In Puerto Rico, government shutdown looms

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MIAMI – Up to 50,000 Puerto Ricans facing massive layoffs because of a $1 billion government budget deficit marched to the capitol building in San Juan Friday to demand a solution to the fiscal crisis.

The protest stretched over three miles. Armed with signs and T-shirts that declared, “Puerto Rico Shouts!,” civil servants, students and union members focused their ire on Puerto Rico’s House of Representatives. The opposition-dominated House has refused Gov. Anibal Acevedo Vila’s request for a $638 million line of credit to keep the government afloat until June 30, the end of the fiscal year.

“We’re calling for them to reach an agreement, that they sign all that they need to sign so the Puerto Rican worker is not thrown out into the street and left without work,” San Juan teacher Nilda Marrero told The Associated Press. “They must leave this game behind.”

The governor ordered 43 of 118 government agencies closed next Monday, saying public coffers have run out of cash. Acevedo insists the only answer is the loan from the Government Development Bank, which would be paid back with a 7 percent sales tax.

The Senate approved a $531 million loan on Monday, but the House has refused, arguing that drastic budget cuts and tax reform are the only solution. The House has proposed a 4 percent tax instead.

Late Thursday, the House approved the use of $114.5 million from emergency funds, which the governor’s office has said is not nearly enough.

The Senate meets again late Sunday, with officials hoping for an 11th-hour agreement.

“The governor has been very successful at projecting this as an issue where the legislature is at fault,” said economist Carlos Colon, a New Progressive Party senate advisor. “The governor has to show some flexibility. If he were to close the government with a viable solution on the table, he’s going to find public perception turning against him.”

The New Progressive Party, which advocates statehood for Puerto Rico, insists the governor created the crisis by overspending. The use of $114 million would cover paychecks for at least a few weeks and force the governor to make drastic budget cuts.

“I am ready to sign the $114 million, but that doesn’t resolve the situation,” Acevedo told Puerto Rican TV and radio stations. “We have to keep up the pressure. The solution is the loan with guaranteed payment. I can sign everything they approved, and nothing changes Monday’s scenario.”

The scenario is dire: 572,000 schoolchildren would be shut out of class, and 75,758 public school employees out of work. A total of about 95,762 public employees would be laid off and many more would see pay cuts.

Emergency services such as jails, police and hospitals would run using the funds from the shuttered agencies.

Miami-based Carnival Cruise Lines said it has been assured by officials in San Juan that the Puerto Rico Ports Authority, which runs the island’s airports and seaports, will continue operating.

Royal Caribbean’s Adventure of the Seas is still set to sail into San Juan on Sunday to embark passengers on a seven-night cruise. The Carnival Destiny is based in San Juan and is still scheduled to pull into port there Sunday, said company spokeswoman Jennifer de la Cruz.

Puerto Rico Chamber of Commerce leaders are confident that if the government does shut down, it would not last more than a week.

“When you are dealing with paying recurring expenses with debt, that’s not the best practice in the world. It’s what happened in Latin America during the debt crisis, and the legislature is very reluctant to do that,” said Edgardo Bigas, CEO of the Puerto Rico Chamber of Commerce, which is trying to help mediate.

He said the House also passed a 1.5 percent tax on corporations, which has been pushed by labor unions, but the chamber does not support it. At 43 percent, Puerto Rico has the highest corporate tax in the world, he said.

“I dare say we’ll have a government shutdown on Monday,” Bigas said. “I think if we can shed some light on this this weekend, we’ll be up and running in a week. If it goes beyond that, I don’t know what’s going to happen.”

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