Puerto Rico Governor Avoids Scrooge Epithet by Paying Bonuses

  • Public employees owed $120 million in payments as of Dec. 20
  • Commonwealth owes $957 million in debt payments on New Year's

Puerto Rico Governor Alejandro Garcia Padilla will likely avoid comparisons to Ebenezer Scrooge by paying Christmas bonuses due to public employees as the commonwealth contemplates defaulting on bond payments at the start of the year.

The 44-year-old governor, who won’t seek re-election when his term expires in January 2017, will begin paying Monday about $120 million that workers were owed as of Dec. 20, according to an announcement posted Sunday on the administration’s website. Jesus Manuel Ortiz, a spokesman for the governor in San Juan, didn’t immediately respond to an e-mail and phone message.

The administration had said it wasn’t sure whether it had enough money to make the bonus payments, which economists say have a multiplier effect on the island’s struggling economy. Garcia Padilla also faces a $957 million interest payment on commonwealth and agency debt due Jan. 1, including $357 million on general-obligations. Puerto Rico’s constitution requires that officials must first pay general-obligation debt before other bills.

A 1969 commonwealth law requires the government to pay its workers a Christmas bonus if they work at least 700 hours that year, according to Jose Alameda, an economist and professor at the University of Puerto Rico at Mayaguez. Instead of implementing a raise at that time, lawmakers established the bonus to increase public-employees’ salaries, according to Sergio Marxuach, public-policy director at the Center for a New Economy, a research group in San Juan.

“I have to do everything in my powers to pay that money,” Garcia Padilla said during a Dec. 9 press conference in Washington . “If I have the funds, I have no option but to pay that money.”

The average salary of a central-government employee is $28,000, with most workers receiving a holiday bonus of about $600, according to Barbara Morgan, a spokeswoman who represents the Government Development Bank at SKDKnickerbocker in New York. The bank oversees the island’s finances and is in talks with bondholders to cut its debt load.

Officials project an economic impact of $150 million if the government pays its employees $120 million in bonus cash, according to Morgan. Alameda, the UPR professor, estimates a combined economic benefit of about $140 million from central-government, municipal and private-company bonuses.

Garcia Padilla is seeking to cut the island’s $70 billion debt load by asking bondholders to accept less than full price on their investments. The bonus announcement follows the governor’s unsuccessful bid to Congress to include a provision in a $1.1 trillion spending bill to allow commonwealth agencies to file for bankruptcy protection. President Barack Obama signed the measure last week.

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