Puerto Rico minority senators: Judge should beware of legislative entrenchment in Cofina deal
SAN JUAN – The Popular Democratic Party’s (PDP) delegation in Puerto Rico’s Senate filed Wednesday a friend of the court brief against debt adjustment confirmation of the Puerto Rico Sales Tax Financing Corp. on the grounds that it sanctions legislative entrenchment.
If the requested order is granted, the PDP says, no successor Puerto Rico Legislative Assembly could amend or repeal the new-bond legislation.
“The inability to amend or repeal the New Bond Legislation not only constitutes a textbook example of impermissible legislature entrenchment per se, but given the subject matters legislated thereby, also implies entrenchment with respect to the exercise of some of the most fundamental powers specifically granted to the Legislative Assembly by the Puerto Rico Constitution. This Honorable Court must therefore be mindful of the language used in any order confirming the Proposed Plan of Adjustment such that it does not sanction the unconstitutional restrictions pursued by the New Bond Legislation,” the PDP said.
Federal Judge Laura Taylor Swain gave the Financial Oversight and Management Board until Jan. 24 to answer the PDP lawmakers’ brief.
The restructuring of Cofina’s $17 billion debt has two parts. In the first part, commonwealth and Cofina bondholders settled their dispute over ownership of the sales and use tax by agreeing to divide the 5.5% portion of the 11.5% sales and use tax. Of the 5.5% portion, Cofina will keep 53.6% and the commonwealth receives the rest. According to court documents, the split will result in the commonwealth receiving about $400 million a year from the sales and use tax over the next 40 years.
Secondly, under the debt plan, Cofina bondholders will exchange their current bonds for new bonds whose value is being cut. Cofina senior bondholders will recover 93% of the value of their original bonds and junior bondholders 53%. Because the sales and use tax will be used to guarantee the bonds, future legislatures will be prevented from changing it.
Also Judge Swain asked that the board provide the legal basis supporting the validity of the Cofina deal. During a recent hearing on the debt-adjustment plan, she had expressed concern that the Cofina deal may result in an unprecedented rewriting of the Constitution because, besides binding future legislative assemblies to the deal, it would also rewrite the Constitution’s definition of “available resources” because, through the deal, Cofina will own its portion of the sales and use tax.
Judge Swain worries about rewriting Puerto Rico’s Constitution
Related Posts
Latest News
-
Medplus Solutions celebrates 10 years Saving Lives
Innovation and continuous growth Expansion of specialized and more comprehensive...
- Posted May 18, 2022
-
The Impact of Climate Change in Puerto Rico and on Humanity
Climate change on Earth affects humanity in all of the...
- Posted May 14, 2022
-
Cowboys and Indians Revisit the Federal Realm
The recent decision by the U.S. Supreme Court that the...
- Posted May 14, 2022
-
Puerto Rico Has Highest Proportion of Tax Expenditures Globally
Study by Espacios Abiertos Reveals Cost of Economic Incentives is...
- Posted May 14, 2022
-
SSI Exclusion Leaves Puerto Rico in the Cold
Associate Justice Sees Potential Repeal of ‘Shameful’ Insular Cases The...
- Posted May 13, 2022
-
GM Sectec, UPR Sign Cybersecurity Agreement
Organizations Establish Practice Centers for Students in Cybersecurity, IT GM...
- Posted May 13, 2022
-
Government, Academia Reach Agreement to Develop Workforce
Will Provide Training for Participants of Labor Development Program Puerto...
- Posted May 13, 2022
-
Medplus Solutions celebrates 10 years Saving Lives
Innovation and continuous growth Expansion of specialized and more...
- May 18, 2022
-
Amazon Web Services Expands Operations in Puerto Rico
Local Office Will Offer Services to other Caribbean Islands...
- April 22, 2022
-
García Padilla: Rubio Is No Friend of Puerto Rico
Governor Says Rubio's Remarks Confirm he Works for 'Vultures'
- February 26, 2016
- 15
You must be logged in to post a comment Login