Disagreement over Budget Shuts Down Puerto Rican Government

Puerto Rican Government Shuts Down, BBC News, 5/1/06
Puerto Rico Questions U.S. Ties By Jonathan Beale, BBC News, 3/28/06

The U.S. territory of Puerto Rico, in the midst of a financial crisis, has temporarily shut down all state-operated schools and non-essential government offices. Approximately 95,000 government workers have been left without work and 40,000 students without classes. The government is the country’s biggest employer. Puerto Rico operates as a self-governing commonwealth, but President Bush is its head of state.

Governor Aníbal Acevedo Víla has blamed the crisis on “legislative inaction”. The Puerto Rican government is currently operating at an estimated $740 million dollar deficit, and has been unable to agree its budget. The government is currently using its 2004 budget because there has been no agreement with the Puerto Rican legislature since that year.

Last week, thousands of Puerto Ricans protested in the streets, demanding a solution. Governor Acevedo hopes to introduce a 7 percent sales tax to help pay off the island’s debt and allow the government to operate. The U.S. territory currently has no sales tax, but most legislators are opposed to any tax higher than 5.5 percent. Puerto Ricans do not pay U.S. income tax, but the island receives federal funds.

The financial crisis occurs on the brink of a recent White House report questioning the political status of Puerto Rico. The commonwealth is divided with some islanders demanding independence, others advocating that Puerto Rico become the U.S.’s 51st state, and others encouraging that the island retain its current status. In 1998, only 2.5 percent of the island population favored independence. However, there has been growing resentment that their country continues to deny them full voting rights.