Crisis
In April 2006, Governor Anibal Acevedo Vilá (PPD) announced that the central government of Puerto Rico did not have enough cash flows to pay projected operating expenses for the months of May and June, including the salaries of thousands of public employees. The governor asked the Legislative Assembly of Puerto Rico to approve an emergency loan of over $500 million US$ so that the government could keep running, which the government would repay using 1% of a newly proposed sales tax, or else the Governor would order a partial shutdown of central government operations, including the closing of numerous agencies. The Puerto Rico Government Development Bank offered to supply the loan, but insisted on a tax reform plan that requires this new tax to be collected with a predetermined rate or amount be set aside exclusively for the loan repayment. The NPP-majority Senate approved the loan based on the proposed tax rate, but the NPP-majority House of Representatives refused to do so.
The House opposed the Governor's proposed rate of the sales tax, suggesting a lower rate. While Governor Acevedo Vilá proposed a global 7% rate, the House instead proposed a global 5.5% rate. The House also proposed a 5% corporation tax, but the Governor has argued that this would violate a number of tax incentive contracts with American corporations, and that it may even violate the Constitution of Puerto Rico. In a televised address on 27 April, Governor Acevedo Vilá announced that most of the government agencies would be shut down beginning 1 May, and would remain closed unless the House approved the economic plan. Government activities relating to health and security (including hospitals and police stations) would remain open, although medical professionals questioned whether hospitals would function if staff went unpaid and also raised the issue of government-funded prescriptions, whilst private security firms on contract to the government said they might cease work if the government did not pay what it owes them.
Senate President Kenneth McClintock said that the shutdown was unnecessary since the government had enough funds to continue paying public workers until the first week of June and that under no circumstance should public schools be shut down. NPP President Pedro Rosselló said he did not think Governor Acevedo Vilá would shut down the government and accused him of trying to create "uneasiness" and "intimidate the Legislature".
A public demonstration against the shutdown, named the Puerto Rico Shouts march, attracted thousands of people on 28 April. Later on, labor leaders called for a general strike if the shutdown occurred.
Many on the island have pointed out that this deadlock between the Senate and the House of Representatives to solve the impending budget crisis further validates the case for downsizing the Puerto Rican Legislative branch to a unicameral body. In a referendum held on 10 July 2005, Puerto Rican voters overwhelmingly approved the change to a unicameral legislature by 456,267 votes in favor versus 88,720 against, although three-quarters of voters chose to abstain. This change would become effective in January 2009 if an additional referendum were held to specifically amend the Puerto Rican Constitution and tailor it to the new legislative body, which is highly unlikely since the House defeated a Senate-passed proposed constitutional amendment.
Read more about this topic: 2006 Puerto Rico Budget Crisis
Famous quotes containing the word crisis:
“What happens in a strike happens not to one person alone.... It is a crisis with meaning and potency for all and prophetic of a future. The elements in crisis are the same, there is a fermentation that is identical. The elements are these: a body of men, women and children, hungry; an organization of feudal employers out to break the back of unionization; and the government Labor Board sent to “negotiate” between this hunger and this greed.”
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