Puerto Rico governor focused on federal funds, restructuring process

Gov. Wanda Vázquez (Juan J. Rodríguez/CB)

During convention speech, stresses need for commonwealth gov’t to regain Washington’s trust

SAN JUAN — Nearly a month before Puerto Rico’s Medicaid funding ratio reverts back to pre-Hurricane Maria levels, Gov. Wanda Vázquez Garced assured that her administration was focused on improving the island’s reputation, which has been tarnished in the eyes of Congress and federal agencies, with the goal of receiving more Medicaid and Medicare funding.

Vázquez made the related remarks during her speech at the Puerto Rico Hospital Association’s annual convention, where she also underscored the island’s debt restructuring process and the relationship between her administration and the federally created Financial Oversight and Management Board.

“It is true that we have been in constant communication with the [fiscal] board about the debt adjustment plan of the commonwealth, and we are satisfied with the process so far. We also continue to work in a collaborative way, defending, always, the interests of our people, while at the same time we find alternatives and recommendations to comply with our obligations in a reasonable and effective way,” Vázquez said. 

The governor has come under scrutiny for not opposing strongly the pension cuts included in the commonwealth’s debt adjustment plan. Also, sectors such as the workers union for the Puerto Rico Electric Power Authority have urged her to not approve any laws that make way to the cuts or the electric bill charge included in the utility’s debt restructuring agreement.

While Vázquez said her administration has “a good relationship with the board and that is something that wasn’t there,” she also acknowledged there are disagreements but said there was no need to have public spats. 

The governor used as an analogy a person taking out a loan and the bank deserving repayment to argue that Puerto Rico must service its debt, which totals some $72 billion, adding that she can think of a better course of action to address the liabilities because she doesn’t have to think about losing votes, as she has vowed to not run in the 2020 elections. 

One of the reasons the governor gave to not dismiss the island’s debt is to not harm Puerto Rico’s credibility, which she stressed was one of the main reasons the administration of President Trump is reluctant to provide more federal funds. She said that in her recent visit to Washington, D.C.—in part to lobby for an extension to the temporary 100 percent Medicaid matching rate—the issue of corruption often came up, especially in light of the arrests in July of the former head and contractors of the Health Insurance Administration, which manages the island’s Medicaid funds through the government’s Vital healthcare program. 

The governor recalled that during her tenure as Justice secretary, the government implemented the Medicaid Fraud Control Unit, a joint project between the Health and Justice departments. 

Although only mentioned once during her address, unlike the credibility issues, Vázquez posited that the disparity in federal healthcare funding is related to Puerto Rico’s political status as an unincorporated territory. The governor stressed that the argument needs to be that Puerto Ricans deserve the same treatment residents of the 50 states. 




Resident Commissioner introduces Puerto Rico Statehood Admission Act

(Courtesy)

Legislation for yes-or-no vote on the island has 45 co-sponsors

SAN JUAN — Puerto Rico Resident Commissioner Jenniffer González announced Tuesday that she will be introducing, with 45 co-sponsors, the Puerto Rico Statehood Admission Act to address the island’s territorial status and “achieve full equality for the island.”

González made the announcement at a news conference in Washington, D.C., accompanied by members of Congress Stephanie Murphy (D-Fla), Don Young (R-Alaska), Donna Shalala (D-Fla), José Serrano (D-NY) and Rob Bishop (R-Utah), among others. Former Gov. Luis Fortuño and New Progressive Party (NPP) Rep. José Aponte also participated.

The announcement was streamed via Facebook Live. The island’s residents voted for statehood in plebiscites held in 2012 and 2017, González recalled.

The main difference is that the plebiscite to be held in November 2020 is it will have the “same questions as Alaska and Hawaii.”

“So that’s the main difference of this bill,” González said. “Allowing Puerto Rico to vote on Election Day for a simple question: Statehood Yes or No.”

“The bill delineates a process consistent with the Constitution and laws of the United States, including Public Law 113-76, which funds a nonpartisan voter education process and a plebiscite that would resolve Puerto Rico’s political status,” reads a release issued by the resident commissioner.

Murphy, meanwhile said she cares deeply about Puerto Rico because “my constituents care” about Puerto Rico.

“I believe that every member of Congress should care about Puerto Rico,” Murphy said, “because Puerto Ricans are our fellow citizens and we are part of the same American family and so we should fight for each other.”

Murphy further noted that the bill will authorize the government of Puerto Rico to hold the first federally sponsored status vote in the island’s history, using “funding Congress made available for this purpose back in 2014,” Murphy added.

“The ballot will be simple and fair, asking voters whether they want Puerto Rico to be a state, Yes or No. Those who support statehood can vote yes, and those who prefer another status can vote no. That’s what Alaska did, that’s what Hawaii did and that’s what Puerto Rico should do,” the Florida lawmaker said, adding, that Puerto Ricans should vote for statehood because it is the only way to gain full rights, full equality within “this nation.”

Serrano, meanwhile said that when he is asked if he’s a “statehooder,” he says, “Yes, I guess so, because I am for equality.”

“I want my cousins, I want my mother’s neighbors who are still in the island, to have the same rights and privileges that I had because I grew up in New York,” Serrano said.

According to the bill’s summary, under the U.S. Constitution, Congress has the power to make “all needful Rules and Regulations respecting the territory or other property belonging to the United States.”

Congress granted U.S. citizenship to Puerto Rico residents in 1917, the bill reads. “There are 5.5 million Americans from Puerto Rico living and voting in all 50 states, and 3.2 million U.S. citizens in Puerto Rico,” according to the bill. “Congress enabled Puerto Rico to establish a local constitution for a republican form of government in 1952. Puerto Rico has not attained equal rights and representation in Congress and Electoral College secured under the U.S. Constitution only by statehood.”

More than 235,000 Puerto Ricans have served in the U.S. military since 1917, the bill further notes.

“Congress has recognized Puerto Rico’s ‘right to determine its future political status’. Consistent with votes in most territories that became states, a yes-or-no vote on statehood is allowed. Congress has authorized and appropriated funding for an official plebiscite,” the bill states.

If the statehood option is selected in the 2020 plebiscite, the U.S. Constitution will apply in the incorporated territory, and primary and general elections will be held to select a Senate and House of Representatives delegation to represent Puerto Rico in Congress, and the President would be required, no later than 30 months after the vote, to issue a proclamation admitting the island as a state and beginning the transition process.

Section 5 of the bill specifies that, upon admission, the “state of Puerto Rico shall include all of the land and waters presently under its jurisdiction.”

“Puerto Rico officeholders shall remain in office. All laws of Puerto Rico and the United States consistent with the bill’s provisions as well as contractual and other obligations shall continue,” reads the bill.

Finally, Section 6 states that “in lieu of enabling a federal/state transition of law project at this time, this section provides a framework for categorical repeal of federal and state law incompatible with statehood.”

During the press conference announcing the bill’s introduction, González was also joined by Mayors María “Mayita” Meléndez of Ponce and Rosachely Rivera of Gurabo; state Sen. Miguel Laureano; state Reps. José Enrique “Quiquito” Meléndez, and Eddie Charbonier; as well as “Shadow Senator” and co-chair of the Puerto Rico Statehood Commission, Zoraida Fonalledas.




Legislation introduced to expand Medicare Part D low-income subsidies to U.S. territories

The U.S. Capitol in Washington, D.C. (File)

Bipartisan bill would allow residents of Puerto Rico, other U.S. territories to become eligible for the subsidy program beginning in plan year 2021

SAN JUAN — Reps. Donna Shalala (FL-27), Darren Soto (FL-9), Jenniffer González-Colon (PR), and Stephanie Murphy (FL-7) introduced Wednesday the Medicare Low-Income Subsidy Expansion for Territories Act of 2019, bipartisan legislation that would allow residents of U.S. territories to become eligible for the Medicare Part D low-income subsidy (LIS) program beginning in plan year 2021.

The LIS program (also called Extra Help) assists low-income individuals by providing subsidies to fully or partially cover their out-of-pocket costs under the Medicare Part D prescription drug program. Program subsidies help reduce or completely cover the out-of-pocket cost of Medicare Part D premiums, deductibles and coinsurance, while also eliminating the prescription drug coverage gap and waiving the penalty for late enrollment into Medicare Part D.

Residents of U.S territories are currently barred from receiving LIS under Part D. In place of the low-income subsidy, territorial residents receive a fixed amount of funding to provide Medicaid-covered prescription drugs for all low-income beneficiaries. This funding can be substantially lower than the amount of federal financial support that low-income beneficiaries would receive if territorial residents were eligible for the LIS program.

“For generations, the residents of Puerto Rico and other U.S. territories have been treated like second-class citizens,” Shalala said in a joint release. “Though these territories face many inequities, poverty–particularly among seniors–may be their most daunting challenge to overcome. This bill is an important step towards alleviating poverty among seniors in Puerto Rico and other territories with aging populations, and it is also a meaningful stride towards better and more equitable treatment for American citizens who have for too long been ignored.”

“This is a step forward for Puerto Rico and the rest of the U.S. territories that have suffered from unequal treatment in several Medicare programs,” said González-Colón. “In the specific case of Puerto Rico, the current situation is critical for the elderly because of limited access to prescription drug assistance compared to the citizens of the rest of the states. H.R. 4666 would grant our duals the same right to access to Medicare Part D subsidies that other Americans enjoy. It is a step in correcting the discrimination in federal programs that our most vulnerable citizens suffer, for the only reason of wishing to remain in Puerto Rico.  I want to thank my colleagues in Congress for supporting such an important piece of legislation that will improve the quality of life of the 3.2 million American citizens that live in Puerto Rico.”

No senior should ever have to forego vital, life-saving healthcare just because of where they live,” said Soto. “At a time when Puerto Rico and the U.S. territories are still suffering from the long-standing injustice of poverty, it’s more imperative than ever that we ensure our communities get the care they deserve. I’m proud to introduce H.R. 4666 with my colleagues and I’m grateful for the bipartisan support.”

“Puerto Rico and the other U.S. territories deserve to be treated fairly. I’m proud to support this bipartisan bill that ensures low-income seniors in Puerto Rico receive the same assistance as their fellow Americans in Florida and other states to help them better afford their prescription drugs,” said Murphy, a member of the House Ways and Means Committee.

González Colón and Soto had also previously introduced HR 4195, Territories Medicare Prescription Drug Assistance Equality Act of 2019, a bipartisan measure that would make the Part D LIS Program applicable in the territories in the same way as is applicable stateside, to continue driving that this assistance be granted to U.S citizens residing in Puerto Rico.




U.S. Supreme Court Holds Oral Arguments on FOMB Appointments

(Mark Thomas from Pixabay)

Board, U.S.: Promesa Doesn’t Involve U.S. Powers; Utier Says Federal Law Should Apply

Editor’s note: This report first appeared in the Oct. 17 issue of Caribbean Business.

The U.S. Supreme Court listened to oral arguments Tuesday in a lawsuit headed by Aurelius Investment LLC—which had been consolidated with other cases—seeking to declare that the appointments to the federally established Financial Oversight & Management Board under the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) were not made in accordance to the appointments clause of the U.S. Constitution.

Others that joined the lawsuit are bond insurer Assured Guaranty, the Official Committee of Unsecured Creditors and the Irrigation & Electrical Workers Union Inc. (Utier by its Spanish acronym).

Earlier this year, the U.S. First Circuit Court of Appeals declared that the board was not constitutionally formed because, although its members were appointed by President Obama, they were not confirmed by the Senate. The U.S. Court of Appeals for the First Circuit, however, validated the board’s actions under Promesa’s Title III bankruptcy case and gave Congress time to fix its constitutional problem.

In June, President Trump sent the nominations of the seven members to Congress, which had until July 15—the deadline established by the circuit court—to act. Even with Senate confirmation, the board members’ terms expired Aug. 30. Nevertheless, the board members were to continue in their roles until they were replaced with new appointments.

The court listened to arguments on whether the board members were named to the board in accordance to the appointments clause, which requires the president to nominate the board members, who are then confirmed by the Senate. The arguments focused on whether the appointments clause applies to Puerto Rico as an unincorporated territory.

Utier Attorney Rolando Emanuelli told Caribbean Business that the justices had the opportunity to clear up any doubts they may have had after receiving thousands of pages of allegations that were filed in court.

The oral arguments lasted some 80 minutes.

“The position of the board and the United States is in the sense that this law is specific to the territory of Puerto Rico, and doesn’t involve federal powers,” Emanuelli said. “And the position of Utier, obviously, was that the board’s federal powers are ample and so, in that sense, the appointments clause should apply.”

Emanuelli said that although the court does not have a deadline to issue a ruling, it tends to issue rulings in June.

“Since Promesa states that these cases have to be resolved quickly, we might have a ruling by the end of the year or by early next year,” the attorney stressed.

In a copy of the transcript sent to Caribbean Business, fiscal board attorney Donald Verrilli said, “The Constitution’s text, structure and history, and this court’s precedents, all make clear that the proper focus in answering that question is the nature of the authority that the board exercises.”

“It comes down to whether Congress has vested the board with the executive power of the national government or, instead, vested the board with the territorial executive power,” Verrilli said. “The statute that created the board, Promesa, answers that question in a straightforward way. It—it sets up an entity within the territorial government.”

Verrilli further noted that Promesa gives the board only territory-specific authority and instructs the board to pursue only territory-specific objectives.

“The board acts on behalf of Puerto Rico as its representative in judicial proceedings to restructure the territory’s debts,” Verrilli said. “It pursues only Puerto Rico’s interests in those proceedings…. Congress also instructed the board to implement a method for restoring fiscal stability. That, too, is territorial authority. It reaches only Puerto Rico’s budgeting and fiscal planning, and the board must exercise that authority in a manner that protects Puerto Rico’s vital—vital interests.”

In a brief filed with the Supreme Court Oct. 4, Utier stated that the question presented was “whether the appointments clause governs the appointment of members of the Financial Oversight & Management Board for Puerto Rico and whether the de facto officer doctrine allows for unconstitutionally appointed principal officers of the United States to validate their previous actions and also allow them to continue acting, leaving the party that challenges their appointment with an ongoing injury and without an appropriate relief.”

Verrilli said the board is in the “territorial government.”

“It’s been given statutory directives to advance the interests of Puerto Rico, and it’s insulated from federal control; it’s clear that board members are territorial officials,” Verrilli said.

Justice Sonia Sotomayor told Verrilli: “It seems to me that your very argument, that it is independent, is suggesting it can’t belong to the territory and that there is a serious problem that the federal government is creating an entity that no one can control.

“Neither Congress nor the president can remove this entity for anything but cause,” Sotomayor told Verrilli. “Tell me how this differs from a U.S. attorney. A U.S. attorney is an officer of the United States. I think you accept that. A U.S. attorney is enforcing federal law in Puerto Rico, the U.S. attorney of Puerto Rico, just the way Promesa is. And a U.S. attorney doesn’t have jurisdiction outside of Puerto Rico. So, how is the U.S. attorney different?”

Verrilli answered by saying, “The general point, I think it’s important to make clear, we don’t say, contrary to our friends on the other side, that the appointments clause doesn’t apply in Puerto Rico.

“It applies in Puerto Rico just like it applies in a state, in that federal officials, officials who are part of the federal government, have to be appointed in conformity with the appointments clause,” Verrilli said.

The oral arguments took place some three weeks after the board filed its proposed plan of adjustment in U.S. District Court. Fiscal board Chairman José Carrión III said when announcing the plan that it would reduce $35 billion in central government liabilities, or by about 65 percent, and restructure $50 billion in pension obligations.




Resident commissioner, Puerto Rico gov discuss alternatives to halted $1.5B in federal Education funds

Resident Commissioner Jenniffer González (Courtesy)

Government faces various hurdles before receiving federal allocations

SAN JUAN — Resident Commissioner Jenniffer González and Gov. Wanda Vázquez Garced met this week to discuss how to resume the flow of federal funds for the island’s Department of Education, the disbursement of which was halted because the Puerto Rican government failed to assign a spending monitor.

González said the governor put forth a discovery process to identify the most critical areas for the island’s Education Department and talks are being held with representatives of the U.S. Department of Education to gain access to at least a portion of the funds with priority to cover special education.

“The governor suggested to me, and I believe it is a good alternative, that instead of putting in place a federal monitor, that Puerto Rico is classified as a ‘high risk’ [jurisdiction], which was one of the actions discussed before the governor came into power. What that does is that when the government spends, it asks for reimbursement with the invoice. That is less harmful than [freezing] the funds completely,” González said.

She also said that “the other alternative that the governor proposes, which I think is very correct, too, is that because the most urgent are the special education funds and they were able to identify some items that could reach half of the funds needed, but an amount is still missing, that the Department of Education then [releases] a percentage.”

At the beginning of this summer, the U.S. Education Department decided that the funds sent to the island would have to be administered by an outside fiduciary agent, a measure used when federal agencies have concerns regarding the handling of its allocations. Because the Puerto Rico government never finalized a contract with a company approved to monitor the $1.5 billion in federal funds for Education, its disbursement was halted.

The requirement of a fiduciary, or financial monitor, is not considered  receivership, which is lower than the island education system’s current classification.

In addition to the internal strategies to unfreeze the funds, González said U.S. Education reps will be visiting the island next week to reassess the matter.

Health and housing, too

Besides the public education funding issue, Puerto Rico is also about to see a reduction in Medicaid funds on Nov. 20, when the temporary 100 percent Federal Medicaid Assistance Percentage for the island’s Vital healthcare program expires. If the continuing resolution is not passed, the matching rate would drop back to 55 percent, resulting in the government of Puerto Rico having to seek funds to cover 45 percent of Vital’s expenses.

In early September, Puerto Rico was about to run out of healthcare funds, but Congress included them in its continuing resolution to fund the federal government. That resolution covers until Nov. 20. The commissioner, as well as representatives of the island’s public and private sectors are advocating the approval of the Territories Healthcare Improvement Act, which would give the island $3 billion annually for four years.

The measure’s bill is in the House Energy and Commerce Committee, and González said she will be meeting with Sen. Charles “Chuck” Grassley, who chairs the Finance Committee and has sent several letters to the U.S. Department of Health and Human Services, questioning the allocation of funds to the island and focusing on government transparency.

On Aug. 2, the U.S. Department of Housing and Urban Development (HUD) announced its plan to appoint a federal financial monitor to oversee the disbursement of disaster recovery dollars to Puerto Rico.

“Given the Puerto Rico government’s alleged corruption, fiscal irregularities and mismanagement, we will appoint a Federal Financial Monitor to oversee the disbursement of all HUD disaster recovery funds,” said Secretary Ben Carson. “The Federal Financial Monitor’s guidance, coupled with our new, improved financial controls, will ensure recovery funds get to the people who need them most and protect taxpayers who are footing the bill.”

HUD said the monitor would have “extensive legal, accounting, construction management and audit oversight experience and be tasked with ensuring the efficient, effective, and accountable use” of federal funds.




Puerto Rico receives $33 million for Opportunity Zone development

Resident Commissioner Jenniffer González (Screen capture of gonzalez-colon.house.gov)

Rep. González lauds EDA investment

SAN JUAN — The Economic Development Administration (EDA) is investing $33 million in Puerto Rico to advance economic resiliency and business growth efforts in the wake of the devastating 2017 hurricane season. The grants, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $4.3 million in local funds and are expected to help create or retain 7,635 jobs and generate $188 million in private investment.

The EDA is an agency within the U.S. Department of Commerce that invests in economically distressed communities to create jobs, promote innovation, and accelerate sustainable economic growth.

The funding goes to designated Opportunity Zones, created by the Tax Cuts and Jobs Act of 2017 to spur economic development by giving tax incentives to investors in economically distressed communities. In June, EDA added Opportunity Zones as an Investment Priority, “which increases the number of catalytic Opportunity Zone-related projects that EDA can fund to fuel greater public investment in these areas,” the agency explained. 

“I have always bet on the private sector as the tool for economic development and I am pleased to be able to join forces with the federal government to help drive it. These allocations, together with private funds driven by federal Opportunity Zones, are an investment in Puerto Rico that we have not seen in a long time,” the resident commissioner said.

The EDA investments are:

  • The University of Puerto Rico, San Juan, will receive $9.9 million to renovate space on the 5th floor of the Molecular Science Research Center (MSRC) to house the Advancing Science and Technology Research and Entrepreneurship (ASTRE) Center. The facility will further workforce development and manufacturing by preventing interruption of services and research for companies. The grant, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $1.99 million in local funds.
  • BLUEtide Puerto Rico, Inc., San Juan, will receive $8.9 million to support the “BLUEtide” Initiative component of Puerto Rico’s comprehensive economic and disaster recovery plan The project includes the establishment of the Marine Business, Innovation and Research Center of the Caribbean, and the Puerto Rico Ocean Technology Complex (PROtech). The grant, to be matched with $166,667 in local funds, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, is expected to help create 5,325 jobs and generate $188 million in private investment.
  • Municipio de Jayuya will receive $8.5 million to make improvements needed to provide resiliency to the tourism park located in the Tierra Alta and Hacienda Parador Gripinas region. The EDA grant, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $1.2 million in local funds and is expected to help create or retain 330 jobs.
  • Pathstone Corporation, Ponce, will receive $3.8 million to support the expansion of the solar industry through microgrid training sites, solar workforce development, industry research, and direct technical assistance. The grant, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $661,914 in local funds , and is expected to help create or retain 200 jobs.
  • The University of Puerto Rico Mayagüez will receive $1.25 million to help boost the productivity of Puerto Rican pharmaceutical companies by providing them with cutting-edge Continuous Manufacturing (CMT) and Process Analytical Technology (PAT) training. The grant, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $183,173 in local funds and is expected to help create 180 jobs and retain 1,500 jobs.
  • Puerto Rico Industries for the Blind Corp., Mayagüez, will receive $640,661 to purchase new highly automated sewing machines that will allow the organization to hire new employees. The grant, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $137,882 in local funds and is expected to help create 100 jobs.

“This project is funded under the Bipartisan Budget Act of 2018 (PL 115-123), in which Congress appropriated to EDA $600 million in additional Economic Adjustment Assistance (EAA) Program funds for disaster relief and recovery as a result of hurricanes Harvey, Irma, and Maria, wildfires, and other calendar year 2017 natural disasters under the Stafford Act,” EDA’s release reads.

“The Trump Administration is fulfilling its promise to help Puerto Rico rebuild after the devastation of Hurricanes Irma and Maria in 2017,” said Commerce Secretary Wilbur Ross. “These preparedness efforts will support uninterrupted, stable and growing business efforts in Puerto Rico.”

“In 2018, EDA made $587 million in Congressional supplemental appropriations available to eligible grantees in communities impacted by natural disasters in 2017,” added U.S. Assistant Secretary of Commerce for Economic Development Dr. John Fleming. “We are pleased to support bottom-up, local strategies designed to help Puerto Rico recover and build back stronger following Hurricanes Irma and Maria and to do so in Opportunity Zones across the island.”




The Electoral College will never make everyone happy

North Carolina Electoral College Certificates of Vote (Screen capture of www.sosnc.gov

…each new state would be guaranteed 3 electoral votes

By Mark Rush, professor of Politics and Law and director of Center for International Education, Washington and Lee University

With the presidential election looming, worried observers of politics have already asked whether the Electoral College will again deliver a victory to the candidate with less than a majority of the popular vote.

This has happened in two of the last five presidential elections.

Critics like Vox’s Ezra Klein contend that this phenomenon is not only undemocratic, but also politically biased, because Republicans were the beneficiaries of both of these Electoral College hiccups. “American politics is edging into an era of crisis,” Klein writes.

But presidential elections – and the occasional hiccups like 2000 and 2016 – represent nothing less than the smooth working of the constitutional system’s allocation of power among the states.

I’ve studied elections and governmental systems around the world. No matter how fairly one tries to allocate political power, some state or someone will have a special edge from time to time. It’s unavoidable. But it’s not undemocratic.

American constitutional math

A state’s Electoral College votes are the sum total of its seats in the U.S. Senate and House of Representatives.

The Electoral College therefore rewards very small states.

That’s because all states, regardless of their populations, are guaranteed equal representation in the Senate with two seats each, as well as at least one seat in the House of Representatives.

Seats in the House are allocated through a formula called the “method of equal proportions.” (If you are a math nerd, you will love this formula.)

The formula occasionally generates some peculiar results. For example, in 2010, Rhode Island (pop. 1,055,247) received two House seats. Montana (pop. 994,416) got only one seat, even though its population was nearly double Wyoming’s (568,300) which also got one seat.

This is typical of any mathematical formula. The results are logical, but not necessarily appealing. In another year, with different populations, Montana might get that second seat and another state would cry “foul.”

The Electoral College adds the Senate’s equal, but unfair, allocation of seats to the peculiar, but logical, allocation of House seats.

The result is that voters in small blue states like Rhode Island and small red states like Wyoming have much more voting power per person in the House, Senate and Electoral College than their counterparts in, say, Texas, California or Montana.

Tweaking the formula

To remedy some of the perceived unfairness, advocates for reform have called for a change to a national popular vote system for presidential elections or, perhaps, a proportional allocation of Electoral College votes within each state.

Such reforms might generate seemingly fairer presidential election results in the short run. But there is no simple, consistent way to allocate legislative seats among states of radically different sizes.

If the U.S. were to increase the size of the House, admit Puerto Rico or Washington, D.C. to the union as states, or perhaps split California into three states, the Electoral College debate would be rekindled, because each new state would be guaranteed three electoral votes.

Regardless of the number of states or the formula used to allocate legislative seats and Electoral College votes, some state will complain that it was shortchanged. In my view, this is the cost of operating as a nation that is composed of states, provinces or other smaller groups.

International comparisons

Other federal nations endure the same disparity of representation that favors smaller states.

Canada has a similar disparity of voting power between the larger provinces of Ontario and Quebec – which each has more than 100,000 people per member of Parliament – and smaller ones such as Nunavut or the Yukon, with barely 35,000 people per member of Parliament. Albertans have the least voting power per capita, with nearly 120,000 residents per member of Parliament.

In Spain, too, power is unevenly allocated. With nearly 180,000 people per representative in the Congress, people in Madrid and Barcelona have much less voting power per capita than the denizens of less-populated provinces such as Soria.

This demonstrates the complexity of organizing a democracy that ensures equality of individual voting power, but also allows smaller states or provinces to have a meaningful voice in the legislative process and the election of presidents.

In my view – and as federal nations around the world demonstrate – it is impossible to achieve both with perfection.

As the U.S. heads into the 2020 elections, I’d suggest that the public be wary of critics who call for “reforms” to the American electoral process but fail to put our process in a global perspective. They are often calling for a result that they prefer – not necessarily a better process.

This article is republished from The Conversation under a Creative Commons license. Read the original article.




Vázquez Administration Tackles Restructuring, Other Complex Economic Issues

Governor and her Fiscal Team Discuss Tax on Multinationals, Electric Utility and Relationship with the Fiscal Oversight Board

BY MARÍA MIRANDA & PHILIPE SCHOENE ROURA

Gov. Wanda Vázquez took office nearly two months ago, much like the discovery of Penicillin—by accident. A “Summer of Discontent” with the administration of Gov. Ricardo Rosselló, which commenced with the arrests of former Education Secretary Julia Keleher and then-executive director of Puerto Rico’s Health Insurance Administration, Ángela Ávila, led to seismic protests after chat group messages, laced with profanity and misogyny, between members of Rosselló’s administration were leaked forcing him to resign.

Ironically, Vázquez initially became an antidote to the ascension to power by the pro-statehood New Progressive Party’s (NPP) mainstream pols seeking the throne, when then-Secretary of State Luis Gerardo Marín—who stood as the constitutional successor to the governor—abdicated, leaving room for the governor to name a secretary of State to become his successor.

Small detail—it would take the Senate’s advice and consent to confirm that candidate. And, Senate President Thomas Rivera Schatz, emboldened by Rosselló’s resignation, intended to exert his power as kingmaker by blocking the 11th hour nominee to Secretary of State Pedro Pierluisi, who was Puerto Rico’s former resident commissioner in Washington, D.C. Pierluisi cleared the House hurdle obtaining the votes to be confirmed, but then pulled a fast one, avoiding Senate hearings on the premise that a 2005 amendment to Act 7 made it possible for a secretary of State to become governor without confirmation by both legislative chambers, giving him the standing to take office without the upper chamber’s consent.

Thus, when Puerto Rico’s Supreme Court declared Pierluisi’s move unconstitutional, Vázquez, who was next in the succession line, became Puerto Rico’s governor.

Much to the people’s surprise, the former Justice secretary did not bend to the will of NPP President Rivera Schatz, who grandstanded, backed by Resident Commissioner Jenniffer González and a conclave of NPP mayors to have Vázquez resign, making room for González to become the eventual governor. Surprise, surprise—Vázquez intended to stay. It should be noted, that once Vázquez made clear that she intended to remain in the post, Rivera Schatz said he would work with the governor for the people of Puerto Rico.

Although Vázquez announced she would only remain in office through the end of this term, which ends in December 2020, and would not seek re-election, she has many thorny issues to deal with, foremost among which is working with Puerto Rico’s Financial Oversight & Management Board (FOMB).

When Trust is a Four-Letter Word

Early in her tenure, sources in the White House told this newspaper that as long as Vázquez remains in office the bulk of disaster relief funds doled out through the U.S. Department of Housing & Urban Development seem destined to trickle down at a glacial pace.

“Wanda Vázquez is part of that corrupt administration. So, when the president gets paper that talks about these different people, the take on the new governor is that she was part of that corruption,” said one source with ties to the GOP who has knowledge of the White House’s perspective. “So, the money is not going to flow. The government of Puerto Rico is corrupt; they have proven they are corrupt—it is corruption left and right. Here are facts. The president feels and has been very vocal about corruption in Puerto Rico. Wanda Vázquez is part of corruption; Jenniffer González is not. That is a fact. Is that fact significant for Puerto Rico? We think it is.”

To that end, the upstart governor went on a meet-and-greet tour across various federal agencies—whirlwind meetings with officials from the Department of Education and the Department of Health, as well as White House Intergovernmental Affairs Director Doug Hoelscher and staffers, and Treasury Secretary Steve Mnuchin.

Her first objective, front and center, before dealing with initiatives that are steeped in hardship—what to do with the phaseout of Act 154 and opening the spigot of disaster relief funding earmarked for Puerto Rico’s reconstruction—was to restore confidence in the island’s government.

After her recent visit to open doors Rosselló had closed in Washington, D.C., Vázquez sat with her financial advisers in tow for a roundtable at La Fortaleza to discuss some of the most pressing fiscal issues currently taking place on the island.

Suscribe to read the rest of this report here, in the Sept. 26 issue of Caribbean Business.

See related stories below:




Puerto Rico senator: Tax reform that’s immune to presidential whims needed

Sen. Juan Dalmau (File photo)

Urges higher, permanent tax on multinationals’ net income

SAN JUAN — Puerto Rican Independence Party Sen. Juan Dalmau stressed Tuesday that the best way to deal with the possibility that the federal government will impose a transition plan that ultimately eliminates the ability of controlled foreign corporations (CFCs) to receive federal credit for the Act 154 excise tax is by passing comprehensive tax reform.

The lawmaker assured that the breadth of that reform must structure the taxation of multinationals based on net profits, that is permanent, of at least 10%, and that is under the control of Puerto Ricans, not subject to the whims or interests of whichever U.S. president or administration is in power, he said.

Dalmau’s remarks come after U.S. Treasury Secretary Stephen Mnuchin asked Gov. Wanda Vázquez to present a transition plan for the federal credit given against the excise tax paid by stateside companies on the island.

“That allows us to collect more revenue. That way, we do not have to rely on an ephemeral and vulnerable special treatment based on the 4 percent of the special [excise] tax,” said Dalmau, adding that “the counter-argument of breach of contract related to exemption decrees does not hold up in a ruined country. Extraordinary conditions allow that harm. We are now threatened since the federal Treasury countdown began to eliminate the 4 percent credit for the tax on foreign [corporations]. That income represents 20 percent of the General Fund.”

For Dalmau, a comprehensive tax reform, particularly in the corporate sector, that eliminates the distinction between exempt and non-exempt companies, and a fiscal policy that modestly increases the tax liability of foreign corporations, is urgently needed and will allow the government to obtain revenue it currently lacks to make social investments in healthcare, mass transportation, the environment, education and culture that elevate the quality of life of Puerto Ricans.

“If we had imposed the tax rates that those companies should have, inn fairness, paid in Puerto Rico, collections in the past 30 years would have exceeded $50 billion: Enough for the working middle class to have been enjoying tax justice for a long time; the government would not have the fiscal crisis it currently suffers; the imposition of an IVU wouldn’t be necessary; the UPR [University of Puerto Rico] would not have budgetary problems; and tens of thousands of workers would not have lost rights or benefits or have to be laid off,” he said.

Dalmau reiterated his call for the Legislature to pass the related measures he has introduced.

“Only in this way can the fiscal deficit be adequately addressed and, in the future, guarantee a more stable and prosperous economic and fiscal framework that will do justice to the majority of our people,” the senator stressed.




Gov. Vázquez to Congress: Without funding, Puerto Rico can’t run Medicaid program

The U.S. Capitol in Washington, D.C. (File)

Requests allocation so efforts ‘to retain health professionals and provide…treatment will not be lost’

SAN JUAN — In an urgent letter to the leaders of the U.S. Congress, Puerto Rico Gov. Wanda Vázquez warned that were the federal Medicaid allocation granted in the Bipartisan Budget Act of 2018 not extended, a scenario could ensue in which the island’s government won’t be able to operate its healthcare network.

In her letter, dated Sept. 14, to Senate Majority Leader Mitch McConnell, House Speaker Nancy Pelosi, Senate Minority Leader Charles “Chuck” Schumer and House Minority Leader Kevin McCarthy, the governor is asking that Congress includes in their next continuing resolution a short-term extension of Medicaid funding while a longer-term option is presented.  

“The combination of insufficient federal allotment at a low matching rate means that Puerto Rico will have an uncharacteristically high burn rate for state generated funding,” Vázquez wrote, adding that despite attempts “in the budget to prepare for this event, it is possible that the Puerto Rico Treasury will not have sufficient state funds to cover program costs. Thus, it is crucial Puerto Rico secures additional funding, in addition to the higher matching rate.”

The Bipartisan Budget Act of 2018 approved $4.8 billion for Medicaid, which is managed locally through the Vital program. This allocation essentially took the Federal Assistance Percentage (FMAP), used to set the Medicaid matching fund rate, to 100 percent, eliminating the financial burden on the local government for the Vital program. But when the funds expire, the FMAP rate will revert to 55 percent. 

Vázquez argued that reverting to a 55 percent FMAP “means that Puerto Rico must once again contribute to a vastly disproportionate share of its own funds for its Medicaid program when compared to any other State.”

The governor’s argument is based on the difference in which the funding rate is set. For states, FMAP is calculated using per capita income but for territories it is capped at 55 percent. If the same formula as the states were applied in Puerto Rico, the rate would surpass 80 percent.  

Vazquéz’s effort comes in addition to those by Resident Commissioner Jenniffer González to include Puerto Rico in a continuing resolution scheduled for passage in Congress by Oct. 1 to fund the federal government. However, in an interview with Radio Isla’s Milly Méndez, González said “it is an uphill [effort] but, regardless, we are pushing that [measure] for Puerto Rico,” adding that “continuing resolutions generally only contemplate government operational costs.”

Among the reasons she gave for needing the extension, Vázquez said the budget cuts by the island’s Financial Oversight and Management Board were going to have a $222 million impact for fiscal year 2020. Also, because reimbursement increases for providers are going to be approved, the issue of a shortage of healthcare providers could worsen. 

Vázquez further said that a lack of funding could jeopardize the inclusion of HIV and Hepatitis-C medication, as well as the implementation of “transparency, reporting and oversight measures.”

Looming fiscal cliffs are becoming a recurring issue for the island’s public healthcare program. In 2017, the then-new administration of former Gov. Ricardo Rosselló had to ask Congress for additional funds because the Medicaid block grant was running out two years ahead of schedule. 

Congress granted a portion of what Resident Commissioner González requested, avoiding the cliff temporarily. A year later, warning of the possible need to cut back on coverage resumed but the Hurricane María recovery package approved in the Bipartisan Budget Act of 2018 injected the funding for the Vital program.

About half of Puerto Rico’s population depends upon the public health system for medical care.