Puerto Rico Board, Governor Clash Over Finances Still reeling from damages caused by Hurricane Maria, Puerto Rico's financial situation is in major free fall. The federal oversight board ordered Gov. Ricardo Rosselló to cut public pensions by 10 percent.
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Puerto Rico Board, Governor Clash Over Finances

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Puerto Rico Board, Governor Clash Over Finances

Puerto Rico Board, Governor Clash Over Finances

Puerto Rico Board, Governor Clash Over Finances

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Still reeling from damages caused by Hurricane Maria, Puerto Rico's financial situation is in major free fall. The federal oversight board ordered Gov. Ricardo Rosselló to cut public pensions by 10 percent.

MICHEL MARTIN, HOST:

We want to head to Puerto Rico now. The damage caused by Hurricane Maria is not the island's only crisis. It is also in the middle of a fiscal crisis. To start turning that around, this week, a federal board with power over the island's finances ordered the governor to cut public pensions. NPR's Adrian Florido reports that the governor said, no, setting up a battle for control of the island's financial future.

ADRIAN FLORIDO, BYLINE: Shortly after the governor said no, Franciso Flores was sitting on a plaza near the governor's mansion. He's 64, a retired mechanic for the city of San Juan. He lives on his government pension.

FRANCISO FLORES: (Speaking Spanish).

FLORIDO: He says, "Puerto Rico's pensions allow you to survive, nothing more." But he says his pension is 600 a month at a few hundred in Social Security, and his monthly income is about $1000. That's right around the poverty line.

FLORES: (Speaking Spanish).

FLORIDO: On top of that, Flores says, "the price of utilities and food is going up." He says he probably couldn't live on less than he does now. But he may have to, and here's why. Puerto Rico has been massively in debt for years. In 2016, Congress did two things to pull it out of its fiscal crisis. It allowed the island to seek protection from its creditors, and it created the financial oversight board with power over the island's finances. This week, the board ordered a long list of cost-cutting measures, including cutting public pensions an average of 10 percent. To Flores, it came as no surprise. He holds a view held by many on the island.

FLORES: (Speaking Spanish).

FLORIDO: "Here in Puerto Rico," he says, "it's that fiscal board that has the power, not the governor." The governor, Ricardo Rossello, has said, not so fast.

RICARDO ROSSELLO: On matters of public policy, it is the government that has the decision-making power.

FLORIDO: Rossello has said he will implement many of the board's cost-cutting measures, but has refused to cut pensions or vacation or sick time or Christmas bonuses for workers.

ROSSELLO: And so on those matters that we oppose - those are just not going to be seen in the legislature nor in my desk.

FLORIDO: Puerto Rico is very much still recovering from Hurricane Maria as it prepares for the next hurricane. At the same time, an even larger struggle is playing out. Its governor and the federal oversight board are in a war of words over who has the power to set the island's fiscal policy. On Thursday, Jose Carrion, the federal board's chairman, issued a warning.

(SOUNBITE OF ARCHIVED RECORDING)

JOSE CARRION: (Through interpreter) We hope the government and the legislature will comply. We don't want to sue the government, but we have to fulfill the duties that we understand the law gives us.

MARIELY LOPEZ-SANTANA: It's basically a question of sovereignty, autonomy and, in the end, who is ultimately responsible for making decisions in Puerto Rico?

FLORIDO: Mariely Lopez-Santana is a political scientist at George Mason University. She says the question of who gets the last word on fiscal policy can't be answered yet. The board's powers haven't been fully tested in court. Professor Lopez-Santana points out that, in fact, the board and the governor agree on many policies - tax reform, cuts to the school system, consolidating government agencies and selling off the island's electrical grid. But politically, Lopez-Santana says the governor has to oppose the board.

LOPEZ-SANTANA: The governor cares about winning election, so even if it's cheap talk, he's gonna say, well, I'm gonna protect my people. I'm going to protect pensions - all that.

FLORIDO: Rossello has asked the members of the oversight board to reconsider their demands. If they don't, the governor says he's prepared to fight the board in court. Adrian Florido, NPR News, San Juan, Puerto Rico.

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