Tuesday, July 23, 2019

Fundamental Changes Puerto Rico Needs

By on October 25, 2018

Editor’s note: The following originally appeared in the Oct. 25-31, 2018, issue of Caribbean Business.

Puerto Rico has been in crisis for more than 10 years. The last re-elected governor was in 1996, and we now have a Supervisory Board overlooking everything the Government does. Puerto Rico needs fundamental change and needs it now.

One of the most important changes we need is to amend our Constitution. It was written by politicians who believed future politicians would respect it and hence, were not 100 percent clear on what it meant. Moreover, we need a comprehensive amendment to the Constitution; therefore, we cannot use Article VII, section 1, of the Constitution, which limits to three the proposed amendments. We need a Constitutional Assembly via Article VII, section 2, through which the complete Constitution is overhauled. I propose the following areas for amendments:

Article II, section 16, eight-hour workday: To implement flextime, this section should state that overtime is paid when there is more than 40 hours of work in a week.

Article VI, section 1, creation and elimination of municipalities: Without a doubt, we must reduce the municipalities, but the second paragraph of this section requires a referendum of the population of the municipality. It would be much easier if this section were eliminated to secure more effective administration.

Article VI, section 2, debt ceiling: It must be made clear that the debt ceiling includes all debt paid by the Commonwealth, including the sales & use tax (SUT, or IVU by its Spanish acronym) and any other income of the Commonwealth. This language is negotiable.

Article VI, section 7, balanced budgets: It is important that the Secretary of Justice Opinion of 1974, whereas a budget can be balanced with loans, should be reversed. This section must define what a balanced budget is, that expenditures are equal to income and, specifically, prohibit taking out loans to balance the budget. Violations should be a felony punishable by 10 years in prison, with no probation and no statute of limitations. That way, whoever commits this crime will have that hanging over them for all those years.

Article VI, section 8, payment of public debt: Since the García Padilla administration claimed the Constitution meant public services had to be paid before public debt, we must make it clear that public debt goes first, BEFORE ANY OTHER GOVERNMENT EXPENDITURE. Violations should be a felony punishable by 10 years in prison, with no probation and no statute of limitations.

A new section should be established that requires that before any part of the Commonwealth or public corporations or the municipalities can borrow, a referendum must be held for its approval by the people. As to the Commonwealth, the quantity it must have approved is over $100 million (to allow for tax revenue anticipation notes, or TRANs), $1 million for the public corporations and $500,000 for the municipalities. That way, these entities cannot borrow without supervision. Violations should be a felony punishable by 10 years in prison, with no probation and no statute of limitations.

A new section should be established that would prohibit Capital Appreciation Bonds. This is a politician’s favorite tool to kick the can on the debt. A CAB, as they are called, does not pay interest until maturity and then the whole instrument becomes due. Usually governments roll them over, ensuring further debt. Violations should be a felony punishable by 10 years in prison, with no probation and no statute of limitations.

A new section should be established that would impose term limits on those who wish to “serve the people.” Since professional politicians are the bane of our existence, we should limit each elected official to no more than two terms in any elected position, through their lifetime, commencing with this amendment. That will ensure more of us serve as legislators and take away the power of the parties. This section should also prohibit elected officials from receiving a salary, but they may receive payment for 40 hours per week during legislative sessions, at federal minimum wage. That way they will not legislate impossible minimum wages.

These are a few of the fundamental changes Puerto Rico needs.

–John Mudd is an attorney and legal analyst in Puerto Rico with more than 30 years of experience. He is admitted in Puerto Rico, the U.S. District Court for Puerto Rico and the First and Fourth Circuit Courts of Appeals. You can follow him on Twitter @muddlaw and on his blog www.johnmuddlaw.com.

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