Puerto Rico budget crisis leads to tax plan

Puerto Rico budget crisis leads to tax plan
Copyright by The Associated Press

May 12, 2006
BY MIRANDA LEITSINGER

SAN JUAN, Puerto Rico -- More than 100,000 Puerto Ricans will head back to their government jobs and public schools will reopen next week after politicians announced an end to a budget crisis that partially shut down the government of the U.S. island territory.

The agreement announced late Wednesday calls for an emergency loan -- backed by the island's first sales tax -- to cover a $740 million budget deficit. The accord, reached by a special commission, did not specify the amount of the new levy and left other key issues up to legislative approval.

Thousands of Puerto Ricans stood outside the Capitol on Thursday, pressuring lawmakers to follow through on their pledge to back the commission's recommended solution. Some expressed concern that Pedro Rossello, leader of the opposition New Progressive Party, had warned that lawmakers weren't obligated to abide by the agreement.

''They're talking about an agreement but this march demonstrates that we don't trust the politicians,'' said Victor Villalba, president of one of the largest public-sector employee unions.

Rossello issued a statement later supporting the commission's recommendation, but saying he believed the sales tax should be as low as possible, around 4 percent, and that he opposes the use of loans to solve the island's structural budget imbalance.

AP