Puerto Rican Lawmakers Pass Revenue Bills; Critics Say They Won't End Shutdown

Puerto Rico's legislature approved bills on Saturday to drum up revenue for the cash-strapped U.S. territory in the sixth day of a partial government shutdown, but critics said the measures would not help fix a budget crisis.

Gov. Anibal Acevedo Vila and the opposition-dominated legislature have increasingly floated competing proposals to close a US$740 million (euro580 million) budget gap that led last Monday to the closure of 43 government agencies and nearly 1,600 schools, sending home more than 95,000 government workers and 500,000 students.

Around dawn on Saturday, House lawmakers approved offering people with private retirement accounts the chance to pay a 5 percent tax on those funds now, rather than 20 percent when they begin to collect on the accounts — a move they said would raise some US$200 million (euro160 million).

Tax chief Juan Carlos Mendez called the House bill a "good step" but predicted it would bring in only US$6.4 million (euro5 million) — falling far short of closing the budget hole.

Later, the Senate voted to end government subsidies to political parties after June 30, 2007, which they said would bring in as much as US$37 million (euro29 million).

The bills now head to the opposite chambers for approval.

But officials in the governor's office said the bills would not end the crisis.

"This does not bring in the money needed so public workers can begin to work on Monday," said Anibal Jose Torres, Gov. Vila's chief of staff.

Vila and the legislature never agreed on a budget for 2005, and the House has repeatedly rejected the governor's plan to bridge the gap by imposing the island's first-ever sales tax, exacerbating tensions between the two parties.

Lawmakers appeared to make progress on Thursday, when a measure calling for a 5.9 percent sales tax passed the Senate with support from opposition legislators who have resisted Acevedo's proposed 7 percent, which he says is necessary to obtain a loan to pay government salaries for the remainder of the fiscal year ending June 30.

The House, however, has not considered imposing a sales tax, and the body's president, Jose Aponte, has said any such measure must be approved as separate tax reform legislation — not as part of the loan-repayment package.

Credit rating agencies have suggested a sales tax to help Puerto Rico drum up desperately needed revenue. The territory's credit rating is nearing junk status, and Acevedo said Friday that Moody's Investors Service would begin its next review of that rating on Monday.

Acevedo and the House have mostly traded insults and accusations during the shutdown, which has taken a toll: More than 70,000 furloughed government workers have applied for unemployment benefits of US$133 (euro105) a week, and thousands have sought food stamps and free canned and staple goods. Protests have been held daily, and some Puerto Rican unions have threatened a general strike for Tuesday.

Officials have warned that the government workers could remain off the job until June 30.