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<h1 id="reader-title">The Disaster Begins: the city of Toa Baja
shuts down in Puerto Rico</h1>
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<p> November 22, 2016<br>
</p>
<p><span>The first domino has fallen. On November 7, the
city of Toa Baja officially shut down. There is no
local government, <span><a
href="http://elnacional.com.do/ayuntamiento-en-pr-cierra-servicios-por-crisis-y-pone-empleados-de-vacaciones/"
target="_blank">no government services</a></span>,
and the only remaining employees – <span><a
href="http://www.elnuevodia.com/noticias/politica/nota/amanececerradalaalcaldiadetoabaja-2259689/"
target="_blank">the police</a></span> – are now
working without pay.</span></p>
<p><span>If the police stop working…then chaos will
consume the city of Toa Baja.</span></p>
<p><span><strong>A CHRONOLOGY FROM HELL </strong></span></p>
<p><span>The first sign of disaster came from the mayor
himself.</span></p>
<p><span>When Anibal Vega Borges lost the primary election
on June 5, 2016, he wasted no time in abandoning his
sinking ship.</span></p>
<p><span>Just eighteen days later, Borges announced <span><a
href="http://www.elnuevodia.com/noticias/politica/nota/renunciaelalcaldedetoabajaanibalvegaborges-2213870/"
target="_blank">his immediate retirement</a></span>
and an interim mayor – Jorge Ortíz – was appointed
until December 31, 2016.</span></p>
<p><span>And then a hellish chronology unfolded…</span></p>
<p><span><strong>August 2016</strong></span></p>
<p><span>A few weeks later in August, the Toa Baja
municipal hospital<em> (Centro de Diagnostico y
Tratamiento – CDT)</em> is put up for sale in order
to “<span><a
href="http://www.primerahora.com/noticias/gobierno-politica/nota/enventaelcdtdetoabaja-1173085/"
target="_blank">pay outstanding municipal debts</a></span>.”</span></p>
<p><span><strong>October 15</strong></span></p>
<p><span>The city stops paying its <span><a
href="http://www.primerahora.com/noticias/puerto-rico/nota/sinchavoselmunicipiodetoabaja-1184608/"
target="_blank">884 employees</a></span>.</span></p>
<p><span><strong>November 2</strong></span></p>
<p><span>Municipal employees are still working unpaid,
since October 15.</span></p>
<p><span>They demonstrate to demand their wages, and to
call the ex-mayor a <span><a
href="https://www.youtube.com/watch?v=q22397qaM14"
target="_blank">thief and a coward</a></span>.</span></p>
<p><span><strong>November 4 </strong></span></p>
<p><span><span><a
href="http://www.primerahora.com/noticias/puerto-rico/nota/toabajasindineroparaalimentarparticipantesdeprogramadeenvejecientes-1186026/"
target="_blank">Senior citizen nutrition programs</a></span>
close throughout the city.</span></p>
<p><span><strong>November 7 – THE BIG DAY</strong></span></p>
<p><span>The <span><a
href="http://www.primerahora.com/noticias/isla/nota/vendencdtdetoabajaparapagardeuda-1186465/"
target="_blank">CDT hospital is sold</a></span>
for $4,251,000 to private buyers, in order to “pay
municipal debts.”</span></p>
<p><span>All 884 city employees are sent home “<span><a
href="http://elnacional.com.do/ayuntamiento-en-pr-cierra-servicios-por-crisis-y-pone-empleados-de-vacaciones/">on
vacation</a>,” </span>and the government of Toa
Baja shuts down.</span></p>
<p><span>All government offices close, and <span><a
href="http://www.sr490.com/2016/11/07/toa-baja-en-puerto-rico-cierra-el-ayuntamiento-por-falta-de-liquidez/"
target="_blank">88,000 city residents</a></span>
are left without municipal services.</span></p>
<p><span><strong>But it gets worse…</strong></span></p>
<p><span>The press is suddenly informed that the <span><a
href="http://www.primerahora.com/noticias/puerto-rico/nota/sinchavoselmunicipiodetoabaja-1184608/"
target="_blank">Internal Revenue Service</a></span>
(IRS) has frozen all of Toa Baja’s accounts.</span></p>
<p><span>Why?</span></p>
<p><span>Because for years, the government of Toa Baja had
been withholding social security payments from all its
employees’ paychecks…</span></p>
<p><span><strong>But it kept the money, and failed to
forward it to the IRS !</strong></span></p>
<p><span>The debt to the IRS exceeds <span><a
href="http://www.primerahora.com/noticias/puerto-rico/nota/sinchavoselmunicipiodetoabaja-1184608/"
target="_blank">$1.5 million</a></span>…and the
IRS will not un-freeze the bank accounts of Toa Baja,
until the debt is fully repaid.</span></p>
<p><span><strong>November 12</strong></span></p>
<p><span>The government is still shut down.</span></p>
<p><span>No one has been paid.</span></p>
<p><span>Interim mayor Jorge Ortíz is under so much
pressure, that he tells the press: “Keep it up…I can <span><a
href="http://www.primerahora.com/noticias/gobierno-politica/nota/mepuedoirmananamismo-1187671/"
target="_blank">quit this job tomorrow</a></span>,
you know.”</span></p>
<p><span><strong>November 22</strong></span></p>
<p><span>As of today, a mere handful of the 884 employees
are still working. These are <span><a
href="http://www.elnuevodia.com/noticias/politica/nota/amanececerradalaalcaldiadetoabaja-2259689/"
target="_blank">mostly policemen</a></span>, and <strong><u>none</u></strong>
of them have been paid since October 15.</span></p>
<p><span><strong>MORE DOMINOES MAY FALL</strong></span></p>
<p><span>Toa Baja is the first municipal tragedy in
Financial Control Board Puerto Rico. But what is even
more frightening, is the municipal default landscape
throughout the entire island.</span></p>
<p><span>If Toa Baja was keeping two sets of books with
the IRS, what are all the <em>other </em>municipalities
doing…not only with the IRS, but with their pension,
vendor and contractor accounts?</span></p>
<p><span>The total long-term debt for all 78 Puerto Rico
municipalities surpassed the $5 billion mark in 2015,
and all of them have pension obligations that are not
fully accounted for.</span></p>
<p><span>At least 25 cities in Puerto Rico currently
receive over 50 percent of their general fund revenue
from the Commonwealth government…but the Commonwealth
will now be run by a cost-cutting Financial Control
Board (FCB).</span> </p>
<p><span>What will the FCB say, and do, to these 25
cities?.</span></p>
<p><span>Toa Baja was only the first domino. There are 77
more…and all of them are in trouble.</span></p>
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