Tags: Luis Fortuño | puerto | rico | deficit

Puerto Rico's Gov. Fortuno Slashes Deficit

By    |   Wednesday, 16 February 2011 02:29 PM

When Luis Fortuño was sworn in as governor of Puerto Rico in 2009, the U.S. territory had a deficit that was 44 percent of its revenue. Moody’s was threatening to downgrade its bonds to junk status.

“I was facing, when I came in two years ago, the worst state budget deficit in the country,” Fortuño tells Newsmax. “Actually, it was so bad that we had to take out a loan to meet our first payroll.”

The first Republican governor in Puerto Rico since 1969, Fortuño turned that around by cutting government expenses by 20 percent. He eliminated 17,000 government jobs, modernized government services to reduce costs, and decreased expenditures for official vehicles, cell phones, and credit cards by 10 percent.

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In 24 months, Puerto Rico’s deficit has been reduced from 44 percent of revenues to 11 percent. Moody’s has upgraded Puerto Rico’s bonds to A3 status, their highest rating in 35 years.

Moreover, Fortuño has cut the maximum corporate tax rate this year from 41 percent to 30 percent. In 2014, it will go down further to 25 percent.

Starting in 2013, the average effective tax rate for individuals — comparable to the state and federal income tax bite combined — will drop from 9.4 percent to 6.7 percent, a 29 percent cut.

“It was so bad that actually before being sworn in, I had to fly up to New York to meet with the rating agencies to avoid being downgraded to junk status.” Fortuño says.

Instead of seeking a bailout, Fortuño says he began by cutting his own salary by 10 percent. Then he slashed the government payroll, including a 30 percent cut in the number of political appointees. By providing services on the Internet, he slashed more jobs.

“Our permitting process was in total disarray, and actually you had to go to 26 different agencies to obtain 28 different permits to do anything in Puerto Rico,” Fortuño says. “Today, you go to one office to obtain one permit, and you can do it through the Internet as well, and that’s important to all of us, because we want to continue providing services to people.”

A lawyer, Fortuño is personally frugal. He is proud that he still wears his tuxedo from high school.

At first, Fortuño got pushback from unions. “But at the end of the day, what we’re doing is, first of all we’re acting in a responsible way, and secondly, I spoke directly to the voters [and] they are keeping a lot more of their own money,” says Fortuño, who was a resident commissioner representing Puerto Rico without a vote in the House before he became governor.

The miracle that Fortuño pulled off should be a model for the country and every state. In contrast, President Obama, who took office in the same month as the Puerto Rican governor, has increased deficits and debt by trillions.

Fortuño says Obama’s policies are wrong. “I believe that we need to empower our businesses and our taxpayers, and if we do that, our economy will grow at a much faster pace than we are today,” Fortuño says. “Secondly, we cannot continue printing money to cover our deficit. Thank goodness the states can’t do that. So we have to bite the bullet, and that’s exactly what I did.”

As a member of Puerto Rico’s New Progressive Party, Fortuño is for making the U.S. territory the 51st state. President Reagan favored statehood, as does the platform of the Republican Party. But many Republicans worry that Puerto Rico would elect Democratic members of Congress.

Fortuño says that assumption is wrong. He notes that Puerto Ricans are proud to be American citizens and have been since 1917.

“We fought in every single war with courage and valor, alongside the people from every single state, and yet we do not fully participate in the decision-making process of the nation, and the laws that apply to every single citizen across the country also apply to the American citizens residing in Puerto Rico,” Fortuño says.

The governor, who was elected with an 11 percent margin, says there is a “misconception that we will be electing people from one party or another at the national level. Well, I don’t know what you call me, but certainly a governor with two-thirds of the legislators willing to cut the size of government by 20 percent in two years, slash taxes across the board significantly, and streamline the permitting process — I call that a Republican.”

Ronald Kessler is chief Washington correspondent of Newsmax.com. View his previous reports and get his dispatches sent to you free via e-mail. Go here now.

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When Luis Fortuño was sworn in as governor of Puerto Rico in 2009, the U.S. territory had a deficit that was 44 percent of its revenue. Moody s was threatening to downgrade its bonds to junk status. I was facing, when I came in two years ago, the worst state budget...
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Wednesday, 16 February 2011 02:29 PM
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