SENOR BORIQUA SPEAKS BRIEFLY ON PUERTO RICO PARTLY SHUT DOWN

MAY 1, 2006.  Puerto Rico for the first time,  in its beautiful history has partly closed down

on Monday May 1st of the year 2006.  

OPENING  DISCUSSION TO RESOLVE THIS ISSUE CLICK BELOW

CHATROOMS-- DISCUSSION BOARD - BORIQUA YAHOO GROUP -

Puerto Rico's government closed schools and suspended other nonessential public services on Monday after last-minute bargaining failed to yield a budget deal.

Gov. Anibal Acevedo Vila last week said the U.S. commonwealth was running out of operational money and would be forced to shut down the government partially on Monday unless the opposition-run legislature passed a sales-tax bill needed to secure a bailout loan.

Weekend and early-morning bargaining among legislators and administration officials deadlocked without a deal.


"Because of legislative inaction, particularly in the House of Representatives ... today more than 90,000 public employees have to take leave without pay," the governor said in a statement.

Only police, health care and other vital agencies were to remain open, according to the governor's office.

Little unusual street activity was seen in San Juan, other than some citizens protesting the closure camping out at the island's Capitol building.

A source close to the negotiations told Reuters that legislators could not agree on an island-wide sales tax of 5.9 percent required by the Puerto Rico Government Development Bank before it would issue a bailout loan to the government.

The opposition has wanted a 4 percent sales tax while the governor pressed for a 7 percent sales tax as part of an overhaul of taxes on the Caribbean island. Continued...

For almost a year, legislators and the administration have not been able to agree on a plan to fill a $1 billion structural deficit that would keep Wall Street credit-rating agencies from downgrading the commonwealth's credit.

Standard & Poor's in March warned it may downgrade Puerto Rico's widely held general obligation bonds. But the Government Development Bank, which is the commonwealth's fiscal agent, has said the government closure would not affect debt payments.

Puerto Rico's Municipal Revenues Collection Center, which distributes about $350 million a year to local governments on the island, has enough money on hand to keep funds flowing through May 12 or May 13, Executive Director Norman Foy said.

The legislature and the governor last year never agreed on a budget, which left the government operating with the previous year's budget of $8.9 billion. Since then, the budget deficit has risen to the current $738 million, according to figures of the Government Development Bank.


The political impasse reached a boiling point on Friday, when as many as 50,000 people took part in a march around the Capitol. More demonstrations were expected.
 

By Enrique Martel