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Puerto Rico on the verge of a shutdown

Marshall, Minnesota
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Puerto Rico on the verge of a shutdown

From the Miami Herald: ( www.miami.com/mld/miamiherald/14438145.htm )

PUERTO RICO

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

frobles@MiamiHerald.com

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.''

POLITICAL DEADLOCK

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.

PUBLIC ADDRESS

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.

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Great. I hope it doesn't affect my cruise on May 6th. I hope taxis are running.

~JS

rio grande pr
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1. Re: Puerto Rico on the verge of a shutdown

you have the governing party asking for a budget that would allow a 7%sales tax, the legislature controlled by the pnp party asking for a 4%, the union workers and the pip party asking to tax banks and american companies and then you have a deadlock situation, people with no paycheck, angry people with dozens of agencies shutdown and you have a recipe for chaos. civil disobedience is already being talked for stores like wal mart, kmart and american fast foods like burger king. protests are dime a dozen and a national strike is not far away from the picture.tough times in paradise for sure.

san juan,Puerto Rico
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2. Re: Puerto Rico on the verge of a shutdown

The insanity of taxing 7% or 4% while these US mega stores take out billions out of PR with almost no tax compared to the ordinary citizen sits at the core of this social volcano.

If it shutdowns good, people should not pay anymore for the mistakes of these 2 corrupt political entities that have brought PR to the edge.

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3. Re: Puerto Rico on the verge of a shutdown

This crisis goes much deeper then American stores taking out billions of dollars. Don't forget that PR runs on a large underground cash economy too. I agree the 7% tax is also unfair as it will just go into the deep pockets of our political leaders. This is just a bandaid for a huge festering wound which has been created. The entire govt needs to be overhauled. The people also need to see how the new taxes will be allocated (improvement of public services, schools, roads hospitals ect...) Also remember that we do pay a 6.6% excise tax on any goods which are imported. Because it is paid when goods enter the country we don't see this outright, but we are paying.

This forum should not be a mode for political discussions and this does not belong here.

Essential services will remain open and I just hope we as the people of PR living in the 21st century are wise and mature enough to learn from past mistakes and realize that violence will never solve this type of problems.

Marshall, Minnesota
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4. Re: Puerto Rico on the verge of a shutdown

The thread was more about the impact on tourism and informational. Not to be a political statement. Also I'm just hoping it won't affect taxi's

~JS

STRONGSVILLE,OH
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5. Re: Puerto Rico on the verge of a shutdown

It is sad to see that with all the problems the puertorrican government is having some of you only care about taking a cruise. As far as I'm concern the water company, power, telephone comapnies and some hospitals were not affected since these were privatized a few years back. Taxis are ran by TourCoop which I believe isn't government owned.

The results of the current problem: 95,000 unemployed puertorricans with 65,000 of these being teachers. The solutions offered by Acevedo are unacceptable to the public. 7% or even 4% sales tax are too high. All imported goods are already taxed and to have another 7%-4% will bring future problems to the puertorrican economy. The ratio of cost of living and wages does not match up. Most of the population live paycheck to paycheck and honestly I don't think is something we can afford. Violence should never be the solution to any political problem but it seems that the current governor manipulates society to get his terms approved. The outrageous unemployment number has created panic within the public and they will do whatever it takes to feed their families. It is only a matter of time. Sadly to say , the human nature instict of survival will overcome wisdom.

There are many families in Puerto Rico that both adults work for the government. The only source of income that they miht be entitled to will be 500 a month each. Therefore in household that had $4000 a month between the two , now will only get $1000. What happens to the other $3,000 that you're not getting paid?

To make things worse, most of the people aren't getting their income tax refunds back.

If the government doesn't get a solution soon I think crime rates will increase, mental health condition will worsen and there migt be another immigration movement of puertorricans to the US.

rio grande pr
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6. Re: Puerto Rico on the verge of a shutdown

water is back as public company or a large percentage of it,power company still a public company. taxis are unionized.

Guaynabo, Puerto...
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7. Re: Puerto Rico on the verge of a shutdown

Relax everyone.. Only services for the central government are closed. Power, Water, Taxis, and all tourist essentials and destinations are operating. This closure is only affecting Locals and on its 6th day has caused no inconvenience to our tourists. Come to Puerto Rico and enjoy! Remember âPuerto Rico does it bestâ, even at its favorite past time⦠politics.

usa
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8. Re: Puerto Rico on the verge of a shutdown

Comments regarding the fiscal budgetary crisis in Puerto Rico should only be posted on its immediate impact on tourism and tourists who visit the island. Political rhetoric is not relevant. Below is some meaningful information:

Local workers ask tourists for support

By Melissa B. González Valentín

Of PRWOW News

The displeasure over the partial government closing reached the terminals of the Luis Muñoz Marín International Airport on Friday when members of the Puerto Rico United Public Workers union gathered at several exit doors to greet tourists with flyers and bright orange-colored stickers asking for their support to “Stop the Lockout!”

The flyers, written in English and Spanish, said government employees were sorry for any inconveniences created by the affection and restlessness that permeates the island due to “the unjust and unprecedented central government shutdown, which has displaced over 95,000 public servants.”

“Thanks for choosing Puerto Rico as your tourist destination. Join us in repudiating the central government shutdown,” read the flyer.

For nearly an hour, PRWOW News was able to see the reaction of tourists who, although polite enough to take the flyers, were way too focused on their own schedules to even ask what was it about. In fact, stickers could be seen on the parking lot floor.

Manuel Melendez Lavandero, director of the union’s labor education division, told PRWOW News he didn’t believe the flyers and stickers would hurt Puerto Rico’s image as a tourist destination.

“It shouldn’t create a negative image. If it does, that will be up to the legislators and governor to work together and avoid this sort of thing. We’re not blackmailing the government. We’re just saying that they are responsible for what’s happening in Puerto Rico,” said Meléndez Lavandero.

Puerto Rico Tourism Co. Executive Director Terestella González Denton admitted that she has been concerned about the impact that the impasse over the government budget coupled with on-going protests could have on the island’s tourism industry.

However, the Tourism chief told PRWOW News in a written statement that she has implemented a plan to ensure that visitors keep informed of the latest developments on the Island and reassure them that their stay won’t be interrupted by the unrest.

“As of today there have been no major cancellations of groups, conventions, or visitors to the island. That’s why we are convinced that Puerto Rico will remain an attractive destination in the Caribbean,” González Denton said.

Nevertheless, Tourism Co. press officials said they expect to have precise information on the recent occupancy rate on hotels some time this weekend to see how it might have been affected by the partial closing that came into effect Monday.

STRONGSVILLE,OH
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9. Re: Puerto Rico on the verge of a shutdown

It is crucial to know what political affairs are occuring in any future traveling destination specially if you're not from that country. If politics and current evets aren't important and we just look at the tourism aspect then lets all go to Lebanon and while we're at it let's go to Iraq.

Puerto Rico will remain a tourism paradise in the long-term .