Puerto Rico Update Week of February 7th 2018

Puerto Rico gets funding boost for disaster relief, Medicaid, under CR deal

Congressional leaders have struck a deal that will avoid another federal government shutdown later this week. Disaster relief funding was included in the agreement; Puerto Rico will receive $13 billion under the Community Development Block Grant (CDBG), $2 billion of which will be used to build a more resilient and “better” electricity system on the Island. Puerto Rico and the U.S. Virgin Islands will also receive $4.9 billion for additional Medicaid funding. This funding avoids the so-called “Medicaid fiscal cliff” that would have left Puerto Rico without coverage for 900,000 citizens. The agreement further mandates a 100% federal match for the islands’ Medicaid programs for the duration of the recovery from Hurricane María. A similar 100% match was instituted in Louisiana after Hurricane Katrina.

Revised Fiscal Plans rejected by FOB

The Fiscal Oversight Board (FOB) has rejected three of Governor Ricardo Rosselló’s revisions to the fiscal plans proposed for the Commonwealth’s central government, the Aqueduct and Sewer Authority (PRASA), and the Electric Power Authority (PREPA). The Board gave the Fiscal Agency and Financial Advisory Authority (AAFAF in Spanish) until February 12 to resubmit the plans and correct the elements which the Board found to be noncompliant with PROMESA.

Among the FOB’s objections was the Governor’s inclusion of the statehood issue—FOB said that they would not certify any fiscal plan containing language on Puerto Rico’s political status. On the economic side, the FOB was skeptical of the Governor’s revenue projections for the PREPA and PRASA plans, as well as the central government plan. FOB Chairman José Carrión also objected to the Governor’s estimate of future federal disaster aid. The Board also called for a $1.3 billion emergency fund.

Full text of the letters regarding the proposed fiscal plans: Central GovernmentPREPA, and PRASA.

House Oversight Subcommittee to conduct hearings on electric system reconstruction

The House Oversight National Security Subcommittee will hold a hearing on February 28 to discuss the rebuilding of Puerto Rico’s electricity system. Though the U.S. Army Corps of Engineers had said that 95% of the Island would have electricity back by the end of February, more than 30% of Puerto Rico’s residents still remain without power four and a half months after Hurricane María devastated the Island.

The federal agencies that will testify at the hearing are the Federal Emergency Management Agency (FEMA), which recently cited PREPA’s dysfunction as the cause for the delay in the energy grid’s reconstruction, the U.S. Army Corps of Engineers, and the U.S. Department of Energy.

Bipartisan group of Members of Congress question wisdom of privatizing Statistics Institute

Fourteen Members of the U.S. Congress, from both sides of the aisle, wrote a letter that throws into doubt Governor Rosselló’s proposal for a merger—and ultimately for the privatization—of the independent Puerto Rico Statistics Institute (PRSI). The Institute is led by a Director appointed to a 10-year term. Recent controversy over the post-hurricane death count, and the general mistrust stirred by the Whitefish energy contract, provoked a strong reaction on Capitol Hill, with House Democrat Bobby Rush (IL) saying in a public hearing that the contract “smells like a rat.” 

The letter cites opposition to the privatization of PRSI by the American Statistical Association, which said in a recent statement that, “Government statistics play a powerful role in any democracy. They empower the economy, serve the health and welfare of its citizens, improve governance, and inform decisions and policies in the public and private sector, among many other vital functions. Government statistics are also fundamental to evidence-based policymaking, the engagement of which is on a rapid rise in local, state, and federal governments.”

The Puerto Rico Senate and House of Representatives are expected to vote on the measure this week.