The League of Cities of Puerto Rico said it will fight in other spaces and public forums in response to the decision of the Court of Appeals for the First Circuit in Boston.
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The executive director of the League of Cities of Puerto Rico, Cristina Miranda Palaciossaid the organization will continue to advocate on behalf of local governments and their communities in other public spaces and forums.
“The ruling by the Court of Appeals for the First Circuit in Boston demonstrates that the Fiscal Control Board and the state continue to leave our people, who depend on the essential services offered by municipalities, the government entity closest to the community, unprotected. Our local governments have assumed the provision of essential services to citizens, many of them the responsibility of the central government, without allocating the available funds, despite the continued imposition of unilateral austerity measures and without real proposals to strengthen our local governments so that they can continue the essential services that are essential to the well-being of our people and our communities,” Miranda Palacios said in a written statement.
Miranda Palacios’s expressions come after the Court of Appeals for the First Circuit in Boston ruled against the League of Cities of Puerto Rico, in a dispute between the Fiscal Control Board (JCF) and the Government’s instrumentalities (ASES, AAFAF, Retiro and CRIM). The demand has its genesis in Law 29-2019, better known as the “Law for the Reduction of Administrative Burdens of Municipalities”, which was promulgated by the then governor Ricardo Rosselló Nevárez.
The law was in effect for about a year, until May 2020. The JCF sued Puerto Rico in the Title III Cases court to repeal Law 29-2019.
Federal Judge Laura Taylor Swain accepted the petition and declared the law in dispute “null and void,” alleging that it did not comply with the Promesa Law and the certified Fiscal Plan.
In the lawsuit, the League of Cities of Puerto Rico requested the court to: (1) rule that the debts claimed by CRIM, ASES, and the Retirement System were nonexistent, based on the Board’s incorrect interpretation that Judge Swain’s decision to annul Act 29 was retroactive; (2) declare illegal the withholdings made by these entities against the Municipalities under the pretext of debt collection; and (3) prohibit the defendant entities from attempting to collect what corresponds to the period from May 17, 2019 to May 6, 2020 while Act 29 was in full force.
In addition, the League asked the court to prohibit the JCF from interfering with the fiduciary responsibilities that CRIM and AAFAF have towards the municipalities.
The First Circuit judges ruled that by declaring Act 29 null and void, the municipalities’ pre-existing pension and health plan obligations “remain in full force and effect,” even during the period in dispute, while the law was in effect.
Miranda Palacios shared that the position of the legal representation of the League continues to be that “Judge Laura Taylor Swain invalidated the law only prospectively, not retroactively, so the withholdings from the municipalities to pay a debt they did not have were not appropriate.”
Following the decision, local governments will not see the return of funds that CRIM and ASES unilaterally withheld, estimated at over $350 million. They will also have to continue making their contributions to the Retirement Plan for public employees and to the Government’s Health Plan.
“Both payments are the responsibility of the central government. The municipalities have lost some $350 million due to this mistaken decision, just at the time when the viability of 43 of them is at stake, with the elimination of the Equalization Fund. In addition, they have continued to assume responsibilities of the central government without receiving fiscal resources for this. This is a matter of justice for local governments, who once again are left without measures that strengthen their deteriorating municipal finances for the good of their communities,” said Miranda Palacios.
The League of Cities of Puerto Rico is a non-partisan political organization that seeks citizen empowerment, municipal autonomy, and the strengthening and interconnection of municipalities as the axes of local life and services close to citizens.
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