Friday, October 7, 2022

Omnibus Bill Expected to be Voted on Today

By on December 17, 2015

Includes Language on P.R. Debt Restructuring

BY EDISON REYNALDO MISLA

While intense negotiations continued between Republicans and Democrats in Congress, it was still unclear at presstime Monday what tool the Omnibus budgetary bill would give Puerto Rico as a way to legally restructure its debt, such as through Chapter 9 bankruptcy protection, and if it would include some form of a federal fiscal control board as a counterbalance.

The text of the Omnibus bill was expected to be released early Tuesday, Dec. 15, according to a statement sent Monday by Resident Commissioner Pedro Pierluisi to Caribbean Business. Under rules established by the Republican majority in the House, a bill must be publicly available for 72 hours before it can be voted upon. That would mean the vote would be today, at the earliest.

“The current continuing resolution—which expires at the end of the day on Wednesday [Dec. 16]—will thus have to be extended for a short period. In terms of Puerto Rico, negotiations are ongoing. Members of Congress from both parties have weighed in with leadership in support of Puerto Rico, and I am grateful to each one of them,” Pierluisi said.

On Monday, Javier Llano, partner at Oldaker Law Group in Washington, D.C., was confident the bill would include language allowing Puerto Rico to enter into an orderly process of debt restructuring. “If it is Chapter 9 or a modified version, no one can say yet,” Llano said.

Such a measure would most likely come with strings attached. Both moderate Republicans and Democrats support some form of federal government oversight to tackle Puerto Rico’s fiscal challenges, Llano indicated. Federal government oversight could also take the form of a requirement for periodic reports to Congress from the U.S. Treasury on Puerto Rico, he said in a previous interview.

It was expected that the Tax Extenders bill, which could be tethered to the Omnibus bill, would contain provisions that benefit Puerto Rico, such as the extension of the rum “cover over.” Under federal law, an excise tax of $13.50 per gallon is collected on all rum imported to the U.S. Most of those funds are then transferred, or “covered-over,” to the Treasury departments of Puerto Rico and the U.S. Virgin Islands (USVI). Permanent law mandates that $10.50 of the excise tax be returned to Puerto Rico and the USVI.

The bill should also include a reduction from 35% to 32% in the tax rate for companies that do business in Puerto Rico as domestic subsidiaries.

Finally, in terms of Medicare, there was still hope the Omnibus bill would authorize the U.S. Health secretary to delay the 2016 cuts to Medicare Advantage rates.

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