Budget of the Government of Puerto Rico
The Budget of the Government of Puerto Rico (Spanish: Presupuesto del Gobierno de Puerto Rico) is the proposal by the Governor of Puerto Rico to the Legislative Assembly which recommends funding levels for the next fiscal year, beginning on July 1 and ending on June 30 of the following year. This proposal is established by Article IV of the Constitution of Puerto Rico and is presented in two forms:
- the General Budget, which piles up the budget proposed for all the executive departments of the government of Puerto Rico, and
- the Consolidated Budget, which piles up:
- the budget proposed for the General Budget,
- the Public Improvements Fund,
- the Special State Funds,
- the revenue expected from the expected subsidies to be received from the federal government of the United States,
- the budget proposed for Puerto Rico's government-owned corporations,
- the revenue expected from loans expected to be taken in the upcoming fiscal year and the sale of government bonds expected to undergo in the upcoming fiscal year, and
- other funds.
For practical reasons the budget is divided into two aspects: a "general budget" which comprises the assignments funded exclusively by the Department of Treasury of Puerto Rico, and the "consolidated budget" which comprises the assignments funded by the general budget, by Puerto Rico's government-owned corporations, by revenue expected from loans, by the sale of government bonds, by subsidies extended by the federal government of the United States, and by other funds.
Both budgets contrast each other drastically, with the consolidated budget being usually thrice the size of the general budget; currently $29B and $9B respectively. Almost one out of every four dollars in the consolidated budget comes from U.S. federal subsidies while government-owned corporations compose more than 31% of the consolidated budget.
The critical aspects come from the sale of bonds, which comprise 7% of the consolidated budget; a ratio that increased annually due to the government's inability to prepare a balanced budget in addition to being incapable of generating enough income to cover all its expenses. In particular, the government-owned corporations add a heavy burden to the overall budget and public debt as not a single one is self-sufficient, all of them carrying extremely inefficient operations. For example, in FY2011 the government-owned corporations reported aggregated losses of more than $1.3B with the Puerto Rico Highways and Transportation Authority (PRHTA) reporting losses of $409M, the Puerto Rico Electric Power Authority (PREPA; the government monopoly that controls all electricity on the island) reporting losses of $272M, while the Puerto Rico Aqueducts and Sewers Authority (PRASA; the government monopoly that controls all water utilities on the island) reported losses of $112M. All these losses were defrayed through the issuance of bonds compounding more than 40% of Puerto Rico's entire public debt today. Holistically, from FY2000–FY2010 Puerto Rico's debt grew at a compound annual growth rate (CAGR) of 9% while GDP remained stagnant.
In terms of protocol, the governor, together with the Puerto Rico Office of Management and Budget (OGP in Spanish), formulates the budget he believes is required to operate all government branches for the ensuing fiscal year. He then submits this formulation as a budget request to the Puerto Rican legislature before July 1, the date established by law as the beginning of Puerto Rico's fiscal year. While the constitution establishes that the request must be submitted "at the beginning of each regular session", the request is typically submitted during the first week of May as the regular sessions of the legislature begin in January and it would be unpractical to submit a request so far ahead. Once submitted the budget is then approved by the legislature, typically with amendments, through a joint resolution and referred back to the governor for his approval. The governor then either approves it or vetoes it. If vetoed the legislature can then either refer it back with amendments for the governor's approval, or approve it without the governor's consent by two-thirds of the bodies of each chamber.
Once approved the Department of Treasury disburses funds to the Office of Management and Budget which in turn disburses the funds to the respective agencies, all while the Puerto Rico Government Development Bank (the government's intergovernmental bank) manages all related banking affairs including those related to the government-owned corporations.
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