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Monday, May 01, 2006 

Posted on Mon, May. 01, 2006

Puerto Ricans wake up to dismal situation


SAN JUAN - Despite round-the-clock sessions in the Puerto Rican legislature, the island woke up to a dismal picture today:

* 95,762 of 213,000 public employees are laid off.

* Classes are canceled at 1,500 public schools, while the Department of Education arranges unemployment payments for 75,758 employees now out of a job.

Legislators met through the night Sunday to stave off a $1 billion budget deficit that puts nearly half the island's central government employees out of work.

Early Monday the House of Representatives voted to authorize the Government Development Bank to transfer $532 million to the central government. But the legislators did not call it a loan or identify a source of repayment.

''Besides the profound human paid this crisis is causing, the chain effect could spread through the rest of the economy,'' House leader José Aponte wrote in the bill he drafted before daybreak. ``This could hurt hundreds of thousands of additional families throughout Puerto Rico.''

At a somber morning press conference, Gov. Aníbal Acevedo Vilá criticized the House for coming up with a new measure each day - rather than approve the $531 million line of credit and seven percent sales tax passed by the Senate last week.

''That last measure -- stealing $532 million from the Development Bank, is to take the bank on the road to bankruptcy, on fast track,'' Acevedo said.

``The answer is on the table, and it's been on the table for weeks.''

The island's House of Representatives is at odds with the governor who insists the only way to end the crisis is with a $638 million Government Development Bank loan, and a 7-percent tax to pay it off. The Senate approved the loan, but at about $100 million than the governor requested.

Steadfast against a sales tax, the House refuses to even vote on the governor's proposal, and instead each day has authorized a measure intended to solve the crisis but which was ultimately not passed in the Senate.

On Sunday, the House approved a retroactive five percent tax on big corporations, but the measure was blasted as unconstitutional and illegal.

It remained to be seen Monday if the Senate would approve the House's proposal to transfer the development bank funds without a sales tax to pay it back.

''This is not a loan,'' Aponte told reporters. ``We are providing alternatives so the governor cannot continue blaming the legislature.''

Meanwhile in a Senate session that began after midnight, legislatures backed yet another measure which would lower the sales tax the governor is requesting from 7-percent to 5.9 percent.

''We're going to work hard so that on Monday, the governor has a proposal on his desk,'' Senate president Kenneth McClintock said early Monday.

The governor signed an order last week saying that absent a deal, he would close 43 of 118 government agencies. Police, fire, hospital and jails would operate normally, using the funds from the shuttered agencies.

Some agencies such as driver's license bureaus would operate at reduced shifts.
The unprecedented crisis is considered the result of Puerto Rico's deeply divided party politics.
Acevedo's Popular Democratic Party, which supports Puerto Rico's commonwealth status is at odds with the opposition New Progressive Party -- which supports statehood and controls the House.

The leader of the New Progressive Party, former governor Pedro Roselló, ran against Acevedo for governor. He is now a member of the Senate.

Acevedo is furiously lobbying to find eight New Progressive Party members to accept his plan.

Copyright 2006 Knight Ridder
All Rights Reserved

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