Board submits Puerto Rico budget as some question its powers

SAN JUAN, Puerto Rico (AP) — A federal control board that oversees Puerto Rico’s finances submitted a proposed $10 billion budget on Thursday as federal legislators debate whether to curtail the board’s power over the U.S. territory.

The proposed Puerto Rico budget is slightly bigger than last year’s and largely suspends government cuts for one year to help the island impose reforms sought by the board including increasing Puerto Rico’s labor participation rate, making it easier to do business on the island and providing cheaper and more reliable electricity.

Local government officials agree with some of the proposed changes but argue the board sometimes oversteps its boundaries as it continues to restructure a portion of Puerto Rico’s more than $70 billion public debt load amid an economic crisis.

“Over the last several years, the board has attempted to take advantage of this unclear separation of powers to gain control over day-to-day operations of the government,” said Omar Marrero, executive director of Puerto Rico Fiscal Agency & Financial Advisory Authority.

Marrero spoke at an online hearing held by the U.S. House Natural Resources Committee, which oversees affairs in U.S. territories. The committee’s chairman, Rep. Raúl Grijalva, recently submitted amendments to a federal law that created the board as part of a financial package for Puerto Rico. He and several other Democrats have said the board is not doing enough to protect Puerto Ricans and improve the island’s situation since its creation in 2016.

The changes they’re seeking include allowing the island to shed certain debt, which board executive director Natalie Jarekso said would erode the confidence of creditors and lead bondholders to seek a more expensive and restrictive type of debt.

“The board has serious concerns that...