Puerto Rico Gov. Ricardo Rossello is downplaying the island's debt crisis as he makes his pitch for U.S. statehood, and says that not only does the island territory have a plan to service its debt, but that becoming America's 51st state would not add to the already high per-capita debt load of U.S. citizens.
"We have a fiscal plan with a clear direction," Rossello told the Washington Examiner during a recent interview in Washington. "We've identified what moneys are available for debt service. Those are — that's what's going to be used to pay our creditors."
Rossello confirmed that his government has embarked on a plan to establish public-private alliances, essentially the leasing of public properties, including seaports, regional airports and other facilities for periods of 25 to 30 years.
"That is not to say that we are selling assets," Rossello said. "We are actually arriving at arrangements with the private sector so that they can have access to either generating infrastructure, gaining some money, but the actual assets become part of the state."
For example, he said the island is in need of energy generation, but the infrastructure for such a project would cost about $800 million.
"So what we do is we have a bid for the private sector to come in, to build that structure, to generate that energy, make profit off of that energy generation, which would actually be a reduction in the costs for the energy of the people of Puerto Rico," Rossello said.
The plan could allow the government to secure $500 million in bids just this summer, though Rossello did not specify how the profits from the plan would be spent.
Rossello proposed a 2018 budget of $9.6 billion in late May, but the congressionally sanctioned financial board is currently mulling over next steps toward repaying its debts.
But Rossello says none of these hurdles should hurt Puerto Rico's statehood effort.
Rossello said the island would not burden the U.S. with its financial woes if approved as a state. He proposed Puerto Rico would not be adding to the national debt, but reducing it, at least on a per capita basis. The island's 4.3 million residents would each need to pay $16,697 to erase its $73 billion of public debt, while U.S. citizens living in states each carry $61,364 in debt for the federal government's $19.9 trillion debt.
The chances of becoming a state appear to be slim. The island has held five nonbinding plebiscites since 1967. The past two referenda concluded the majority of voters want to become a state, though this last one only reported a 23 percent participation rate.
In the meantime, the territory is struggling to cope with its debt crisis, one that dwarfs the $18 billion debt crisis Detroit went through in 2013.
A high poverty rate and ongoing recession have made it even harder for Puerto Rico to cope with the crisis. Many have left for jobs in the United States, and Puerto Rico has lost 10 percent of its population since 2005, when it was 3.8 million.
Rossello said his government still has the resolve to become a state even as it tries to reversing years of overspending is its priority, despite one recent contradicting report.
Oversight Board Chairman Jose Carrion sent Rossello a letter in June that said he was worried his efforts to steer the territory out of bankruptcy "may be waning," and said cooperation between the board and administration "may be receding."
"I was very surprised by that letter. I think there were some pressures from other places. But the reality, I mean, the documented reality is that in the previous three weeks before that letter, our administration was meeting with their advisers every day, and having, you know, three- to four-hour sessions on the numbers and collaborating," said Rossello. "Not only do I completely disagree with that statement — it is in direct contradiction with other statements the chairman and the board have made in the past."