THE LOCAL FINANCIAL BOARD AND THE FEDERAL FINANCIAL CONTROL BOARD

Today the Governor sent to the Legislature the “Law of Fiscal Responsibility and Economic Revitalization of Puerto Rico”. The Law creates a Fiscal Supervision and Economic Renewal Board“. You may ask what is the difference between this and the Federal Financial Control Board I have been advocating for some time. I will briefly try to explain it.

The Local Board has five (5) persons who will receive whatever compensation the Governor determines. The Control Board in Washington has 5 who serve without salary. In addition, Article 208 of the law gives powers to the Local Board that probably violate the Separation of Powers of the PR Constitution. This limitation would not exist with a Board like the one used in Washington since Congress has the power pursuant to the Territorial Clause of the Federal Constitution to “dispose of and make all needful rules and regulations respecting the territory”. And Federal law is the “Supreme law of the land” and can abrogate state or territorial statutes and constitutions.

Besides, since the Federal Board would not be tied to local parties or governor it can take those measures necessary to bring sound fiscal policy and make the difficult decisions that politicians do not want to take. If anyone thinks the Governor is not going to appoint those loyal to him and his party, I have a little bridge in Brooklyn I can sell you. Finally, the local board may be eliminated by the next government repealing the law, which creates it, but the Federal Board could only be eliminated by an Act of Congress. .

The Local Board law is nothing more than a Law 66 that creates a bureaucracy that will consume, at least, $12,000,000 a year to do what the Governor is supposed to do but is incapable of doing.

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2 comments

  1. The Board does not have enforcement powers. It can only issue notifications that the Budget submitted by the Governor and approved by the Legislature is not in accordance with the Growth and Fiscal Plan. The law also requires the Board to monitor budget implementation and issue notifications of deficiencies. This task will require an army of accountants and budget officials to follow more than 100 spending entities, unless the Board chooses to rely on the numbers provided by Office of Management and Budget and Hacienda.

    The only effective enforcement tool in the bill is the power to impose a $5,000 penalty to heads of agencies and departments for each instance in which they go over the budget. Imagine how the guy who nows manages ASES, the health insurance agency in Puerto Rico, will respond to this penalty. The Board will not be the imposing this fee.

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