Momentum is building ahead of a proposed congressional hearing that aims to amend the federal PROMESA law that put debt-ridden Puerto Rico in a type of receivership .
Arizona Congressman Raúl Grijalva, who heads the House Natural Resources Committee, said earlier that hearings would be held in late October. But Orlando Congressman Darren Soto, a committee member who visited Puerto Rico this week, told the island press that the hearing may be in November.
Grijalva visited Puerto Rico in September, saying at the time that he’ll present a draft of a proposal to amend PROMESA, which was passed in 2016 and stands for Puerto Rico Oversight and Management and Economic Stability Act.
The law created a highly unpopular unelected fiscal control board to oversee Puerto Rico’s finances through a bankruptcy-like process. At the time, Puerto Rico was carrying more than $72 billion in debt, excluding debt held by government agencies and pension debt. The debt has since been considerably reduced under a plan that awaits federal court approval.
On Grijalva’s agenda:
- Appointment of a reconstruction coordinator to oversee the island’s recovery from Hurricane María.
- Public audit of the island’s debt.
- Federal funding for the oversight board, which is currently subsidized by the Puerto Rico government.
- Protections for education, health care and pension security.
The Senate would have to agree to any amendments to PROMESA, and that may prove difficult since many bills approved in the Democratic House are dying in the Republican Senate. While in Puerto Rico, Soto said he would support the amendments but hinted that they may have to be approved one at a time.
Some Orlando groups are organizing ahead of time to provide input into the congressional hearings and the amendment process. Florida is home to the largest population of Puerto Ricans in the states – over 1 million with the greatest concentration in Central Florida.
Checks and Balances
Grijalva said he hoped the amendments would add “more checks and balances,” according to a Bloomberg report, although Puerto Rico’s political status gives Congress ultimate control over the island’s affairs. The Natural Resources Committee and its counterpart in the Senate directly oversee the island.
The greater protections sought are in response to austerity measures, including slashing teachers’ pensions by 8.5% for those with larger pensions. The University of Puerto Rico budget also has been significantly reduced. The proposal is now before the Southern District Court of New York, the federal court overseeing Puerto Rico’s bankruptcy.
Puerto Rico began defaulting on its debt in 2015. The island’s debt is high because it borrowed to pay for government operations due to budget deficits that began in 2002.
In September, the fiscal board disclosed a plan to reduce the island’s total debt from $129 billion to $86 billion, or 33%, the New York Times reported. Reductions were even greater for certain debt holders. The plan must be approved by the federal court.
Still, a Government Accounting Office (GAO) report dated June states that experts on Puerto Rico’s debt are concerned that the amounts to be paid do not reflect the island’s ability to pay. The report added that payments are based on rosy economic projections.
The island is still reeling from a historic population migration to the states, including about 50,000 to Florida after Hurricane María, that is sapping the island of its workforce.
A debt analysis by the National Bureau of Economic Research, for example, states that up to 80% of Puerto Rico’s debt may need to be cancelled.
˜˜María Padilla, Editor