Background
There is much debate over the long-term causes of the crisis and Puerto Rico's economic fortunes in general, but the immediate cause of this crisis was a dispute where the Puerto Rico Legislature refused to approve the Governor of Puerto Rico's budget-balancing proposals, preventing the central government from raising sufficient revenue and decreasing expenditures for the 2005–2006 fiscal budget.
Following the general elections in 2004, the Puerto Rican government was split between opposing political parties, with Governor Aníbal Acevedo Vilá of the Popular Democratic Party (PPD), and a Legislature controlled by the New Progressive Party (PNP). Due to an elections dispute, the elections had to be decided by the Supreme Court of Puerto Rico, and relations between the Governor and the Legislature have been poor since. The legislature has refused to approve the Governor's proposed budgets since the elections, the Governor vetoed the budget the Legislature approved and the government has been operating on the budget approved for the 2005 fiscal year.
The PNP has repeatedly opposed further borrowing for operating purposes by the already heavily indebted government, and blamed increased levels of spending under Acevedo Vilá's predecessor, Sila María Calderón (also of the PPD), for Puerto Rico's financial problems. The PNP has advocated a fiscal reform and the use of money set aside for income tax refunds and unemployment benefits in the short term.
On the other side, some blame former Governor Pedro Rosselló, the PNP's former president and current senator, for the excessive expenses during his administrations (1993–2000).
Read more about this topic: 2006 Puerto Rico Budget Crisis
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