The Puerto Rico Oversight Board should be given more power over the island's government as the board seeks to repair the economy, the leader of the U.S. House committee overseeing Puerto Rico said Tuesday.
“Today’s testimony will inform the work of Congress to ensure the Oversight Board and federal partners have the tools to coordinate an effective and sustained recovery,” U.S. Rep. Rob Bishop, R-Utah, said in a written statement after a hearing of the House Committee on Natural Resources, which he chairs. “It is clear that a stronger mechanism will be necessary to align immediate recovery with long-term revitalization and rebuilding.”
He added, “this committee will work to ensure [the Puerto Rico Oversight Board] has the tools to effectively execute that mission and build a path forward for this island and its residents.”
The board was created last year to oversee fiscal management by the island government, which had said more than $70 billion of debt was unpayable under current economic conditions. Since the hurricane, the board has clashed with the local government over leadership at the power utility.
During the hearing the board's executive director, Natalie Jaresko, said the ability of Puerto Rico’s government to repay its debt was “gravely worse” than it was before Hurricane Maria, which arrived Sept. 20. By the end of December the board plans to complete a 30 year debt sustainability analysis with Puerto Rico’s government, she said.
“After the hurricane it is even more critical that the board be able to operate quickly and decisively,” Jaresko said. To “avoid uncertainty and lengthy delays in litigation, congressional reaffirmation of our exercise of our authority is welcome.”
On Oct. 27 the board filed a motion in the Title III bankruptcy case for the Puerto Rico Electric Power Authority seeking the court’s permission to appoint Noel Zamot as the authority’s new leader. The government of Gov. Ricardo Rosselló has made it clear that it intends to challenge this motion. The court is scheduled to have a hearing on the matter on Nov. 13.
In calling for more board power, Bishop and Jaresko probably were at least partly referring to the struggle over PREPA’s leadership. They may also want the board’s power augmented in other ways.
The board has already announced that it will be creating five year fiscal plans for Puerto Rico’s government and for its public authorities this winter.
Puerto Rico’s government will have substantial needs for federal aid in the coming years, Jaresko said. Congress plans to tie this aid to the government following the board’s fiscal plan and this would be appropriate, she said.
“Before the hurricanes, the board was determined that Puerto Rico and its instrumentalities could achieve balanced budgets, work its way through its debt problems, and develop a sustainable economy without federal aid,” Jaresko said in her written testimony. “That is simply no longer possible. Without unprecedented levels of help from the United States government, the recovery we were planning for will fail.”
She also said that over the next 1.75 years Puerto Rico’s government will need federal help closing a gap of between $13 billion and $21 billion for basic services. She also said the federal government should change tax laws to benefit the island.
"The representatives of the Financial Oversight and Management Board (FOMB) that appeared before the House Committee on Natural Resources of the United States Congress insist on jeopardizing the necessary resources for the payment of pensions and job stability,” Rosselló said in a written statement Tuesday.
Rosselló said that the testimony of Jaresko and Zamot "evidenced ignorance about the recovery process in Puerto Rico, presenting incorrect figures relating to the existing conditions on the island.”
“I again invite the FOMB to collaborate so that the government of Puerto Rico, together with the support of the federal government, facilitates the fastest possible recovery of our island," the governor said. The assistance shouldn't depend on the FOMB "assuming the administrative role" that belongs to the elected government of Puerto Rico, he said.
