Puerto Rico “Government Is Bankrupt”

Puerto Rico’s Gov. Luis Fortuno on Tuesday outlined a plan that would cut spending by $2 billion per year and slash government payrolls by what could be more than 30,000 workers, or 10 percent of the government’s work force.

“It’s up to us to confront the bitter reality that the government is bankrupt,” he said in a televised address.

The number of laid-off workers will depend on how many accept voluntary buyouts and how many agree to cut their hours, he said.

“But I am frank,” he said. “The quantity could be significant and I fear they could exceed 30,000 workers.”

Though he did not lay out a timetable, Fortuno prefaced his prediction by calling for “immediate action” to emerge from a crisis that has left the government unable to pay its bills.

The situation is dire, he said. “Imagine that in June, the government stopped paying the light bill,” he said. “Or the water and phone.”

Failure to take quick action, he predicted, could delay recovery by a decade. “Simply put, I am not going to permit it,” he said.

Fortuno said his plan would slash government operations by 10 percent, cut his own salary by 10 percent, cut salaries of chiefs of agencies by 5 percent until 2010, and freeze others’ salaries. He said since entering office two months ago, he discovered the fiscal deficit is four times greater than what he had been told — or more than $3.2 billion, which translates into the highest per capita deficit figure in the nation.

Failure to take immediate action would result in an unemployment rate above 10 percent in two years, he added.

FULL STORY

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