financial viability of the statutes and they have not been able to offer all the information on which they were based to approve them. For months everything they offer is half. This costs money and we need to know that it is not a promise that cannot be paid, ”said Jaresko.
Against this background, the executive director of the board assured this newspaper that if the governor fails to demonstrate the viability of the laws, he could go before federal judge Laura Taylor Swain to demand that the statutes be annulled, as they did with the Law for the Reduction of Administrative Burdens of Municipalities (Law 29 of 2019).
“We can take action to the extent that we understand that it is necessary. We hope that (the government) will submit today (yesterday) the information that we are asking for. This is serious business. If you can come up with an appropriate plan on how you will pay those benefits, you would be preventing us from litigating in court, ”Jaresko said.
Lay off thousands of employees
Although the governor affirmed yesterday that, despite the opposition of the board, she will continue with her intention to “do justice to the retired from the public service,” Jaresko made it clear that the statutes are not consistent with the certified fiscal plan for the current fiscal year. and that, therefore, cannot be implemented.
Likewise, he emphasized that if Vázquez continues with the implementation of the statutes – despite the above – it would be opening the door for the government to be forced to significantly reduce its workforce to mitigate the impact that the aforementioned laws will have on government coffers. Some 15,000 people will have to be laid off in order to balance finances, according to Jaresko.
“If the government remains committed to implementing these additional retirement benefits, it will have a very difficult decision to make. If this is the priority, we are not going to oppose it, but this (the layoffs) is what it means, “he added.
17,000 could retire
Of the three statutes, Jaresko indicated that the most that worries him is Law 80, with which an early retirement window is offered, payment is increased and health benefits are added. For this window, some 17,000 people are eligible, of which 7,400 are central government employees, 7,200 are municipal officials and another 2,400 correspond to public corporations.
“The number of people who are eligible to retire under these laws is greater than the 3,200 people envisaged by the fiscal plan and who would not be replaced. If the idea is not to replace them, that would be a greater austerity measure than those imposed by the board in the fiscal plans. However, I don’t think that’s what happens, ”added Jaresko.
According to the analysis of the fiscal entity, Law 80 will have a negative economic impact of $ 4,200 million. At the moment, the government allocates $ 2 billion from the General Fund to pay pensions.
Sing to the municipalities
The executive director of the board also emphasized that the most recent payroll of the municipalities is 35,000 people, so if 7,200 employees take advantage of the retirement window and are not replaced -as the government proposes-, they would be losing 20 % of your staff permanently.
“For the municipalities this represents 20% of their employees. The government says it will save $ 6.2 billion in savings if no one is replaced. You have to talk to the mayors to see if they agree that 20% of their employees leave and are not replaced, ”Jaresko said.
Regarding Law 81 -which seeks better retirement benefits for the police and firefighters-, Jaresko said that it could lead to a national security problem because it would encourage public security employees to retire at a time when the workforce has been affected.
Currently, the Police maintains some 13,388 employees. Of these, 6,991 are eligible for retirement through the aforementioned statute. “The Island needs these people. We do not recommend these cuts. If you encourage the retirement of experienced officers and replace them with newcomers, you still have an increase in expenses and it is not sustainable, ”said Jaresko.