Treasury Secretary Resigns, Governor Reshuffles Top Financial Spots

Treasury Secretary Teresa Fuentes resigned in a surprise move this week. In her resignation letter, the former partner at Ernst and Young said that the Governor should have a Treasury Secretary that shares his public policy views. She also alluded to the need for compassion and love of country in the Island’s financial policies. Reports indicate that Fuentes was part of internal battles with former Treasury Secretary, Governor’s Chief of Staff and Commonwealth Chief Financial Officer, Raúl Maldonado over tax reform and other policies. The differences may also be related to Fuentes’ cancelation of Treasury contracts with a company that employs Maldonado’s son. The reports indicate that Maldonado’s son also has contracts with seven other government agencies. These reports resulted in a Commonwealth Department of Justice investigation into the matter.

Following Fuentes’ resignation, Governor Ricardo Rosselló announced that he was appointing Maldonado to his old post at the Treasury, as well as designating him as the new Executive Director of the Office of Management and Budget (OMB). Maldonado will remain as the CFO of the Commonwealth, a move that was praised by Fiscal Oversight Board (FOB) Executive Director Natalie Jaresko. Today the Governor announced the appointment of Ricardo Llerandi as his new Chief of Staff. It remains to be seen if Maldonado retains his CFO title, as well as his positions as Secretary of the Treasury and OMB Director. The news has dominated the local headlines for the last three days. 

González Introduces Bill to Extend Federal EITC to Island

Puerto Rico’s Resident Commissioner in Congress, Jenniffer González, has re-introduced a bill to extend the federal Earned Income Tax Credit (EITC) to residents of Puerto Rico. The bill is co-sponsored by Reps. Bonnie Watson Coleman (D-NJ) and Frederica Wilson (D-FL).

Residents of Puerto Rico do not currently qualify for the federal EITC; the U.S. General Accountability Office (GAO) reports that, if this benefit were extended to Puerto Ricans, the Island would receive around $525 million a year. GAO had previously published a report recommending that the credit be extended to the Island after detailing the unequal treatment of Puerto Rico’s residents. The EITC benefits families with household income between $39,000 and $53,000 depending on various factors. It can also be requested by single individuals who earn less than $14,800 or a couple making less than $20,300.

Legislation Advances to Create Office of Puerto Rican Coffee

The Puerto Rico Senate has passed a bill to create the Office of Puerto Rican Coffee (OPRC), under the Department of Agriculture. The OPRC would merge, under one umbrella, the Program of Buying and Selling Coffee, the Program of Crop Protection, as well as the Program to Incentivize Farming Machinery, the Program to Protect and Distribute Coffee Seeds, and the new Program of Special Coffee from Puerto Rico. The OPRC will also be responsible for evaluating, recommending, administering, measuring, and monitoring all of Puerto Rico’s coffee industry incentives and tax credits.

The proposal has the support of the Coffee Sector of the Puerto Rico Farmers Association, and the private sector as “…long as they can have real participation.” They would also like for the OPRC to execute strategic support programs for coffee growers, strengthen the small and medium-sized businesses in the coffee industry, and offer technical and technological resources for the growers.