A key senator in Puerto Rico said Monday that he opposes a congressional plan for tough federal oversight of the island’s debt-ridden finances, and says those decisions should still be made with local input from Puerto Rican officials.
“The local authorities must retain final decision making with respect to structural reforms and policy. Otherwise, the proposed board will prove an illusory fix,” Sen. Angel Rosa, a Democrat, said in a report he released Monday. The report was done for the Puerto Rican Senate’s Committee on Government, Government Efficiency and Economic Innovation, which he chairs.
Rosa, a Democrat who is also running for the island’s non-voting seat in the U.S. House of Representatives this year, was reacting to a congressional proposal to set up a five-member board to deal with the crisis in Puerto Rico. The board would have broad authority to set policies aimed at keeping the island solvent given its $72 billion debt.
That debt is causing a huge strain on the island’s finances and economy, and a $2 billion payment is due this summer that it’s unlikely to make. But Rosa said under the current House plan, the board wouldn’t have any input from local officials, and said for this reason, it wouldn’t work.
“No list of enumerated powers could make the board succeed without ample participation by the people of Puerto Rico through its elected officials in the board’s composition, decision-making and accountability to the Island’s constituents,” he said in the report.
“Democracy is a messy path, but it’s the only right path,” Rosa added.
Rosa warned that the board would have the power to set spending guidelines, make staffing and management decisions, preside over economic decisions, and even set tax rates. “[I]t seems as though the Board would have the power to increase taxes even if the Puerto Rico legislature opposed said tax increases,” Rosa said.
He warned that the proposal would replace “rule of law” with “rule by board.
“That group would have limited buy-in from Puerto Rico stakeholders, tempting them to oppose all reforms to score political points,” he said. “That would erode the Board’s legitimacy and effectiveness.”
Instead of the board, Rosa said Congress should extend the Earned Income Tax Credit to Puerto Rico, and to exempt the island from payroll taxes. “These proposals would provide relief to working Puerto Ricans, small and medium businesses, and those who are currently searching for a job,” he said in a separate statement.
The House is expected this week to advance legislation setting up the new board, although it’s not clear the proposal from the House Natural Resources Committee can pass. Many Democrats oppose the plan because it doesn’t allow Puerto Rico to declare bankruptcy, while Republicans worry that allowing the territory to restructure its debt would only reward mismanagement and overspending.
Rosa said he was traveling to Washington on Monday to talk about the draft bill with members of the House committee.
