SAN JUAN , Puerto Rico ( CNN ) -- Puerto Rico 's Gov . Luis Fortuno on Tuesday outlined a plan that would cut spending by $ 2 billion per year and slash government payrolls by what could be more than 30,000 workers , or 10 percent of the government 's work force . `` It 's up to us to confront the bitter reality that the government is bankrupt , '' Gov . Luis Fortuno said Tuesday . `` It 's up to us to confront the bitter reality that the government is bankrupt , '' he said in a televised address . The number of laid-off workers will depend on how many accept voluntary buyouts and how many agree to cut their hours , he said . `` But I am frank , '' he said . `` The quantity could be significant and I fear they could exceed 30,000 workers . '' Though he did not lay out a timetable , Fortuno prefaced his prediction by calling for `` immediate action '' to emerge from a crisis that has left the government unable to pay its bills . The situation is dire , he said . `` Imagine that in June , the government stopped paying the light bill , '' he said . `` Or the water and phone . '' Failure to take quick action , he predicted , could delay recovery by a decade . `` Simply put , I am not going to permit it , '' he said . Fortuno said his plan would slash government operations by 10 percent , cut his own salary by 10 percent , cut salaries of chiefs of agencies by 5 percent until 2010 , and freeze others ' salaries . He said since entering office two months ago , he discovered the fiscal deficit is four times greater than what he had been told -- or more than $ 3.2 billion , which translates into the highest per capita deficit figure in the nation . Failure to take immediate action would result in an unemployment rate above 10 percent in two years , he added . To achieve his `` reconstruction plan , '' Fortuno said he was sending the Legislative Assembly proposals to inject money into the economy through public works and to resolve the fiscal crisis `` that has broken the government . '' In addition to the $ 5 billion that Puerto Rico is to receive under the federal stimulus plan , Fortuno said he was submitting to the legislative assembly a plan for $ 500 million to provide benefits , carry out public works projects and create jobs . A stimulus package would invest $ 180 million to guarantee loans to small- and medium-sized businesses , he said . An additional $ 142.5 million would be for public works projects in the cities -- $ 100 million of which would go directly to mayors , he said . In addition , more than 106,000 pensioners making less than $ 20,000 per year will each get a voucher worth $ 300 , he said . More than 5,000 families that risk losing their homes because of lost jobs or lost income of 20 percent or more would be eligible for a program to reduce their monthly payments -- either by lowering their mortgage interest rates or lengthening the term of their loans , he said . `` Public-private alliances '' will help ensure Puerto Rico 's port and highways have the money they need to keep working , he said . Fortuno said he would work to avoid increasing taxes on items that disproportionately affect the middle class , like gasoline and cellular phones . But he said he would impose a temporary 5 percent increase on income tax for corporations , banks , insurance companies and international banking entities as well as for individuals making more than $ 100,000 per year and couples making more than $ 150,000 per year . The only permanent tax increase will be levied on cigarettes , wine and beer , he said . `` Simply put , the government has to shrink , '' he said . `` I know that this plan is painful , but we have no alternative . '' Some union representatives said the plan was gruesome and called for a series of protests this week . Most of the syndicates had negotiated collective agreements with the former governor . Fortuno argued that those agreements may not be honored since the agencies that negotiated them failed to identify where the money was to come from . Journalist Nuria Sebazco contributed to this story from San Juan , Puerto Rico .
Gov . Luis Fortuno wants to cut spending by $ 2 billion , cut government jobs . Fortuno : ` ` It 's up to us to confront the bitter reality that the government is bankrupt '' Fortuno : ` ` I fear they could exceed the '' government job limit '' Fortuno : Without immediate action , unemployment could reach 10 percent in two years .