Puerto Rico Governor Seeks Referendum on Pension Payments
Puerto Rico Governor Calls for Referendum on Pension Payments
(Bloomberg) -- Puerto Rico Governor Wanda Vazquez is seeking a Nov. 3 referendum that could potentially make the bankrupt territory’s billions in public pension payments a constitutional obligation.
In a televised address, Vazquez called a special session of the local legislature and said she was proposing a measure that would trigger an Election Day referendum in which voters would decide whether to elevate public pension payments to a “first rank” priority. If the measure passes, pensions and debt payments would have to be made before other government expenses, including contracts, judicial sentences and operational costs, she said.
Vazquez said that many public workers had spent a lifetime paying into the pension system, only to face uncertainty in their retirement after it went broke.
“This is not a bonus, this is not a gift, this is justice,” she said.
Staggering under $74 billion in debt and $50 billion in unfunded pension obligations, Puerto Rico declared bankruptcy in 2017. Since then it has been working its way through a debt restructuring plan that includes some cuts to those with the largest pensions.
Senate President Thomas Rivera Schatz said he fully backed the constitutional amendment, “so that in the future it’s understood that we can’t pay our creditors and forget about our retirees.”
In a statement, the federally-appointed board that oversees the commonwealth’s budget and finances said it just had learned of the proposal during the press conference and could not comment.
Under the 2016 U.S. law that allowed for Puerto Rico’s bankruptcy, the board has the obligation to block legislation that’s in violation of the island’s fiscal plan. But this is the first time the Puerto Rican government has pushed a constitutional amendment since it began operating, putting it in uncharted legal territory.
Asked if she was worried that the board might intervene, Vazquez downplayed their role.
“This is for the people of Puerto Rico to vote on,” she said.
Along with the pension measure, Vazquez proposed a raft of other bills to be considered during the legislative special session, including aid to earthquake victims, health-care regulations and a “responsible debt” bill. Under that measure, future governments would not be able to rely on public debt to finance day-to-day operations.
Vazquez, who is running for re-election on Nov. 3, is facing a tight primary race next month from within her own New Progressive Party.
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