SAN JUAN, Puerto Rico (AP) — Wage increases for teachers, firefighters, prison officers and other workers were included in a revised tax plan approved Thursday that will serve as Puerto Rico’s economic plan criticized by some then that the island emerges from bankruptcy.
A federal board of control that oversees the U.S. territory’s finances noted that many government workers hadn’t seen a pay rise since 2014, a year before Puerto Rico announced it was unable to pay its salary. public debt of more than $70 billion accumulated over decades through mismanagement, corruption and excessive borrowing to balance budgets.
The budget plan was approved a week after a federal judge signed off on another plan to reduce the island’s debt after a nearly five-year battle with bankruptcy, marking the largest debt restructuring on the island. history of the United States. It comes into effect on March 15.
“This is a very important time for (Puerto Rico),” the budget plan reads. “For the first time in years, she can manage her resources without the cloud of uncertainty of bankruptcy.”
Teachers will see an average increase of 27% over what they earned in fiscal year 2019, firefighters 17% and correctional officers 15%. Even medical residents will see a 20% increase, their first since 2003.
However, some of these increases are conditional.
Teachers, for example, will receive half of their raise on July 1, with the other half tied to completing a pay and attendance system and maintaining student attendance. Correctional officers face similar demands.
The Puerto Rico Teachers Association criticized the terms as well as the salary change, saying it is only increasing base salaries to $2,220 per month instead of the $3,500 it had requested.
“Do you think a teacher can live off the misery he earns and at the end of his life not even have a dignified retirement?” the association said in a letter to Governor Pedro Pierluisi.
The governor said in a statement that while the board did not agree to all of his initiatives, including a call for bigger pay increases for public servants, he called the plan “a step in the right direction.”
The revised budget plan also includes more than $130 million per year for the next five years for civil service reform to improve appraisals, recruitment and organizational structure. Additionally, the plan includes paying debt service for the first time since the council was created by the US Congress in 2016, a year before the island filed for the largest municipal bankruptcy in history. the United States.
The budget plan also aims to bolster health, public safety and education infrastructure and services and bolster a pension reserve trust to help employees, including police and symphony orchestra members, by setting aside $10.3 billion over the next decade. Puerto Rico entered the bankruptcy process with more than $50 billion in public pension liabilities.
“This fiscal plan is another step in Puerto Rico’s recovery,” said David Skeel, chairman of the board.
Puerto Rico now faces $1.5 billion in annual debt repayments under the restructuring, instead of the $3.9 billion it once paid. Moreover, a new deficit is not expected before 2048.
“It’s a historic day,” board member John Nixon said before approving the revised budget plan. “While this is a huge step…there are still a number of things we need to work on.”
The plan notes that since 2005, Puerto Rico’s economy has shrunk, poverty has increased, electricity has remained expensive and unreliable, and “the public sector has provided declining service levels at high cost to residents. “.
Power outages worsened after Hurricane Maria hit the island in September 2017, leveling the power grid and destroying or damaging thousands of homes. Shortly before the start of the council meeting, the judicial center in the capital of San Juan announced that a power outage had forced them to move some cases to another city and postpone others.
Puerto Rico has also struggled to recover from a series of strong earthquakes that hit the southern region of the island two years ago, the strongest in a century.
As the US territory seeks to emerge from bankruptcy and natural disasters, some have criticized the board and the debt restructuring plan, saying they have not sufficiently reduced debt or paved the way for the economic development.
“The next few years are going to be tougher for certain sectors of the population,” said Daniel Santamaría Ots, senior policy analyst for Espacios Abiertos, a Puerto Rico think tank. “The most vulnerable will suffer the most.”
He also noted that the bankruptcy process has cost Puerto Rico about $1 billion in consultants, lawyers and other expenses, adding that electricity and water rates are rising, as well as toll charges. and college credits for undergraduates.
“Now we will have to pay the debt again in a time of austerity without growth,” he said.
Meanwhile, Sergio Marxuach, director of policy and general counsel for the Center for a New Economy, a nonpartisan grassroots think tank, wrote in a report released Thursday that while the plan to bail Puerto Rico out of bankruptcy is not not perfect, it offers some debt relief. .
“It’s a really difficult task to determine, with certainty, if the proposed plan is adequate, the time horizon is too long and there are too many variables,” he said. “We believe the best-case scenario proposed by the (board) and the worst-case scenario favored by those opposing the plan are unlikely to occur.”