Calderón’s Budget Plays To Her Weaknesses

by John Marino

February 21, 2003
Copyright © 2003 THE PUERTO RICO HERALD. All Rights Reserved.

. JOHN MARINOGov. Calderón played to her weaknesses in the budget address she delivered this week, pledging tax relief for the middle class and budget boosts for island crime-fighting agencies.

The governor also used the opportunity to highlight her efforts to bring sound administration to the huge commonwealth government and to attack the corruption scandals that stained the administration of her predecessor and probable rival in 2004 -- former Gov. Pedro Rosselló.

Critics cried foul, accusing Calderón of using the annual State of the Commonwealth address to make a political speech.

But the governor, dressed in the bright red of her Popular Democratic Party, made no attempt to disguise the political attacks she launched at the opposition New Progressive Party.

"Punishing people for corruption is not political persecution," she said, a direct retort to Rosselló’s charge that the PDP administration was persecuting statehood supporters.

Several critics dubbed the speech a "call to battle," and it partially was. But governors throughout history have used the budget address to score political points, and expecting Calderón to do otherwise is naive.

There was much to praise and much to complain about in the latest address, Calderón’s third since taking office.

For example, she announced the establishment of a $20 million fund for the Land Authority to purchase land for conservation, a good idea on island increasingly covered by concrete.

Likewise, boosting Education spending by a substantial 20 percent is also good news, with the funds to be used to expand an innovative after-school program as well as to undertake a needed building improvement program at island schools.

But the governor also proposed granting across-the-board pay increases of $100 per month to public employees and also hiked the pension of commonwealth government retirees by $100 monthly.

While many government workers probably deserve a pay increase, it would be better to award them according to merit and on a percentage basis rather than a flat rate.

Moreover, now that public employees are unionized, pay raises would be better left to the negotiating committees representing workers and management at different government agencies rather than the sweeping pay raise announced by the governor. That just ups the hand of the workers at bargaining time.

Increasing the pensions of commonwealth government retirees is also a bad idea. The Commonwealth Employees Retirement System is broke, with an unfunded liability of several billion dollars, and this should only make matters worse.

Also, many government retirees, former managers, are probably living quite well. In fact, as a whole, government retirees are doing a lot better than many of their contemporaries in Puerto Rico who get by on social security payments.

The heart and soul of the Calderón budget message, however, was her call for middle-class tax relief and her dramatic boosting in public security spending.

On the first count, she passes with flying colors, but on the second count, it’s not clear whether her spending will add up to results.

Having slashed capital gains taxes in half during her first budget address, and having launched a $1 billion anti-poverty campaign in her second address, it was clear Calderón had to deliver some benefits to Puerto Rico’s healthy, but financially strapped middle class.

Rather than pushing forward with Rosselló administration plans for a repeal of the so-called marriage penalty tax and a rate cut of 1 percentage point across all but the highest tax bracket, Calderón fashioned together a patchwork of deductions to target the middle class.

The plan calls for increasing the deduction for married, working taxpayers to $3,000 from $300 and upping the child-care deduction for working couples to $1,200 from $800 for one child and to $2,400 from $1,600 for two or more children. Families with children can also claim a $500 deduction for the purchase of a computer.

Other facets of the plan include an increase in the deduction for dependents to $1,600 from $1,300, a 5 percent hike on individual tax deductions and a proposed tax credit, ranging from $50 to $250, for filing the short form.

The Calderón administration argues its alternative would more equitably target the middle-class than the previous proposals.

For example, a married couple earning over $150,000 annually would have received a savings of $8,295 under the Rosselló plan while they will receive $1,244 in savings under the Calderón plan.

A couple earning $15,000 annually would have received a savings of $8 under the previous proposal, while the Calderón proposal grants them $336 in tax savings.

Nearly 90 percent of taxpayers, those earning under $75,000, will receive 77 percent of all benefits paid out under the new scheme.

Given the previous cuts in the capital gains taxes, and the myriad of deductions available to higher-income taxpayers, the Calderón plan is more equitable.

The governor’s crime-fighting package, however, does not appear so sound. Sure overall spending on public security increases nearly 10 percent to $1.35 billion, but it’s not clear the money is going to be well-spent and the spending does not appear directed by any overriding plan that will direct the fight against crime.

The Police Department will get $90 million for new equipment and funds to hire 2,800 more officers. The Drug Control Office, meanwhile, will hire nine advisors earning over $50,000 annually and create a new statistics system.

But the embattled Forensics Sciences Institute, chronically underfunded, will only see a $600,000 increase -- not nearly enough to hire needed new staff. That’s despite the fact that the entity's inability to perform swift tests key to criminal investigations and prosecutions has prompted calls by the governor and Justice Secretary Anabelle Rodríguez for reform.

Backlogs at the agency often drag out criminal investigations for months and delay prosecutions, allowing dangerous criminals to return to the streets under a constitutional guarantee that they be tried within six months or be released pending trial.

It’s not only the spending priorities that raise questions about the public safety initiative, but that it represents a complete 180 degree turn-around in administration philosophy.

Former Police Superintendent Miguel Pereira, who was switched to Corrections in December after a year in the post, had argued there were more than enough police officers, and what the department needed was more training and equipment to better solve crime.

His successor, Superintendent Víctor Rivera, the former Corrections chief, has taken the exact opposite tack, arguing more police are needed. He also wants to cut down the time it takes to train new officers to get them on the street more quickly.

Rivera also overturned a restructuring plan instituted by Pereira that aimed to hold area commanders responsible for crime-solving rates and sought to decentralize the island’s detective bureau, housed in San Juan at the Criminal Investigations Corps, throughout the island. That plan, too, has been completely scrapped by Rivera.

Pereira’s proposed reform was not well-accepted by the department’s career officers, largely because it held them accountable for doing their jobs effectively. And his abrupt removal from the post came too soon to really allow the reform to take root. Rivera’s moves are simply returning the department to the status quo Pereira sought to overturn.

With three police chiefs under her belt, and a rising crime rate, Calderón had to address the issue in her budget.

This latest initiative looks a lot like throwing money at a problem, which can’t hurt. But it does not address the structural deficiencies inherit in the commonwealth’s crime-fighting efforts exposed by Pereira and others.

John Marino, City Editor of The San Juan Star, writes the weekly Puerto Rico Report column for the Puerto Rico Herald. He can be reached directly at: Marino@coqui.net

Self-Determination Legislation | Puerto Rico Herald Home
Newsstand | Puerto Rico | U.S. Government | Archives
Search | Mailing List | Contact Us | Feedback