April 30, 2012
Governance, Economic Development
SAN JUAN - With the economy of Puerto Rico experiencing positive growth for the first time in six years, Puerto Rico Gov. Luis Fortuño has introduced a FY 2013 budget that will cut the deficit he inherited in 2009 by 90 percent, marking the fourth consecutive year of fiscal progress as the U.S. territory marches toward a balanced budget.
When Gov. Fortuño took office in January 2009, the $3.3 billion budget deficit he inherited was the worst, proportionally, among the 50 states and Puerto Rico. Now the Island is ranked 15th in the country, and will move even higher in the rankings with the deficit-reducing budget the Governor outlined Tuesday to the Puerto Rico legislature for FY 2013, which begins July 1.
“We have brought down the deficit responsibly, from the $3.3 billion left to us in 2009 to $610 million this year [FY 2012]. And for the fiscal year beginning in July, we will reduce the deficit nearly in half, to $332 million, the smallest deficit we’ve had since 2005 and a reduction of 90 percent compared with $3.3 billion left to us in 2009,” Gov. Fortuño said. The Governor anticipated that the deficit will be fully eliminated in FY 2014.
The Governor said Puerto Rico’s fiscal efforts are continuing to advance the Island’s economic turnaround, citing recent estimates showing acceleration of the economy into positive territory, with growth projections of 0.9 percent for FY 2012 and 1.1 percent for FY 2013. “In Puerto Rico, we are on the path of progress. With the fiscal year beginning July 1, our economy will experience its most robust growth since 2005,” Gov. Fortuño said.
With the world economy still in a weakened position, Gov. Fortuño said Puerto Rico’s economic recovery will continue with measured, steady progress. “This will require us to continue careful vigilance of our economic and fiscal health and to stay the course on the fiscal discipline we have implemented to control government spending and leave that money in people’s hands through tax reform,” the Governor said.
In 2010, Gov. Fortuño signed into law the biggest tax cuts in Puerto Rico’s history, creating a new, simplified tax code that cut rates an average 30 percent for corporations and 50 percent for individuals. Since FY 2009, Puerto Rico government spending decreased by 17 percent, from $10.890 billion to $9.083 billion in the new recommended budget for FY 2013. Fortuño said that for the fourth consecutive year, the government is reaching projected revenue levels and not spending more than it is taking in.
In outlining priority areas in the FY 2013 budget, the Governor noted that more than half the General Fund budget for next fiscal year will be allocated to education, public safety and health.
For education, the Governor announced the expansion of the 21st Century Schools initiative, a comprehensive, Island-wide school modernization program that is working to transform public schools across the Island. Following completion of the 103 schools already under renovation or construction, the expanded effort will modernize 100 more schools during the next four years. Fortuño also announced the launch of a comprehensive program called Bilingual Generation, with the goal of ensuring, within 10 years, that every student who graduates from high schools is fully bilingual.
In the area of public safety, the Governor announced that the recommended consolidated budget totals $1.387 billion, including $808 million for the Puerto Rico Police, an increase of $39 million from the general fund. The increased resources are part of Puerto Rico’s effort at the local level to address the uptick in drug-related violence created by transnational criminal organizations seeking to penetrate American markets through the U.S. Caribbean Border.
In addition, the budget for the year beginning July 1 contains the necessary appropriations for Puerto Rico’s status referendum on Nov. 6, 2012, to provide a fair, transparent and swift process of self-determination for the people of Puerto Rico. The two-question status referendum will first ask whether or not voters want to change the island’s current status as an unincorporated U.S. territory. Voters will then be asked for their preference among Puerto Rico’s three constitutionally-viable, non-territorial status options: statehood, independence or sovereign free associated state.
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