Sunday, June 15, 2014

Puerto Rico: House Passes Emergency Funding Legislation 26-19, Commonwealth Drowning in Debt

According to The Latin American Tribune, the House of Representatives of Puerto Rico passed a controversial fiscal emergency bill despite the staunch opposition of some public employee unions.

The bill passed Friday (June 13) with a vote of 26-19 with two abstentions, which hardly had consensus.

The Utier union representing electrical industry and irrigation workers staged a protest, which briefly turned violent, outside the legislative building.

However, popular support for anti-austerity protests has not been widespread limited due in part to agreements reached between the island’s government and some of the public-sector unions.

COMMENT: Some Puerto Ricans view the protests as an attempt by the unions to shield themselves from spending cuts that many be deemed necessary if the US commonwealth is to emerge from more than seven years of recession.

The Fiscal Sustainability Act would prohibit workers from cashing in on unused sick days, reduce Christmas bonuses to workers to $600 and freeze salaries.

Gov. Alejandro García Padilla has argued that the only way for employees of the heavily indebted Puerto Rico Electric Power Authority (AEE) to keep their benefits would be to raise electricity rates or lay off a portion of its employees.

Many other public agencies and corporations simply lack the funds to continue to operate, rendering it necessary to adjust their collective bargaining agreements, according to the Governor.

The bill will next go the Senate of Puerto Rico, although some union leaders have urged the upper house’s president, Eduardo Bhatia, not let it come up for debate and instead promote a measure to restructure the island’s hefty public debt load of more than $73 billion.

To make matters worse, Puerto Rico’s debt was downgraded to junk status by all three credit rating agencies: Standard & Poor’s, Moody’s and Fitch  earlier this year [2014].