The Puerto Rico Oversight Board urged the federal government to provide more help to the island’s people and businesses.
In an annual report released on Wednesday, the board asked the federal government for a long-term funding solution for Medicaid on the island, to change a law to make air cargo cheaper, to expand a child tax credit to Puerto Rico, and increase federal statistics collection there.
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The board released the annual report as part of a requirement in the Puerto Rico Oversight, Management, and Economic Stability Act. Copies of the report were distributed to key members of Congress, the federal executive branch, the governor’s office, and the Puerto Rico legislature on Wednesday.
“Aid from the federal government is needed to help in continued disaster relief efforts," said Evercore Director of Municipal Research Howard Cure. "Medicaid and Medicare reforms, stimulating the economy and improving infrastructure. This would take the form of direct grants and loans, legislative bills, changes to tax provisions, changes in federal regulations and benefit reforms.
“I am not convinced that the current White House administration is willing to provide all of this assistance particularly given the corruption issues surrounding the prior administration,” Cure continued. “Also, as the commonwealth does not have any direct representation in the U.S. Congress, other representatives and senators would need to promote Puerto Rico’s cause and convince the legislature that Puerto Rico still deserves special treatment.
“This is hard enough during relatively strong economic times.” Cure said. If the U.S. economy slows, Congress may prioritize giving aid to mainland regions, he added.
In its report the board said that adequate long-term federal funding for Medicaid has to be secured, as more than 45% of the island’s residents receive their health coverage from the program.
The board called for the federal government to waive the Century of Aviation Reauthorization Act for Puerto Rico. This prohibits foreign civil aircraft from exchanging cargo in the United States with some exceptions and with a general exception for exchanges in Alaska. The board wants an exception granted to Puerto Rico. The goal is to lower prices of goods, the vast majority of which are imported to the island.
The board called for a federal child tax credit to be equalized in Puerto Rico compared to the states. Whereas it applies to all children in the states, it is only granted to families with three or more children on the island.
The board recommended the federal Small Business Administration to take several steps to support Puerto Rico businesses.
Further, the board asked federal government to direct the Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, National Center for Education Statistics, National Center for Health Statistics, and other bodies to collect and publish statistics on Puerto Rico to the same degree they do for the states.
In introductory essays, Board Chairman José Carrión and Board Executive Director Natalie Jaresko highlighted the board’s successes in this past fiscal year. These came in restructuring the Puerto Rico Sales Tax Financing Corp. (COFINA) and Government Development Bank for Puerto Rico debts, the consolidation of commonwealth agencies, the reduction of commonwealth payments of professional fees, the reaching of agreements with the Retiree Committee and unions on pension cuts, and the creation and gaining of support for a Puerto Rico Electric Power Authority Restructuring Support Agreement.
The board has also announced an agreement for a framework for a commonwealth government debt plan of adjustment.
However, deeper into the report the board acknowledges some things haven’t developed as fast as it had hoped.
The board’s fiscal plan required the government to submit 128 implementation plans for the plan’s fiscal measures and structural reforms. Even though they were due on June 30, 2018, the report said that as of the report release date not all had been submitted.
Government reform implementation has been characterized by poor data quality in reports, lack of implementation by the commonwealth’s Office of the Chief Financial Officer, lack of progress on implementing fiscal measures, and lack of progress on structural reforms, the board said.
The board has been promoting reforms to ease business activity on the island. Despite this the World Bank lowered the island’s world ranking on eight of 10 ease of doing business measures in 2019 compared to 2018.
“A significant gap remains between the Highway and Transportation Authority’s performance to date and its June 2018 fiscal plan requirements, particularly in enhancing the operating model, growing revenue streams and delivering on the capital improvement program,” the board said.
The board said “little to no progress” had been made in reforming the Public Corporation for the Supervision and Insurance of Cooperatives in Puerto Rico. This organization is important because “the cooperative system is a pillar of the Puerto Rican economy.” A large portion of island residents use financial cooperatives for their banking.
