Federal judge rules Puerto Rico will not have full control over its finances

Federal judge rules Puerto Rico will not have full control over its finances

A federal judge in New York ruled [order] on Tuesday that Puerto Rico will not have full control of its financial management under the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (PROMESA) [text]. Instead, the court ruled that oversight of financial management shall be handled by the PROMESA—created Financial Oversight and Management Board for Puerto Rico in accordance with the legislation itself.

Part of an extended legal proceeding [JURIST report] involving the future of Puerto Rico’s financial future, on July 5 Puerto Rican Governor Ricardo Rosselló, along with the Puerto Rico Fiscal Agency and Financial Advisory Authority, filed a complaint against the Financial Oversight and Management Board for Puerto Rico.

In the complaint, Rosselló opposed the Board’s fiscal plan to suspend the spending powers of Puerto Rico’s administrative agencies, plans to reduce and consolidate the territory’s number of agencies, civil service downsizing, reduction of paid civil servants’ leave days; and to criminalize excessive state spending. The Board moved for dismissal of the governor’s complaint.

Referring to the text of PROMESA, US District Judge Laura Taylor Swain dismissed some of the complaints asserted, while permitting ones such as the proviso to criminalize noncompliant budgetary practices by the territory. Swain permitted the rest of the adversarial claims to go to Magistrate Judge Dein for pretrial proceedings.