Puerto Rico Extends Government Shutdown

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

SAN JUAN, Puerto Rico – Puerto Rican lawmakers failed to resolve the U.S. commonwealth’s budget impasse, extending into yesterday a partial government shutdown that has closed public schools and thrown nearly 100,000 people out of work.


The governor and legislature remained at a stalemate. Governor Anibal Acevedo Vila said he would agree to a lower sales tax than he had previously said was necessary to secure an emergency line of credit to finish out the fiscal year, but the Senate and House of Representatives did not offer a proposal.


The island currently has no sales tax.


All 1,600 public schools on the island closed Monday, two weeks before the end of the academic year, along with 43 government agencies.


Many basic functions of Puerto Rico’s government – such as obtaining building permits or a driver’s license – were not available because of the shutdown, which the governor said was necessary because the island did not have enough money in its budget to get through the fiscal year ending June 30.


The island closed 43 government agencies and the public schools, granting an unscheduled holiday to 500,000 students – and leaving many parents suddenly without a paycheck.


“I have to find some other way to support my family,” a government-employed laborer in the central mountain town of Jayuya, Americo Santiago, 38, said.


The government is Puerto Rico’s largest employer, with some 200,000 workers. Salaries make up about 80% of the government’s operational costs.


The shutdown – the first in Puerto Rico’s history – happened despite last-minute attempts by Mr. Acevedo and lawmakers to agree on a bailout plan.


Puerto Rico is saddled with a $740 million budget shortfall because the governor and lawmakers have been unable to agree on a spending plan since 2004. Conflicting sales tax proposals have been floated that would allow the island to secure a line of credit so it could pay public salaries through June 30.


Mr. Acevedo had insisted that a 7% sales tax was necessary to pay for an additional $640 million loan. Anything less than 7% would only postpone the crisis until July 1, when the next fiscal year begins, he said.


The governor now says he would be willing to accept a 5.9% sales tax – the amount offered under one Senate proposal.


Leaders in the House of Representatives said they would support only a 4% sales tax.


Members of the New Progressive Party, which controls the legislature, have blamed the governor for the crisis. The two sides never agreed on the 2005 or the 2006 budgets, and the government is using the 2004 budget to operate as debts pile up.


The New York Sun

© 2024 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

By continuing you agree to our Privacy Policy and Terms of Use