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Lawmakers introduce bill to amend Puerto Rico Oversight, Management and Economic Stability Act

By on May 22, 2020

(Screen grab of https://naturalresources.house.gov/)

Legislation intended to ‘stabilize Puerto Rican Economy, stop austerity cuts and guarantee services funding’

SAN JUAN – U.S. Rep. Raúl M. Grijalva (D-Ariz.), the chairman of the House Natural Resources Committee, which oversees Puerto Rico matters in Congress, has introduced a bill to amend the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) of 2016.

The “Amendments to PROMESA Act” legislation intends to prioritize funding for public health care, education, safety, pensions and the University of Puerto Rico. It would create a publicly funded commission to audit Puerto Rico’s debt and would give the island’s government the “option to discharge unsecured debt if it deems the burden excessive to the people,” as put in the news release issued Friday by the Natural Resources Committee.

The committee’s release listed the following features of the bill:

  • defines public health care, education, safety, and pensions as essential public services, which makes it much harder for the Financial Oversight and Management Board to cut funding;
  • assigns federal funding for the operation of the Oversight Board, which reduces the burden on the Government of Puerto Rico;
  • guarantees funding for the University of Puerto Rico, which enjoys wide public support and provides essential technical and scientific support to the entire island;
  • audits the public debt, which is a priority for many on the island who want to know how their money has been spent;
  • and gives the Puerto Rican government the option to discharge overly burdensome unsecured debt, among other policy priorities.

“The crushing fiscal austerity imposed by the original PROMESA law has failed to improve economic development or fix chronic poverty in Puerto Rico, so it’s time for a more people-focused approach,” Grijalva said. “Whatever your politics, we can all agree when a course of action isn’t working as intended, and PROMESA is not working for the people who need it most. This bill is the result of a year and a half of traveling to Puerto Rico and listening to the people there. It’s a first step in addressing the challenges PROMESA has brought to the surface, and I’m proud to introduce it with my colleagues today so we can start a conversation about a better future for the island.”

Cosponsored by Reps. Nydia M. Velázquez (D-N.Y.), Alexandria Ocasio-Cortez (D-N.Y.), José E. Serrano (D-N.Y.) and Darren Soto (D-Fla.), the bill is endorsed by the Hispanic Federation, the Service Employees International Union, the United Auto Workers, the Power4PuertoRico coalition, the Puerto Rican Association of University Professors, the National Student Confederation, the Center for American Progress, Power 4 Puerto Rico, and by Jorge Acevedo, president of the University of Puerto Rico.

The release quotes several of the cosponsors.

“With hurricanes, earthquakes, and now a pandemic, Puerto Rico has suffered enough,” Velázquez says. “I will continue to oppose austerity measures that put hedge funds and speculators’ profits ahead of the people of Puerto Rico. The legislation we are introducing today will bring some badly help to Puerto Rico through important reforms. It includes a bill I authored with Senator Warren that will let Puerto Rico write down much of its unsecured debt. With COVID-19 and the current crisis, it is more important than ever that we give the Island a way out from under suffocating debt. This bill also includes legislation I wrote that would ensure consultants working for the Fiscal Oversight Management Board follow the same disclosure requirements as apply on the mainland. Puerto Ricans should be confident that the Board’s bankruptcy advisors do not have their ‘thumb on the scale’ to favor certain debts where they have a self-interest. This bill offers that transparency. I am proud to join Chairman Grijalva in the introduction of this bill and look forward to working toward its enactment.”

“The Fiscal Oversight Board created by PROMESA has too often failed to protect the most important asset that Puerto Rico has – its people,” Serrano said. “This legislation will make much-needed reforms to PROMESA to guarantee funding for essential public services such as education, public safety, healthcare, and pensions; to create stricter accountability and transparency measures for the Oversight Board; and to allow Puerto Rico to discharge some of its unsecured financial obligations. With these reforms, we can help the 3.2 million American citizens living in Puerto Rico better address the myriad problems caused by the economic crisis, natural disasters, and the current pandemic.  Congress can and should set the island on the path to a fairer and more just future. I’m proud to join my colleagues in introducing this legislation,”

“We conducted numerous hearings on the Island and in Washington, received extensive input from diverse groups from across the Puerto Rican community and now present long-overdue PROMESA reforms for the people,” Soto said. “After nearly four years of PROMESA Fiscal Board oversight, we have yet to see meaningful improvement to unemployment, poverty and debt. After Hurricanes Irma and Maria, multiple earthquakes and a COVID-19 outbreak, the economic situation is more dire than ever. These critical reforms restore greater sovereignty to our fellow Americans in Puerto Rico and their elected leaders, establish more focus on jobs and economic growth and protect essential funding for education, pensions, health care and public safety. As we move forward, it is absolutely critical that we act swiftly to support our Puerto Rican brothers and sisters. Let’s reform PROMESA now and bring prosperity back to the Island!”

“I am proud to join Chairman Grijalva and my colleagues today in introducing these long-awaited changes to PROMESA” Ocasio-Cortez adds in the release. “This is a step in the right direction. We must ensure essential services like health care, public education and pensions are protected for the most vulnerable communities. I am also pleased that there was an inclusion of a public auditing of the debt – we cannot let Wall Street capitalize on the pain and suffering of the island.”

Grijalva led a congressional delegation to Puerto Rico in March 2019 with Velázquez, Soto, Rep. Ruben Gallego (D-Ariz.) and Rep. Jenniffer Gonzalez-Colón (R-P.R.) to meet with community leaders and hear from Puerto Ricans about the budget cuts and fiscal austerity following the enactment of Promesa.

As part of their #ListenToPuertoRico tour, the lawmakers said they “gathered information on the Trump administration’s failure to help Puerto Rico recover from Hurricane Maria and Hurricane Irma and on the severe economic and social impacts of drastic budget cuts by the Oversight Board to essential public services,” according to a committee release.

In May 2019, Grijalva held committee hearing on Promesa. In September, Grijalva traveled to Puerto Rico for a second time to tour San Juan, Loíza, Guayama, Adjuntas and Vieques to hold meetings with local leaders to discuss the pace of reconstruction across the island.

In October, Grijalva held two legislative hearings on a discussion draft of amendments to Promesa. On day one, the committee received testimony from witnesses from the FOMB, the Puerto Rico Fiscal Agency and Financial Advisory Authority, and elected officials from Puerto Rico. On day two, the committee heard from unions, non-profits, professors, economists, and scientists “who agreed the core elements of what is now the Amendments to PROMESA Act are vital to the future of Puerto Rico,” the news release reads.

On Tuesday, Grijalva and 12 lawmakers sent a letter to Health and Human Services (HHS) Secretary Alex Azar urging him to consider the economic and public health infrastructure in the U.S. territories when determining the distribution of coronavirus resources.

The letter, available at https://bit.ly/3cGJsat, was signed by committee Vice Chair Gregorio Kilili Camacho Sablan (D-CNMI) and Reps. Michael F.Q. San Nicolas (D-Guam), Stacey E. Plaskett (D-USVI), González-Colón, Aumua Amata C. Radewagen (R-American Samoa), Velázquez, Soto, Serrano, Ocasio-Cortez, Joaquin Castro (D-Texas), Jesús G. “Chuy” García (D-Ill.) and Juan Vargas (D-Calif.).

The lawmakers asked the Trump administration to take into account the unique “challenges and vulnerabilities” that the territories face, especially Puerto Rico, which has faced “an economic crisis, a series of recent natural disasters, and unequal access and treatment under federal programs.”

“We urge HHS to consider the vulnerable economic and public health infrastructure in the Territories when determining the criteria for prioritizing the distribution of COVID-19 resources to ensure these jurisdictions receive sufficient test kits, protective equipment and other lifesaving supplies to respond to this pandemic,” the lawmakers wrote.

An analysis of the Amendments to PROMESA Act bill is available at https://bit.ly/2zlQ3bW, and a fact sheet explaining the bill in more detail is available at https://bit.ly/2ZusQiC.

Amendments to PROMESA Act BillDownload

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