Puerto Rico vows to protect public employees in fiscal plan

Puerto Rico government officials on Tuesday pushed back against a federal control board's suggestion that they cut benefits for the U.S. territory's employees to cope with an 11-year financial crisis.

Secretary of Public Affairs Ramon Rosario said the government won't implement any measures that financially affect government workers.

The control board that oversees Puerto Rico's finances is demanding changes in the territory's fiscal plan, and more details about it. The board suggested late Monday that the government could cut costs by making severance pay and Christmas bonuses optional or by reducing requirements for vacation and sick leave to U.S. mainland levels. The board said no state requires that employers provide vacation pay, and that only nine of 50 U.S. states require any paid sick leave.

"It is imperative that Puerto Rico seize this moment to fundamentally reform an economy that has been in a long-term recession, even before Hurricanes Irma and Maria," wrote board chairman Jose Carrion.

One month before Hurricane Maria hit on Sept. 20, the board sued Puerto Rico's government for refusing to impose furloughs and other cost-saving measures.

In one of several letters filed Monday, the board said the government must revise its fiscal plan to clearly show the link between the proposed tax reforms and any anticipated economic growth. It also said the administration of Gov. Ricardo Rossello has to be more specific in its capital investment plan and note the sources of funding for all investments.

The board questioned the government's estimate that it needs only $400 million a year for capital expenditures, saying there is no analysis to support a reduction to that amount. It noted that federal funds would not cover many of the capital expenditures required.

The board also called for sharp cuts in government pensions, with a 25 percent reduction imposed on people whose combined pension and social security income is above a $1,000 a month poverty line. Puerto Rico's pension system faces nearly $50 billion in liabilities, and hundreds of Puerto Ricans last year protested a plan to cut the system by 10 percent.

Board members called on Puerto Rico to create an emergency fund and build a reserve of $1.3 billion in the next decade. They also said the fiscal plan should contain realistic measures to reduce costs so the power company can deliver electricity at more affordable rates, and that legislators should submit a measure by this summer to create an independent energy regulator as the company moves to privatize.

Puerto Rico has until Feb. 12 to submit a revised fiscal plan.