Wednesday, April 30, 2014

Puerto Rico Presents First Balanced Budget In Over A Decade - AP | Governor raises status issue in speech | Caldero takes oath as PR’s top cop - CB

Governor raises status issue in speech
Issued: April 29, 2014
Gov. Alejandro García Padilla pledged Tuesday to present legislation before ...

Caldero takes oath as PR’s top cop
Issued: April 28, 2014
Police Superintendent José Caldero officially took the reins of the embattled department after a swearing in ceremony in San Juan on Monday.

» Puerto Rico Presents First Balanced Budget In Over A Decade
30/04/14 10:35 from Latino Voices on
SAN JUAN, Puerto Rico (AP) — Puerto Rico's governor on Tuesday presented the territory's first balanced budget in more than a decade, fulfilling a promise to cut spending at a time when the island's economic problems have spread fear amo...

Puerto Rico Presents First Balanced Budget In Over A Decade

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SAN JUAN, Puerto Rico (AP) — Puerto Rico's governor on Tuesday presented the territory's first balanced budget in more than a decade, fulfilling a promise to cut spending at a time when the island's economic problems have spread fear among U.S. investors.
Gov. Alejandro Garcia Padilla proposed more than $1.4 billion in cuts and adjustments by consolidating 25 government agencies and imposing an average 8 percent spending cut for most agencies, among other things. He also pledged $775 million to pay off debt — $525 million more than in last year's budget.
The $9.64 billion budget aims to strengthen and revive the economy as the U.S. territory enters its eighth year in recession and struggles to reduce some $73 billion in public debt.
The budget does not call for layoffs or new taxes.
"We are finally paying off the debts of the past," Garcia said during a televised address to a joint legislative session. "Our island needs radical changes. For too long, previous proposals have only been cosmetic or sought a collective applause."
The governor is scheduled to formally submit the budget Wednesday, and legislators will debate it in upcoming weeks, with approval needed before June 30. Last year's budget stood at $9.77 billion.
U.S. investors and bondholders were awaiting details of the budget and are expected to monitor its impact on the economy after Puerto Rico sold a record $3.5 billion in general obligation bonds last month in part to generate more liquidity and refinance debt.
David Tawil, co-founder and portfolio manager of New York-based Maglan Capital, praised Garcia's push for a balanced budget, although he said reservations remain.
"It's an important achievement beyond the financial soundness," Tawil said. "It is all critical and goes a long way but may not necessarily be sufficient."
Opposition legislator Lourdes Ramos criticized Garcia for not acknowledging the island's contracting economy, the lack of jobs and dwindling funds. "It was disappointing," she said of his speech.
Hundreds of unionized workers gathered outside the seaside Capitol to protest the cuts.
Puerto Rico economist Gustavo Velez said the last balanced budget for the U.S. territory's government was in 1999, with governors borrowing over the past 14 years to finance deficits while violating the island's constitution requirement for balanced budgets. He said the government borrowed an estimated $29 billion from 2004 to 2013, adding that the money wasn't put into public works but rather was just used to let the island live beyond its means.
"That should never have occurred," he said, adding he feels Garcia had no other option but to balance the budget. "This is happening because of the current fiscal reality. They cannot go to the market to borrow more money. ... They have no choice but to face reality, to operate with the resources they have."
Garcia, a lawyer who became governor in January 2013, inherited a more than $2.2 billion deficit and the highest unemployment rate compared with any U.S. state, among other economic problems.
He has sought to diversify the economy and strengthen its industrial base, attracting international companies with tax incentives while also courting wealthy investors such as New York hedge fund executive John Paulson.
Earlier this month, German company Lufthansa Technik announced it would invest $20 million on a facility for aviation maintenance, repair and overhaul, while Arizona-based Honeywell Aerospace said it would spend $24 million to expand its business on the island.
Garcia also has made changes to two major public pension systems, noting they would run out of money soon if nothing was done. He also previously implemented new taxes and various measures to help generate some $1.5 billion in new revenue.
The island of 3.67 million people is struggling economically. More than 450,000 people have left in the past decade, and just 41 percent of working-age Puerto Ricans are in the labor force, compared to 63 percent in the U.S.

UPDATE 1-Puerto Rico governor announces $1.4 billion budget cut

Tue Apr 29, 2014 6:49pm EDT


(Updates throughout with details from speech, adds announcement)
(Reuters) - Puerto Rico's governor announced a $1.4 billion cut in public spending on Tuesday as the commonwealth government agencies braced for measures that will be taken to produce the first balanced budget in years.
Governor Alejandro Garcia Padilla unveiled his $9.64 billion budget proposal for 2015 in an address to the legislature that included a $775 million payment for Puerto Rico's long-term debt.
The current general fund budget is $9.835 billion for fiscal year 2014, which runs through June 30.
"We are beginning to pay for today's expenses with today's earnings. This balanced budget complies with my commitment to prepare a budget without deficit financing nor refinancing of debt," the governor said.
"We have accomplished this without firing anyone, respecting the daily bread of public workers," the governor said.
The governor said that he would cut government spending by an average 8 percent and would freeze hiring but added he would not make cuts to the Police Department or the University of Puerto Rico.
The governor also announced the fusion of 25 government entities, which he said would be undertaken without affecting services or employee rights. He also said he ordered a 10 percent cut in the budget for senior executive staff positions and for professional service contracts.
The government will also seek savings of $236 million in government payroll expenses through negotiated cuts in marginal employee benefits, as well as transferring school transportation service to island municipalities. Officials also said the least utilized and most obsolete schools would be shut down to save money.
There will also be savings through changes to Christmas bonus and sick leave benefits to public workers.
On a positive note the governor highlighted plans and recent achievements in the areas of manufacturing, high tech and financial services, tourism and agriculture.
Hundreds of public workers gathered outside the Capitol building in the afternoon to pressure the government to respect their collective bargaining contracts.
In February, when Garcia Padilla pledged to investors to deliver a balanced budget, he said making the government's public corporations self-sufficient is "one of the most significant, greatest challenges" facing Puerto Rico.
"We have to adjust to the reality of a smaller economy with less resources and we can't maintain a government structure as if this was an economy with much greater productive capacity," said economist Jose Joaquin Villamil, of Estudios Tecnicos.
While no new taxes are expected following a year in which the administration levied $1.5 billion in new taxes, the government could see added revenue because some new taxes are still being implemented, including a levy on Internet purchases and a plan to charge the sales and use tax on goods imported into the island.
Earlier this year, concerns over the Puerto Rico government's ability to deal with its debt, with an economy and population in decline since 2006, prompted all three credit ratings agencies to cut Puerto Rico's credit to non-investment grade, or a junk bond rating.
Last month's $3.5 billion bond deal gave the Puerto Rico government "breathing room" and analysts have awaited the budget to see how the administration will address fiscal challenges.
The commonwealth government is seeking to make the case that the economy is turning the corner.
In March, the island economy fell for a 16th straight month, but the 0.8 percent year-over-year decline was the smallest drop in more than a year, according to the Government Development Bank Economic Activity Index.

While the EAI is down 3.4 percent overall through the first three quarters of the current fiscal year, it has been on the rise for three straight months. (By Reuters in San Juan.; Editing by David Adams, David Gregorio and Ken Wills)

Friday, April 25, 2014

"Puerto Rico is becoming a narco-state": Under Pressure from the Drug Cartels, Puerto Rico is Collapsing - Canada Free Press 24/04/14 08:02 from puerto rico police department - Google News, and other news stories

» Under Pressure from the Drug Cartels, Puerto Rico is Collapsing - Canada Free Press
24/04/14 08:02 from puerto rico police department - Google News
Under Pressure from the Drug Cartels, Puerto Rico is Collapsing Canada Free Press In July 2010, an investigation by the US-DEA and the Puerto Rico Police Department resulted in a federal grand jury indictment for 158 people on heroin, cr...

Increasing involvement in the hemispheric illicit narcotics trade undermines the island's civil society

Under Pressure from the Drug Cartels, Puerto Rico is Collapsing

By Sierra Rayne (Bio and Archives)  Thursday, April 24, 2014 
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In July 2010, an investigation by the US-DEA and the Puerto Rico Police Department resulted in a federal grand jury indictment for 158 people on heroin, crack, cocaine, and marijuana drug trafficking charges, as well as firearms related offences. It was the largest ever federal law enforcement operation in the American territory.
Only two months later, the DEAindicted another 20 individuals—including seven US Postal Service employees—for trafficking large quantities of heroin, cocaine, and marijuana through the mail. Over 50 tons of marijuana valued at greater than US$150 million was sent into the island from the continental United States by the corrupt employees. A month later a further 68 persons wereindicted for drug trafficking.
The flurry of DEA indictments in Puerto Rico during 2010 came after the high-profile arrest of Angel “El Buster” Ayala-Vazquez in 2009. Ayala-Vazquez was the head of Puerto Rico’s largest drug trafficking organization and responsible for both imports to, and exports off, the island. A year later, the DEA hadcaptured the top drug trafficker for the entire Caribbean region, Jose Figueroa Agosto, widely viewed as the “Caribbean’s Pablo Escobar.” The power vacuum following Agosto’s arrest concerned the law enforcement community, who feared a potential battle among drug cartels to fill the void. In May 2011, the NYPD and federal agents took down Puerto Rican cartel kingpin Ricardo Gonzales-Santiago in Times Square, along with 79 pounds of cocaine valued at over a million dollars.
The DEA’s arrests reflect the increasing presence and activities of drug cartels on the island, and murder rates are going up accordingly. Since 2007, the homicide rate hasincreased 35 percent to a level that is almost equal to that in Colombia, almost six-fold higher than in the USA (and higher than in any single American state), and well above rates in Mexico, Panama, and Nicaragua. At least 75 percent of the killings areattributed to drug-related violence.

Puerto Rico is becoming a narco-state

Unemployment is also pervasive and the recent financial recession hit the island harder than the USA, leading many citizens into an economic relationship with the cartels. In 2012, the unemployment rate was around 15 percent, the labor force participation rate is only about 40 percent, and the child poverty rate isnear 60 percent. Corruption in the government, and especially the Puerto Rican police forces, is on the rise. In 2010, 134 agents from the anti-narcotics directorate were firedfor misconduct known or believed to be related to the drug trade and its criminal spin-off activities.
Hundred of millions of dollars have poured into Puerto Rico over the past few years from the US federal government in an attempt to bolster security forces and push back the cartels. And yet the cartels push forward, leading some to wonder if Puerto Rico is becoming a narco-state? Perhaps the real question is whether it ever stopped being a narco-state after its move in this direction during the 1980s. Along with drugs, more smuggled cash is moving through the territory, leading to the recent Justice Department designation as a “major bulk cash movement center.”
As the drug war heats up in Mexico, the cartels are—once again—moving more product through the Caribbean. Much of the cocaine coming through Puerto Rico moves into the United States directly, dominantly on the eastern seaboard, or is shipped on to Europe. Illegal plane flights used to bring most of the cocaine into the Caribbean, often dropping small shipments in places like the Dominican Republic, after which the cocaine was picked up and transferred to Puerto Rico via go-fast boats. Following a crackdown on illicit air traffic in the region, now the main transport vectors are “go-fast boats, privately-owned fishing and recreational vehicles, and cargo containers” coming direct from the South American sources. The Sinaloa cartel from Mexico is known to be active in the area, as are the Venezuelan, Dominican, Puerto Rican, and Colombian cartels and their proxies.
By mid-2012, another 45 Puerto Ricans were indicted by the DEA—working in concert with the Puerto Rico Police Department, the San Juan Municipal Police, and the FBI—as suspected drug cartel members and their associates. The trafficking operation that was targeted included employees at Puerto Rico’s main airport, as well as at Miami International Airport and Dallas/Fort Worth International Airport.
Nothing illustrates more clearly the increasingly disruptive influence the cartels are having in Puerto Rico than its declining population. People are actually fleeing the island and primarily moving to the mainland United States. Puerto Rico’s population peaked in 2004 at 3.83 million. Since then it has declined by over 160,000 people. Its net migration rate in 2013 was -7.73 migrants per 1,000 population, compared to a rate of +3.64 migrants per 1,000 population on the mainland.
Puerto Rico is asking for help, but senior security officials there say Washington isn’t listening as close as it could be, even after a majority of Puerto Ricans voted for statehood in late 2012. The law enforcement deficiencies aren’t restricted to the island, however. Last year, the New York Post reported that Connecticut cops had “completely botched” a case dealing with the importation of 250 pounds of cocaine from Puerto Rico to New York City.
By late 2013, another round of DEA indictments occurred against cartel members on the island, this time with the successors who took over after the Ayala-Vazquez and Agosto arrests in 2009 and 2010. A well-known businessman with government connections was a member of those arrested in 2013, and other individuals in the group had connections to Texas, Florida, and California. The attraction of Puerto Rico is simple. Once the narcotics make it onto the island, they don’t need to clear customs in order to be shipped onto the US mainland. Vito Guarino, a special agent in charge of the DEA’s Caribbean division, has stated that the “similarities between Miami in the 1980s and Puerto Rico and the Dominican Republic today are striking ... The Cocaine Cowboys, the Uzis, the shootouts that we used to have ... You’re seeing the same violence.”

The Puerto Rican New Year didn’t start off well. There were 13 murders in the first five days of 2014. By February, the island’s debt was downgraded to junk status by Standard & Poor’s and Moody’s. Electricity, water, and other costs of living areskyrocketing upwards while incomes stagnate or decline.¬† ¬† Under sustained pressure from the drug cartels, Puerto Rico’s civil society is collapsing in a synergistic spiral.

* * *

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