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Puerto Rico Government Workers Will Be Furloughed For 1st Time in Island’s History

Puerto Rico Government Workers Will Be Furloughed For 1st Time in Island's History

SAN JUAN — A federal control board overseeing Puerto Rico’s crisis-wracked finances announced Friday that it will impose furloughs for the first time in the U.S. commonwealth’s history.

Furloughs of up to two days a month will start Sept. 1 and apply to all government employees except police, said Natalie Jaresko, the board’s executive director. She said these will continue until the end of fiscal year 2018.

“Where we are today is still very concerning,” she said.

The meeting turned contentious after the announcement, with Puerto Rico officials rejecting the board’s decision.

“There will be no furloughs. You can take that to the bank,” said Christian Sobrino, the Puerto Rico governor’s representative to the board, as he sat on stage next to board members during the public meeting.

Rossello did not return a message for comment but said in a statement that he would make a public address Friday afternoon. He said on Thursday that he would go to court to fight furloughs that he argues would affect more than 138,000 employees and lead to a $600 million negative economic impact in the next two years.

 Board chairman Jose Carrion warned that going to court could lead to deeper furloughs if implementation is delayed.

“We do not consider this a recommendation as the government alleges,” he said.

Jaresko said the furloughs are not permanent and that Puerto Rico’s government has the power to end them earlier than forecast if it meets a couple of conditions, including the required $218 million in savings.

 The board had originally proposed furloughs of two days a month for teachers and four days a month for other government workers as a way to cut government spending by up to $40 million a month. In addition, the board is expected to vote in upcoming weeks on whether to eliminate all Christmas bonuses.

More than a dozen of Puerto Rico’s 78 municipalities already have implemented their own furloughs in recent months as they struggle with shrinking budgets.

The board on Friday also briefly talked about reforming Puerto Rico’s public pension system, which faces nearly $50 billion in liabilities. Board members said all newly hired employees will be enrolled in Social Security. Currently, teachers and police officers in Puerto Rico do not receive Social Security and depend solely on the public pension system.

The board also said the system will face a 10 percent cut.

“Unfortunately, we find ourselves in a situation where honoring 100 percent of the obligations is not workable,” said board member Ana Matosantos.

Sobrino disputed that, saying that a bill currently being debated by Puerto Rico legislators will protect the system from any cuts. He also warned that if no action is taken, the system will become insolvent in the next couple of weeks.

Puerto Rico is mired in a 10-year recession and seeking to restructure a portion of a $73 billion public debt load in a bankruptcy-like court process that recently began.

“The simple fact is that Puerto Rico’s government has run out of money,” said board member Andrew Biggs. “It will have to raise taxes and reduce spending.”

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STORM WATCH: ‘Torrential Downpours, Gusty Thunderstorms’ Forecast For The Region In The Next Five Days

STORM WATCH: 'Torrential Downpours, Gusty Thunderstorms' Forecast For The Region In The Next Five Days

AREA TO WATCH: The area highlighted in red is where a tropical depression or storm may develop during the next five days. The Virgin Islands and Puerto Rico could be affected by this system.

MIAMI — August is historically the beginning of the annual ramp up of hurricane season in the Atlantic, and right on cue, there are a couple of areas to watch in the Atlantic through next week.

There have been five Atlantic tropical storms so far this season, but all of them were short-lived. Four of those storms did affect land, mainly with heavy rain.

There is the potential for two tropical systems, one in the Atlantic and one in the Caribbean, to slowly develop and drift westward over the next week.

The next two names on the list of tropical storms in the Atlantic for 2017 are Franklin and Gert.

Residents and those planning vacations around the Caribbean should closely monitor the weather and forecasts.

Up to this point in the season, there have been extensive areas of dry air and Saharan dust as well as a large zone of strong westerly winds aloft. These three factors act as a strong deterrent toward tropical storm formation and can bring an early demise to well-developed tropical storms and hurricanes.

Conditions are gradually becoming more favorable for development in the tropical Atlantic with dry air, dust and strong winds aloft on the retreat. Waters are sufficiently warm over the region.

One system, dubbed 90L, was located close to South America over the south-central Caribbean and is the more immediate concern of the two.

“In the short-term, the close proximity to South America will be a significant inhibiting factor for development,” according to AccuWeather Senior Meteorologist Mike Doll.

“However, once this system moves away from South America, it will have a better chance for development sometime this weekend,” Doll said.

Depending on the track and speed of strengthening of 90L, some of the islands and mainland areas may be affected by adverse conditions and perhaps localized flooding.

An immediate concern for torrential downpours, gusty thunderstorms and building seas will be in northwestern Venezuela, northern Colombia, Aruba, Bonaire and Curacao through Saturday.

As 90L grows in size, the risk of flooding downpours, gusty winds and rough seas may affect Jamaica late Saturday night and Sunday.

Westerly steering winds may bring 90L close over Nicaragua and Honduras later this weekend.

While this track would mark an end for strengthening, the two nations could be affected by damaging and dangerous conditions from flooding and gusty winds.

Should 90L take a more northwesterly track, toward the Yucatan Peninsula of Mexico, it would have more time for development and may then wander into the southwestern Gulf of Mexico next week.

The system farthest away from North America, dubbed 99L, has the potential to gradually develop into next week and beyond, according to AccuWeather Senior Meteorologist Mike Doll.

“Nintey-nine L could become a tropical depression by the end of the weekend,” Doll said.

Provided the system avoids strong winds aloft and dry air to the north, significant additional strengthening could occur.

If 99L develops and/or survives, then it is likely approach the Windward and Leeward islands during the middle to latter part of next week. Parts of these islands are likely to experience an uptick in showers and thunderstorms at very least during that time.

The exact track of 99L in relation to the proximity to the islands will depend on how quickly the system strengthens. A weak and poorly organized system is more likely to track to the west. A developed system is more likely to track north of west.

STORM WATCH: 'Torrential Downpours, Gusty Thunderstorms' Forecast For The Region In The Next Five Days

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Bulletproof 360 Collagen Protein Bars, Bites Sold In The U.S. Virgin Islands and Puerto Rico Are Being Recalled

Bulletproof 360 Collagen Protein Bars, Bites Sold In The U.S. Virgin Islands and Puerto Rico Are Being Recalled

BELLEVUE, Wash. — Protein bars and bites from  Bulletproof 360 are being recalled because they were made with cashew butter that may be contaminated with Listeria.

The Washington state-based company said that the bars and bites were sold in the U.S. Virgin Islands and Puerto Rico, among other places nationally and internationally.

Five varieties are part of the recall: fudge brownie, lemon cookie and vanilla shortbread collagen protein bars; and fudge brownie and vanilla shortbread collagen protein bites.

That’s because those products were made with cashew butter from HVF, Inc., where facility testing came back positive for Listeria contamination. Bulletproof said it will be shipping out replacement bars made with a new cashew butter supplier.

No other Bulletproof products, including the company’s collagen protein powder, are affected by the recall.

No illnesses have been reported to date, the company said. adding that they were sold in the U.S. Virgin Islands and Puerto Rico, among other places nationally and internationally.

Listeria monocytogenes can cause serious and sometimes deadly infections, especially in young children, elderly people or those with weakened immune systems. Symptoms include high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea. Listeria can cause miscarriages and stillbirths in women who are pregnant.

The following products are being recalled:

Product Packaged Individual Net Wt. Box Net Wt. Individual UPC Box UPC Use by Dates Lot numbers
Fudge Brownie Collagen Protein Bar Individually packed in foil wrappers, then 12 packed in a box. Bar: 1.58oz (45g) 18.96 oz (540g) 815709021498 815709020811 11/1/2017
11/6/2017
11/14/2017
11/23/2017
12/1/2017
12/19/2017
12/25/2017
0957-011007-011087-011177-011257-011437-011497-01
Fudge Brownie Collagen Protein Bite Individually packed in foil wrappers, then 15 packed in a box. Bite:0.74 oz (21g) 11.10 oz(315 g) 815709021528 815709021535 12/27/17
11/28/2017
12/8/2017
1227-011327-011517-01
Lemon Cookie Collagen Protein Bar Individually packed in foil wrappers, then 12 packed in a box. Bar: 1.58oz (45g) 18.96 oz (540g) 815709021801 815709021795 11/7/2017
11/8/2017
12/14/2017
1017-011027-011387-01
Vanilla Shortbread Collagen Protein Bar Individually packed in foil wrappers, then 12 packed in a box. Bar: 1.58oz (45g) 18.96 oz (540g) 815709021481 815709020804 11/15/2017
11/22/2017
11/29/2017
12/11/2017
1097-011167-011237-011357-01
Vanilla Shortbread Collagen Protein Bite Individually packed in foil wrappers, then 15 packed in a box. Bite:0.74 oz (21g) 11.10 oz(315 g) 815709021504 815709021511 11/20/2017
11/27/2017
1147-011217-01

The recalled products were distributed between April 7 and June 12, 2017, in retail stores nationally and in the U.S. Virgin Islands and Puerto Rico and on bulletproof.com to customers nationally and in the following locations: Australia, Bahrain, Bermuda, Bolivia, Brazil, Brunei Darussalam, Canada, Cayman Islands, China, Finland, France, Germany, Guam, Hong Kong, Hungary, Iceland, Israel, Japan, Korea, Kuwait, Liechtenstein, Macau, Malaysia, Malta, Mexico, Monaco, Netherlands, New Zealand, Norway, Oman, Philippines, Puerto Rico, Romania, Saudi Arabia, Singapore, Spain, Switzerland, Taiwan, United Arab Emirates and the United Kingdom.

What to do

Customers who purchased the recalled products should not eat them, but return them to Bulletproof for a replacement or bulletproof.com store credit.

Consumers with questions or concerns may contact Bulletproof customer service at 1-425-434-9704 Monday through Friday, from 9 a.m. to 5 p.m. (PDT).

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SPECIAL REPORT: Shunned From Bond Market, Territory Will See If It Can Float Itself Out Of Its Cash Crisis

SPECIAL REPORT: Shunned From Bond Market, Territory Will See If It Can Float Itself Out Of Its Cash Crisis A nurse stands next to closed toilets at the Juan F. Luis Hospital and Medical Center in Estate Diamond near the Sunny Isle Shopping Center on St Croix. (PHOTO BY: Alvin Baez/Reuters)

CHRISTIANSTED — For a glimpse at the precarious financial health of St. Croix, visit its public hospital.

Pipes underneath the emergency room collapsed in May, causing waste water to back up through the drains.

Now workers and visitors – even patients – use portable toilets set up on the sidewalk.

The hospital doesn’t have the cash for new plumbing.

For years the Virgin Islands funded essential public services with help from Wall Street. Investors lined up to purchase its triple-tax-exempt bonds, a form of debt free from municipal, state and federal taxes.

Now the borrowing window has slammed shut. Trouble in neighboring Puerto Rico, which recently filed for a form of bankruptcy after a string of debt defaults, has investors worried that the Virgin Islands might be next.

With just over 100,000 inhabitants, the protectorate now owes north of $2 billion to bondholders and creditors.

That’s the biggest per capita debt load of any U.S. territory or state – more than $19,000 for every man, woman and child scattered across the island chain of St. Croix, St. Thomas and St. John.

The territory is also on the hook for billions more in unfunded pension and healthcare obligations.

“We have a government that we can’t afford, and now all of it is converging,” said Holland Redfield, a former six-term St. Croix senator who hosts a radio talk show about politics in the territory. “We’re getting to the point where we may have a potential meltdown.”

Ratings agencies have downgraded the islands’ credit ratings deep into junk territory. With the U.S. Virgin Islands shut out of the credit markets after a failed January bond issue, officials are scrambling to stabilize its finances after years of taking on debt to plug yawning budget holes.

The government proposes to slash public spending by 10 percent. It recently hiked taxes on liquor, cigarettes, sugary drinks and vacation timeshares. And it has threatened to auction homes and businesses of property-tax deadbeats.

Gov. Kenneth Mapp is quick to reassure bondholders that they get first crack at one of the territory’s largest funding sources: rum taxes. The money pays debt service before heading to government coffers, a protection called a lockbox.

The Virgin Islands has “never been late on a payment, much less defaulted on a bond or loan agreement,” Mapp said during his State of the territory address in January.

But how these islands will recover from years of budget deficits and a severe liquidity crisis remains to be seen. The territory lost its single-largest private employer five years ago when a refinery shut down.

Gross domestic product has declined by almost one-third since 2008. At times this year the government was operating with just two days’ cash on hand.

Locals live with pitted roads, crumbling schools, electricity outages and deteriorating medical care.

At the Juan F. Luis Hospital and Medical Center, plumbing troubles are just the beginning. Doctors have stopped performing some vital procedures, including implanting pacemakers and heart defibrillators, because the facility can’t pay suppliers for the devices, officials say.

“We have gone from bad to worse, and the patients are the ones who are suffering,” said Dr. Kendall Griffith, an interventional cardiologist who recently left the island to take a job in a Georgia hospital. “It’s forcing physicians to make hard decisions.”

Forgotten Islands

Before Puerto Rico imploded under $70 billion in debt and $50 billion of unfunded pension liabilities, few in Washington noticed troubles brewing in the other inhabited U.S. territories of American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands.

Residents of these places are U.S. citizens, but they can’t vote in presidential elections and their Washington delegates are non-voting figureheads. Despite high poverty rates and joblessness, the territories receive just a fraction of the federal funding allocated to U.S. states for entitlements such as Medicare and Medicaid.

To bridge the gap, some have turned to the bond market. Bond issues typically fund infrastructure and capital projects. But in the case of Puerto Rico and the U.S. Virgin Islands, officials increasingly relied on borrowed money to fund government operations.

Debt loads for both territories have grown to staggering proportions, now surpassing 50 percent of their respective GDPs. That’s higher than anywhere in the nation and sharply above the state median of 2.2 percent, Moody’s Investors Service found.

(For a graphic on U.S. territory debt, see: tmsnrt.rs/2h8TGIo)

Bond buyers for years whistled past the territories’ shaky finances, comforted in the knowledge that these governments couldn’t seek bankruptcy protections available to many municipalities.

“There was an idea that because of the lockbox structure and the fact that the territories did not have a path to bankruptcy, they had to pay you,” said Curtis Erickson, San Francisco-based managing director of Preston Hollow Capital, a municipal specialty finance company.

That all changed in 2016 when Congress passed legislation known as PROMESA giving Puerto Rico its first access to debt restructuring. The move sparked a ferocious battle among creditors to see who would shoulder the largest losses.

Investors quickly surmised the U.S. Virgin Islands might pursue the same strategy. In December, S&P Global Ratings downgraded the territory by a stunning seven notches to B from BBB+, putting it well below investment grade.

The U.S. Virgin Islands is adamant that S&P and other ratings agencies overreacted. The territory has been unfairly “tainted by Puerto Rico’s pending bankruptcy,” and has no intention of pursuing debt restructuring, said Lonnie Soury, a government spokesman.

In addition to tax hikes and budget cuts, he said the current administration is looking to do more with its tourism and horse racing industries to boost development.

Big Debts, Few Options

In the meantime, the U.S. Virgin Islands is trapped in a circle of hock that’s making it tough to maneuver.

The government and its two public hospitals, for example, owe a combined $28 million to the territory’s water and power authority, known as WAPA. In turn, WAPA owes about $44 million to two former fuel vendors.

Then there’s the $3.4 billion of unfunded liabilities for public pensions and retiree healthcare. The pension fund is 19.6 percent funded and projected to run out of money by 2023.

Pensioners can wait months before their annuities start, because the government is behind on its contributions. St. Croix resident Stephen Cohen, 67, said it took almost a year after he retired as a high school biology teacher before he received his first check in 2016.

(REUTERS NEWS SERVICE)

SPECIAL REPORT: Shunned From Bond Market, Territory Will See If It Can Float Itself Out Of Its Cash Crisis

A nurse pushes a patient in a wheelchair through a hall of the Juan F. Luis Hospital and Medical Center (PHOTO BY: Alvin Baez/Reuters)

SPECIAL REPORT: Shunned From Bond Market, Territory Will See If It Can Float Itself Out Of Its Cash Crisis

SPECIAL REPORT: Shunned From Bond Market, Territory Will See If It Can Float Itself Out Of Its Cash Crisis