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Puerto Rico Gov Submits $25B Budget    05/23 06:07

   SAN JUAN, Puerto Rico (AP) -- Puerto Rico's governor proposed a $25 billion 
budget to the island's legislature Tuesday in which retired government workers 
would keep their monthly pensions uncut and public school teachers and police 
officers would get pay raises.

   The budget also contains $25 million for a voluntary buyout program as the 
U.S. territory's government faces new austerity measures while it struggles to 
recover from Hurricane Maria amid an 11-year recession.

   "There are a lot of challenges to overcome, but I'm certain we are headed in 
the right direction," Rossello said during his annual budget address.

   The governor kept his promise not to implement a 10 percent reduction to the 
public pension system as sought by a federal control board overseeing Puerto 
Rico's finances. While the proposed cut to a system facing nearly $50 billion 
in liabilities might not be made in the upcoming fiscal year, it could come the 
following year.

   Rossello delivered his address two days after he reached a tentative deal 
with the control board to reverse its decision to eliminate a Christmas bonus 
and reduce vacation and sick days for public workers. In exchange, Rossello 
said Puerto Rico would adopt at-will employment for the private sector as part 
of an overhaul of local labor laws, including a new work requirement for 
certain people enrolled in a nutritional assistance program.

   "For those families ... who are thinking about leaving Puerto Rico, look at 
this budget deal as a first step for a new opportunity to stay here," the 
governor said.

   However, the deal with the board is still tentative because Puerto Rico's 
legislature first has to agree to at-will employment, in which employers would 
be able to dismiss a worker at any time without having to prove just cause.

   "In my opinion, it's bad," said Thomas Rivera Schatz, president of the 
island's Senate and a member of the governor's party.

   The budget submitted by Rossello also calls for a $50 million-a-year fund to 
help municipalities and a $25 million fund for scholarships to the University 
of Puerto Rico, which will see its undergraduate cost rise from $57 per credit 
to $115 by next year and then to $157 by fiscal year 2023.

   In addition to a $1,500 annual salary increase for teachers and police 
officers, the budget would slash an 11.5 percent sales-and-use tax on processed 
food to 7 percent starting in August.

   Rossello also said his administration would start renovating roads with $600 
million in local and federal funds following Hurricane Maria, which caused 
overall damage estimated at more than $100 billion. He said Puerto Rico also 
has an additional $817 million to renovate homes and some $120 million to build 
new housing projects.

   However, Rossello said federal funds cannot be the only solution to Puerto 
Rico's economic problems, saying that statehood is needed.

   "It's a problem of civil rights that cannot be ignored, neither in Puerto 
Rico nor in Washington," he said.

   Rossello pledged his administration also would soon release long-awaited 
audited financial statements for 2015 and 2016 and noted that the $7 billion 
set aside for upcoming government operations is 22 percent less than the budget 
approved by the previous administration.

   Some criticized Rossello for not including budget cuts sought by the control 
board for the island's legislature and the office of Puerto Rico's 
representative to Congress.

   "The priority should be social spending, not political spending," Jose 
Caraballo, president of Puerto Rico's Association of Economists, told The 
Associated Press.

   He said federal hurricane recovery funds will help the island's economy grow 
in the next two years.

   "But it's not because we're truly doing better," he said. "The exit from 
this crisis will take longer than we think."


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