Puerto Rico governor expected to sign budget

SAN JUAN, July 1 (Reuters) - Puerto Rico's governor was expected to sign as soon as Thursday a $9.133 billion fiscal 2011 budget that the U.S. commonwealth's legislators approved as protesters and police clashed.

The general fund budget for the fiscal 12 months beginning Thursday is $61 million less than Governor Luis Fortuno's first proposal, which had to be pared after he dropped plans for a video lottery that had been forecast to raise $220 million annually.

Majority, pro-statehood New Progressive Party lawmakers on Wednesday worked on the budget while outside the Capitol police skirmished with protesting University of Puerto Rico (UPR) students and union members.

The disturbance provoked the minority Popular Democratic Party to abandon the legislative session in protest of the way the police handled the incident. About a dozen protesters received injuries.

Earlier on Wednesday, Fortuno had predicted a budget would be passed despite Senate opposition to a plan to raise $110 million through a property tax amnesty that officials hope will bring in back taxes and add unregistered homes to the tax rolls.

Besides the property tax measure and cost cutting, the administration will try to plug the $220 million gap by raising an extra $45 million from slot machines at island casinos as the government cracks down on illegal slot machines. More aggressive tax enforcement is expected to supply the balance.

Images of the disturbance showed a police riot squad pushing back protesters with batons and protesters throwing debris. Police used tear gas on the demonstrators. The clash began after students tried to enter a Senate hearing room to read a statement.

The protests were spurred by lawmakers' recent approval of legislation to expand the membership of the UPR Board of Trustees and to have UPR decisions be bound by electronic, secret vote. The protesters also opposed Fortuno policies on government layoffs and funding of the university.

The students just ended a two-month strike but could walk out again after university authorities announced an $800 annual "special fee" aimed at raising $40 million toward filling an expected deficit of nearly $200 million.

Fortuno inherited a $3.5 billion deficit upon taking office in January 2009 and has been cutting government spending with a target of a balanced budget by 2013. The Puerto Rico Planning Board predicts the island's economy will grow by 0.7 percent during fiscal 2011. That would end a four-year-old recession. (Reporting by Reuters in San Juan; Writing by Michael Connor in Miami; Editing by Kenneth Barry)