Wed, May 03, 2006 - Page 7 News List

Puerto Rico shuts down because of political infighting

AP , SAN JUAN, PUERTO RICO

Puerto Rican police clash with violent participants in a largely peaceful but angry march against the shutdown of many government departments, including Puerto Rico's 1,600 public schools and 120 government agencies, in San Juan's financial district on Monday.

PHOTO: AP

Schools closed. Building permits were on hold. Renewing a driver's license was impossible.

Many basic functions of Puerto Rico's government weren't available on Monday as the US commonwealth ran out of money and imposed a partial public-sector shutdown, putting nearly 100,000 people -- including 40,000 teachers -- out of work and granting an unscheduled holiday to 500,000 public-school students.

The first partial shutdown of the government in Puerto Rico's history happened despite last-minute attempts by members of the legislature and Governor Anibal Acevedo Vila to agree on a bailout plan.

Police and other emergency services weren't affected, but dozens of public offices were either shuttered or partially closed. Hundreds of government employees stood in the rain outside the capitol to protest the politicians' failure to avoid the shutdown, and to spur them into resolving the impasse.

"I'm not earning any money and the kids don't have classes," said protester Sonia Ortiz, a 44-year-old teacher and single mother with two children. "I have savings but not enough."

A protest late in the afternoon in San Juan's financial district turned into a confrontation between police and masked youths, who scrawled graffiti calling for a revolution. Officers used nightsticks to disperse the protesters and one youth was taken away in an ambulance. There were no reports of arrests.

Puerto Rico is saddled with a US$740 million budget shortfall because the legislature and the governor have been unable to agree on a spending plan since 2004.

Negotiations failed to produce an agreement on a proposed sales tax that would allow the island to secure a line of credit so it could pay public salaries through the end of the fiscal year on June 30.

"They have to solve this quickly," said Juan Marrero, a shop owner in a San Juan suburb, whose business was hurt by the closure of a nearby elementary school. At the school, a sign told parents to monitor news reports to learn when classes would resume.

All 1,600 public schools on the island closed on Monday, two weeks before the end of the academic year, along with 43 government agencies. Acevedo blamed "legislative inaction" on the shutdown.

"As of 8 am this morning, I don't have in hand a single legislative proposal that resolves this crisis," he told reporters.

Overnight, the leader of the Senate offered a compromise that would create a 5.9 percent sales tax that he said would raise enough money to pay off an emergency US$532 million line of credit that the government needs to finish the fiscal year.

But leaders in the House of Representatives said they would support only a 4 percent sales tax. The island currently has no sales tax.

Acevedo insisted that a 7 percent sales tax was necessary to pay for an additional US$640 million loan and avoid a partial government shutdown. Anything less than 7 percent would only postpone the crisis until July 1, when the next fiscal year begins, the governor said.

Members of the New Progressive Party, which controls the legislature, have blamed the governor for the crisis. The two sides never agreed on the 2005 or the 2006 budgets, and the government is using the 2004 budget to operate as debts pile up.

The government is Puerto Rico's largest employer, with some 200,000 workers. Salaries make up about 80 percent of the government's operational costs.

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