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30,000 could be fired amid Puerto Rico crisis

More than 30,000 government employees — about 14 percent of the public work force — could lose their jobs and new taxes will be introduced as Puerto Rico attempts to shore up its ailing economy.
/ Source: The Associated Press

More than 30,000 government employees — about 14 percent of the public work force — could lose their jobs and new taxes will be introduced as Puerto Rico attempts to shore up its ailing economy, the governor of the U.S. island territory announced Tuesday.

In a half-hour televised address, Gov. Luis Fortuno outlined a plan to cut a long-bloated work force — excluding police officers and teachers — and institute new taxes to increase revenue on the cash-strapped island, which is in its third year of recession. The layoffs will begin on July 1, the start of the new fiscal year.

The government is Puerto Rico's main employer, with 218,000 people, or 21 percent of the work force on the island of 3.9 million inhabitants. Economic analysts have been advising Puerto Rico, which currently has a $3.2 billion budget deficit, to slash its sprawling public payroll for years.

"The government is too big and spends too much," Fortuno said. "Simply, the government has to be minimized."

Most painful crisis in decades
The governor, a Republican who is the leader of the pro-statehood New Progressive Party, said Puerto Rico was facing its most painful financial crisis in decades, and failing to take immediate action to rein in spending would push the economy into a depression.

Opposition legislators could not immediately be contacted for comment.

Fortuno said he did not have an exact number for how many workers would be let go but said he was "afraid" it would exceed 30,000. The total will depend on the success of a voluntary retirement offer and savings from wage and benefit freezes, he said.

"We all must confront the reality of a bankrupt government and work together to return progress, opportunity and your future to you. The government may be bankrupt, but Puerto Rico is not," said Fortuno, who declared a fiscal emergency shortly after taking office on Jan. 2.

Salary reductions planned
Fortuno, who stressed that he was "conscious that this plan is painful," also pledged to reduce his own annual salary of $70,000 by 10 percent and that of his Cabinet officials by 5 percent over the next two years.

Among other measures affecting the public, he said he would implement a two-year moratorium on tax credits to businesses, except those involved in tourism, manufacturing, and films. Banks, corporations, and insurance companies, as well as islanders earning more than $100,000 annually, would have their income taxes boosted by 5 percent over two years.

Federico Torres Montalvo, president of one of the island's main labor unions, said the governor's proposals were intended to "dismantle public service and to give that space to the private companies." He said workers planned to protest Friday in front of La Fortaleza, a powder-blue mansion where governors have ruled since the 17th century.

Fortuno soundly defeated an incumbent tainted by federal corruption charges in November elections. During the gubernatorial campaign, Fortuno, 48, promised to reduce the tax rate and create thousands of private-sector jobs across the island, a U.S. commonwealth since 1952.