Puerto Rico’s federally appointed oversight board yesterday rejected the U.S. territory’s budget proposal for next fiscal year, saying it did not comply with a financial turnaround plan for the island approved by the board last month, Reuters reported. In a letter to Governor Ricardo Rossello, the board said that the budget’s expense projections were inconsistent with the turnaround plan, which is designed to be a blueprint for how Puerto Rico will recover from the twin challenges of bankruptcy and September’s Hurricane Maria. The board directed Rossello to submit a compliant budget by May 15. Puerto Rico has $120 billion in combined bond and pension debt it cannot pay, the biggest insolvency in U.S. government history. The board on April 19 approved a fiscal turnaround plan that included pension cuts and labor reforms, which Rossello has said he will refuse to implement. The plan forecasts $6.7 billion in debt payment ability for Puerto Rico through fiscal year 2023. But Rossello’s proposed budget does not allocate for debt service, while including other expenses that are not in the plan, like $100 million in municipal spending.
