From the Miami Herald: ( www.miami.com/mld/miamiherald/14438145.htm )
Governor says Puerto Rico on verge of shutting down
A looming fiscal crisis and a political deadlock threatened to halt Puerto Rico's essential governmental services.
BY FRANCES ROBLES
More than 1,500 schools will close Monday and up to 200,000 public employees will hit the streets if Puerto Rico's Legislature doesn't approve a line of credit to keep the government operating, Gov. Aníbal Acevedo Vilá is warning Puerto Ricans.
Facing a severe fiscal crisis and a political stalemate with the opposition party, Acevedo is asking the Puerto Rico Legislature to approve a $638 million line of credit -- or he'll shut down all but essential government offices.
The governor's office said such action would be unprecedented.
Come Monday, Acevedo said in a televised address Tuesday night, the government will simply run out of money to pay its 225,000 public employees through the end of the fiscal year, June 30.
He said the move would affect 575,000 students, more than half of all students on the island.
''Nothing like this has ever happened before in Puerto Rico,'' said union leader Roberto Pagán of the Service Employees International Union, which represents some 27,000 public employees in Puerto Rico. ``We're all very worried. People are having nervous fits, crying in the workplace.''
But so far, Puerto Rico's House of Representatives isn't budging.
''Beginning [Monday], the majority of central government agencies will not be able to operate, because the Legislature hasn't approved the funds necessary to fund the payroll,'' Acevedo said during his TV address. ``It's inconceivable that the political miserliness of a few can hijack the economic well-being and the emotional stability of thousands of good public employees.''
An ongoing political deadlock between the governor's Popular Democratic Party and the New Progressive Party -- the pro-statehood party that dominates the House of Representatives -- has stalled most of the governor's proposals.
Puerto Rico's Senate approved a $531 million loan Monday, $106 million less than the governor's request.
The governor proposes paying off the loan with a new 7-percent sales tax, but the New Progressive Party wants a 4-percent tax instead. Puerto Rico currently has no sales tax.
Now it's up to the House of Representatives, which meets today.
New Progressive Party legislators flatly refuse to approve any loans for an already deeply indebted island, and say five years of wild spending and growing bureaucracy created the crisis. A loan would only worsen it, they say. The party advocates massive fiscal reform to prevent such shortfalls.
Late Wednesday, House Speaker José Aponte suggested the governor delay distribution of income tax refunds and instead use that money to cover the public payroll.
''Their solution to this is to take out another loan, which is the reason Puerto Rico's debts are not in the millions but the billions,'' said Sen. Pedro Roselló, a former governor who heads the New Progressive Party, in a telephone interview from Washington, D.C. 'The Legislature is saying: `How can you condone doing the same thing you've been doing for five years?' ''
Roselló said the party would also recommend dipping into surpluses in unemployment benefit funds. But he said he recognizes that tapping income tax refunds or unemployment benefits is risky.
''Sure, it's dangerous,'' he said. ``These are alternatives. We're proposing that to counteract having to close down essential services of the government of Puerto Rico.''
Roselló said Acevedo created the problem himself when he vetoed a balanced budget passed by the legislature last year. By doing so, he is operating on last year's budget, which he knew would run out, Roselló said.
In his address Tuesday night, the governor assured the public that agencies that provide critical services such as public hospitals, police and prisons would remain open.
He urged Puerto Rico's 3.9 million residents to contact legislators by phone, fax, e-mail or even in person to insist the loan be approved. With 18 of his party's members in the House of Representatives, he needs eight New Progressive Party legislators to cross party lines.
''They have the solution on the table and they fail to act,'' the governor said. ``Instead, they keep talking and talking about tax and fiscal reform, but in reality they have approved nothing in a year and a half.''
The House, Roselló said, does not plan to even vote on the loan request when it meets today.
''This is an intent to intimidate the Legislature to do something that is fundamentally wrong,'' he said.
Great. I hope it doesn't affect my cruise on May 6th. I hope taxis are running.