Posted on 05/19/2016 4:25:28 AM PDT by cll
SAN JUAN — Following several setbacks, the U.S. House Natural Resources Committee finally released its new version of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa), Congress’ latest effort to “bring lawful order to chaos in Puerto Rico,” reads a summary of the bill released late Wednesday.
In doing so, the committee says it is not providing access to Chapter 9 of the U.S. Bankruptcy Code, there is no threat of contagion to the rest of the municipal bond market and no precedent is being established for other troubled U.S. states.
The bill, now HR 5278, could go to markup hearing as soon as next week. If it clears the committee vote, it would go to the House floor, where it remains to be seen if there is enough support for its passage. The Senate still awaits for the lower chamber to act on the matter.
Officials have stressed Puerto Rico is running out of time, warning it would default again in the summer, when roughly $1.5 billion in debt payments hit the commonwealth on July 1.
While changes have been introduced to its original version, strong fiscal oversight — a seven-member board within the local government structure — still remains. It would have “exclusive control” to ensure fiscal plans are implemented and followed through, budgets get balanced and reforms enacted, if the commonwealth fails to do so. If Puerto Rico decides to issue debt, it would need to the board’s approval.
Oversight would end after Puerto Rico regains access to capital markets, and achieves balanced budgets for four consecutive years.
As for debt restructuring, Promesa would seek to promote voluntary agreements between the commonwealth and its creditors, while honoring existing ones. Language includes collective action, whereby a two-thirds majority within a creditor group could agree to a debt-restructuring plan. Creditors would be divided respecting their priority as provided by the Puerto Rico Constitution, according to the summary.
Only if voluntary negotiations stall, audited statements are delivered and a fiscal plan is in place, a commonwealth entity could be authorized to enter into a court-ordered restructuring. Five board members would need to consent to this action.
The new bill would shield the Puerto Rico government from creditor lawsuits, although it is not to encourage otherwise avoidable defaults, reads the document. A court could provide relief to creditors that prove irreparable damage, and the board could decide whether the commonwealth can at least pay interest during the legal stay period.
Meanwhile, the commonwealth government would not be able to make budgetary transfers between public entities until the board is established.
The Board
The oversight entity could force the sale of public assets, consolidate agencies and reduce government workforce, according to the summary. Members and employees would be exempted from liability in carrying out their functions. Conflict-of-interest rules and financial disclosures requirements would remain in place.
The commonwealth government would need to provide a funding source for the board’s operations, while members would be only reimbursed for expenses.
The board keeps its broad powers to request information from the commonwealth, with criminal penalties for those who fail to follow its orders or knowingly provide false information.
It could go after audited financial statements at all government levels, and invalidate legislation and administrative actions that run counter Promesa. Puerto Rico lawmakers would have to submit cost estimates for bills they approve, and let board members know if they want to change the use of funds that require legislative approval.
Economic growth
After years of sustained economic decline, many observers have called for tools that help the island jumpstart its economy.
Under Promesa, Puerto Rico’s governor would be able to decide whether to lower the minimum wage to those younger than 25, and pay less than the States’ $7.25 an hour. It would waive the island’s exempt employees from the 113% increase to the threshold that determines federal overtime-pay rules.
The Natural Resources Committee is also proposing a “bipartisan, bicameral Congressional Task Force” that would examine how federal laws affect Puerto Rico’s economic growth. This group would need to deliver a report on its findings and recommended changes by the end of the year.
Moreover, the new bill calls on the U.S. GAO, short for Government Accountability Office, to conduct another study on the contracting activity of the federal Small Business Administration with HUBZone, or This program grants preferred treatment to local small and midsize businesses when contracting with the federal government.
Language remains for the expedited permitting of infrastructure projects that are deemed critical by the board, and the creation of a “revitalization coordinator.”
Pensions
A “firewall” would be created between pensioners and creditors in the island’s fiscal plans, according to the summary. Moreover, the board would conduct a study on the commonwealth’s pension liabilities, which government officials have pegged at $40 billion.
The revised bill would create a control board to help manage the U.S. territory's financial obligations and oversee some debt restructuring, BUT WOULDN'T COMMIT ANY FEDERAL MONEY - A CRITICAL REQUIREMENT TO WIN SUPPORT OF CONSERVATIVES.
http://seekingalpha.com/news/3184385-help-puerto-rico-way?ifp=0
Setting the stage for bailouts of democrat run welfare states with massive unpayable debt - like California.
Hmm...Puerto Rico, Californa...both have extreme cost overruns and are on the verge of bankruptcy just about all the time. I wonder what the common denominator is?.../s
Ethnic welfare cases living in paradise sucking down more of our tax dollars we actually worked for.
Leave them to their own corrupt devices.
>House Republicans have reached a tentative deal with the Treasury Department on a rescue package to ease Puerto Rico’s debt crisis, according to House Natural Resources Chairman Rob Bishop, who has been leading negotiations.
Wow. With ‘defenders’ of the Constitution and executors of the taxpayers $$, such as these, would someone like to point out that dime’s worth of difference between the parties again??
Or, why is hitting the $20T wall @ 85MPH any ‘better’ than 100MPH?
BOHICA.
And they are ruling any cut to public employee pensions unconstitutional. That is the major debt owed by CA, IL, and other states. It’s headed for a disaster to be burdened by private workers that had to save for their own retirement.
no bailouts for failed cities, failed states or failed territories.
Hola! Could you please keep us abreast of the Dem primary results today on the Island? Thanks! Saludos!
What’s the best radio station to stream? NotiUno?
NotiUno, yes. Today they roll electronic vote counting so maybe we will see results early.
Thanks!
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