A congressional oversight board created to help Puerto Rico through its 12-year fiscal nightmare is seeking to a 230 percent budget increase, drawing criticism for its spending and power struggle with island authorities.
Created in June 2016 by Congress with a $30 million budget, the Financial Oversight and Management Board for Puerto Rico is expected to seek a budget of $100 million, according to officials.
Documents show that the board, which is angling to take over the cleanup from Hurricane Maria, has a record of spending most of its funds on professional services like lawyers.
In its current budget documents, it is spending 86 percent of its $60 million budget on “professional services,” including for a $1,000 an hour Washington lawyer.
The unelected board, funded by island citizens, is starting to feel heat as it boosts its budget and power.
“Through these massive budget increases, the board is working overtime to quickly become a shadow government and a political institution instead of focusing on the long-term fiscal health of Puerto Rico,” said a high level source with detailed understanding of the oversight board budget and operations.
The criticism began before the end of last year when it sent a letter to the governor of Puerto Rico advising the government not to provide Christmas bonuses to its employees, which are mandated by law. Meanwhile salaries for the board are as high as $625,000.
“Every step of the way they’ve worked against the governor Puerto Rico,” said said the insider.
And as it steps into taking charge of the Hurricane Maria cleanup, even members of Congress who support Puerto Rico are irked at the power grab.
A board spokesman referred Secrets to public documents posted on its website.
In a sign of how the two sides don’t trust each other, the oversight board struck back at the commonwealth government, charging in a letter to congressional leaders this week that that the local government is doing “duplicative” and expensive legal work.
“Historically, the people of Puerto Rico have suffered from wasteful government spending. The FOMB is doing all that it can to avert such waste as the legal representative of the Commonwealth and its instrumentalities in the Title III proceedings so that the Commonwealth’s resources are spent on what matters most: providing for health, education, and safety and promoting economic development,” wrote board Chairman José B. Carrión III.
Still, local officials are questioning the board’s spending, especially at a time when the island is struggling to recover from Hurricane Maria. They feel the $100 million budget it is seeking could better be spent on island improvements and workers.
Among the contracts the board has is with Washington-based Munger, Tolles & Olson LLP. It was retained as specialists in constitutional law to fight a challenge to the board. The chief lawyer in the case charges $1,225 per hour, but the contract indicates it will give a little discount.
Said the agreement: “We will provide a 15 percent discount from our standard hourly rates. Our pre-discounted hourly rates for the attorneys currently assigned to your matter will be: Donald B. Verrilli, Jr. ($1,225), Ginger Anders ($800); Chad Golder ($735); Sarah Boyce ($660); Adele El Khouri ($600). Other attorneys in the firm may also be involved in this representation to the extent we find it appropriate. Paralegal time is billed at rates ranging between $190 and $320 per hour. We expect to adjust our rates annually on the first of the year, and of course will notify you of any increases in the rates of persons working on your matter. In addition, upon conclusion of the district court proceedings, we will endeavor to negotiate a mutually satisfactory fixed fee arrangement for proceedings in the Court of Appeals. We will also endeavor, upon conclusion of proceedings in the Court of Appeals, to negotiate a mutually satisfactory fixed fee arrangement for proceedings (if any) in the United States Supreme Court.”
