Re: Recommendations to the ‘‘Puerto Rico Oversight, Management, and Economic Stability Act” (PROMESA)

April 17, 2016

Dear Representative:

We, the undersigned organizations representing and serving millions of Puerto Ricans, Latinos and impacted Americans across the country, write to offer our recommendations to the “Puerto Rico Oversight, Management, and Economic Stability Act” (PROMESA).

After months of delay and inaction, we are pleased that the House of Representatives has begun to consider proposals to aid the more than 3 million U.S. citizens of Puerto Rico suffering as a result of the island’s fiscal crisis and are encouraged by the discussion draft that House Natural Resources Chairman Rob Bishop has put forward.

Although the discussion draft includes promising proposals to restructure Puerto Rico’s debt, several elements of PROMESA are problematic and, unfortunately, further undermine the already limited autonomy of U.S. citizens in Puerto Rico. Moreover, the legislation fails to address other urgent issues that will further exacerbate the island’s economic situation, including healthcare inequities and the need for progressive tax reforms. At the same time, PROMESA needlessly weakens environmental protections that would remove public review and input over land developments and jeopardize the Vieques National Wildlife Refuge.

As the bill moves forward in the process, we offer the following recommendations to the House Committee on Natural Resources to provide the island the necessary resources it needs to address its near-term challenges and promote long-term growth.

Establishment and Organization of the Oversight Board (Title I and II)

We are troubled with the broad powers assigned to the proposed Puerto Rico Financial Oversight and Management Board (Oversight Board). The Oversight Board would have almost absolute power over the island’s political and economic affairs and would weaken Puerto Rico’s democratic institutions and the rule of law. The economic crisis should not be used as an opportunity to infantilize the U.S. citizens of Puerto Rico by denying them their civil and democratic rights. Moreover, because of the serious risk that an Oversight Board could also be used as a backdoor for creditors to continue to strip out wealth from Puerto Rico, any legislation must include enforceable conflict of interest rules that apply to both appointees and their staff.

Specifically, the following provisions are of grave concern to our institutions and communities as they usurp the power of the democratically-elected Commonwealth government and thus should be removed:

  • Removal of Local Officials: PROMESA grants the Oversight Board the authority to suspend without pay or remove from office any local officials that take any actions in violation of Board’s orders.
  • Enforcement of Strike & Lock-out Laws: PROMESA transfers power to the Oversight Board to enforce existing local laws prohibiting public employee strikes and lock-outs.
  • Impose Fiscal & Management Recommendations: PROMESA grants the Oversight Board the authority to issue fiscal and management recommendations and, in the event of noncompliance, implement them.
  • Review of Legislative Acts: PROMESA grants the Oversight Board the authority to review any Legislative Acts approved in a given year, and the power to void them if they are not consistent with the Fiscal Plan.
  • Review of Contracts & Leases: PROMESA empowers the Oversight Board to approve contracts or leases of any size entered into by the central government.
  • Permanent Life of the Board: PROMESA permits the Oversight Board to be reinstated, following sunset, in the future (without Congressional action) if Puerto Rico violates one of several fiscal parameters (default on debt, missed payroll, cash deficit in any given quarter, etc.).

In order to ensure the Oversight Board is transparent, uncompromised and accountable to an appeals process, the following additions should be incorporated into PROMESA:

  • Conflicts of Interest: The establishment of any Oversight Board should include explicit cross-references to enforceable financial conflicts of interest rules that apply to both appointees and staff. Because section 101(a) explicitly states that “the Oversight Board is established as an entity within the Government of Puerto Rico, and is not established as a department, agency, establishment or instrumentality of the U.S. Government” and because section 109(a) then exempts the oversight board from any “control, supervision, oversight or review over the Oversight Board,” it does not appear that the appointees or their staff would be subject to rules governing conflicts of interest and, even if the Oversight Board adopted such rules, that any outside entity would be in a position to enforce such rules.
  • Public Disclosure: As a basic principle of democracy and good governance, the Oversight Board should be subject to public disclosure requirements, including the Freedom of Information Act.
  • Appeals and Judicial Review: As the significant decisions of the Oversight Board would not be reviewable by an independent entity as proposed under PROMESA, we strongly recommend the legislation include a mechanism for the Commonwealth to appeal rulings and for a judicial review system to apply to Oversight Board actions.
  • Island Representation: The composition of the Oversight Board, in requiring only one Puerto Rico-based resident or worker, is insufficient and not appropriate to make decisions about the Commonwealth’s internal affairs. We recommend additional island representatives.

Adjustment of Debts (Title III)

The current and future livelihood of millions of American citizens living in Puerto Rico is in danger as a result of the island’s economic crisis and the massive, unpayable $72 billion debt. While the average state in our nation spends roughly 5% of its budget on paying debts, today the government of Puerto Rico is spending an unprecedented and unsustainable 35% of its revenues on debt payments. This situation threatens the Puerto Rican's government ability to tend and provide for the basic education, health and safety needs of its people, and demands an immediate federal response, including a government-led plan to restructure the island’s entire debt.

The Commonwealth previously had bankruptcy powers until being left out of early 1980s federal bankruptcy reform legislation. Therefore, any legislation addressing the Puerto Rico debt crisis must include robust debt restructuring powers for all public services, in order to renegotiate the debt and establish a fair repayment plan.

PROMESA includes several promising debt restructuring provisions giving the Commonwealth some needed tools to effectively negotiate with creditors, essentially encompassing the entire $72 billion debt. While additional powers would be helpful, the scope of the debtors and the automatic 18-month stay on litigation (under Title IV) are important provisions under PROMESA.

Vieques National Wildlife Refuge (Title IV)

Vieques National Wildlife Refuge is the largest and one of the most ecologically diverse refuges in the Caribbean, with thousands of tourists visiting each year. It is home to at least 14 endangered animals and plants and many other endemic species including several types of magnificent sea turtles, and provides an important habitat for 190 species of migratory and resident birds. PROMESA voids the cooperative agreement (between the Department of the Interior, the Conservation Trust of Puerto Rico, and the Municipality of Vieques) for 3,100 acres of protected conservation land in the Vieques National Wildlife Refuge, and permits its conveyance to the Municipality of Vieques without any assurances this valuable open space will be preserved and not sold to private interests for development. While local control of Puerto Rico is always a priority, in this case, this provision would jeopardize vital public lands, needed recreational space and precious ecosystems with no protections from sale or development. This provision should be removed or amended to protect the land from development.

Puerto Rico Revitalization Act (Title V)

PROMESA should foster cost-effective, clean energy generation and environmental cleanups. This will ensure the development of a comprehensive policy plan that addresses the energy, clean environment, safety and health needs of Puerto Rico, including the cleanup of remaining toxic sites within the island municipalities of Vieques and Culebra.

While we support efforts to provide Puerto Rico with the necessary resources to upgrade its energy infrastructure, we have serious concerns over proposals that would weaken or undermine the National Environmental Policy Act (NEPA). For many projects, NEPA is the only law that provides the Puerto Rican public a voice to inform, improve, or oppose projects that have a direct effect on their health and safety. By making sure that the public is informed and that alternatives are considered, NEPA has improved or stopped unwise and harmful projects like the solid waste incinerator in Arecibo, Puerto Rico. The incinerator would burn garbage and emit incredibly dangerous levels of toxic chemicals like lead, mercury, ammonia, and other toxic ashes into the air communities breathe. In its current form, PROMESA places limits on public involvement and the right of the Puerto Rican people to challenge harmful projects. It excludes the Puerto Rican voice from the Puerto Rican recovery. The Puerto Rican people should not be expected to be silenced in exchange for an economic recovery package. The economic recovery of the island will largely depend upon the strong will and character of its people and any recovery that undermines the Puerto Rican will is deemed to fail. We strongly recommend the removal of Title V from PROMESA.

Other Recommendations

The following issues should be addressed in PROMESA or timely, subsequent legislation aimed at aiding Puerto Rico during this debt and economic crisis:

Healthcare Parity

Severe underfunding of Puerto Rico’s healthcare system is pushing it to the brink of collapse and is already threatening patient care. Congress should bolster Puerto Rico’s healthcare safety net by approving the Health and Human Services Administration’s recommendation to eliminate the annual Medicaid/Mi Salud funding cap on Puerto Rico in favor of funding based on FMAP per-capita income.

Puerto Rico receives half the rate of federal healthcare funding while the island’s U.S. citizens pay the same Medicare tax as mainland residents. The severe federal funding cuts the island is currently facing could amount to $3 billion in the next two years. The Medicare Advantage program may no longer be viable next year if funding to insurers is not restored. The Medicare Advantage system’s collapse will cause the migration of low-income seniors to Mi Salud, the island’s Medicaid program. Mi Salud, which relies on both federal and commonwealth funds, is unprepared to absorb the Medicare Advantage transfers and is poised to run out of money as early as the end of 2016, resulting in 900,000 people being dropped from the program.

Meanwhile, a significant number of doctors are moving to the U.S. where they are paid more for their services simply because mainland reimbursement rates are far superior. In the last five years, over 3,000 medical professionals have left Puerto Rico. The healthcare industry represents 20 percent of Puerto Rico’s GDP, amounting to $11 billion dollars, and employs approximately 100,000 people. A collapse will not only jeopardize care for millions of U.S. citizens, but could result in a dramatic blow to Puerto Rico’s already weakened economy.

Tax Reform

The Federal Government should institute tax policies that foster economically-diverse and living-wage job creation. We support local government implementation of an Earned Income Tax Credit (EITC) and an expanded Child Tax Credit that rewards work and supplements earnings to low-income workers in Puerto Rico.

The EITC is already available to Americans living in the fifty states and the District of Columbia. At present, residents of Puerto Rico can qualify for the Child Tax Credit only if they have three or more children, in contrast to low-income workers in the States who can obtain benefits with one or more children. The Child Tax Credit should be extended to low-income all Puerto Rican parents with no added conditions.

The EITC is a proven and effective anti-poverty measure to promote employment. An EITC would create incentives for work and increase participation in the formal economy. At forty percent, Puerto Rico has the lowest labor market participation in the United States and the territories, with participation rates are about two-thirds of the U.S. average. Low participation in the formal economy stunts economic growth and undermines Puerto Rico’s economic reform efforts. While Puerto Rico’s employment rates have somewhat improved recently, applying the EITC to the island will encourage the needed labor participation to grow the economy.

We appreciate PROMESA’s intent to address this crisis, but we encourage Congress to carry out the aforementioned recommendations to create a legislative package that can truly begin to address the island’s grave fiscal and health care problems, while respecting Puerto Rico's autonomy and protecting its environment.

Sincerely,

José Calderón
President
Hispanic Federation
National

Raul Russi
CEO
Acacia Network, Inc.
New York

Palmira Ubinas
President
AIPEH, Inc. Hispanic Arts & Culture International Association
Florida

Nilda Ruiz-Singh
President/CEO
Asociación Puertorriqueños en Marcha, Inc.
Pennsylvania

Ronald Blackburn-Moreno
President/CEO
ASPIRA Association
National

Mark Gonzalez
CEO
ASPIRA of New York, Inc.
New York

George Zeppenfeldt-Cestero
President/CEO
Association of Hispanic Healthcare Executives
National

Marce Gutierrez-Graudiņš
Founder/Director
Azul
California

Santos Rivera Jr.
CEO
Betances Health Center
New York

George Cruz
Executive Director
Bright Futures Youth Center, Inc.
Connecticut

Yamira Lee Johnson
CEO
Business Nature, Inc
Florida

Anabel Beltrán Román
Executive Director
Casa Boricua de Meriden, Inc.
Connecticut

Yanil Teron
Executive Director
Center for Latino Progress - CPRF
Connecticut

Jennifer Allen
Vice President & National Director
Chispa | League of Conservation Voters
National

Gladys Rivera
Vice President
CICD Puerto Rican Parade, Inc.
Connecticut

Denise Rosario
Executive Director
Coalition for Hispanic Family Services
New York

Teresa A. Santiago
Chairwoman
Comite Noviembre
National

Dr. Rosa Gil
President/CEO
Comunilife, Inc.
New York

Soledad Hiciano
Executive Director
Community Association of Progressive Dominicans
New York

Milan Bhatt
Executive Director
Community Resource Center
New York

Courtney Washburn
Executive Director
Conservation Voters for Idaho
Idaho

Maria Elisa Cuadra Fernandez
CEO/Executive Director
COPAY Inc
New York

Edwin Segarra
Founder
Delaware for Puerto Rico
Delaware

Vivian Rodriguez
President
Democratic Hispanic Caucus of Florida
Florida

Venus Gines
CEO
Dia de la Mujer Latina, Inc.
National

Rosita Romero
Executive Director
Dominican Women's Development Center
New York

Jose Tejada
Executive Director
Dominico-American Society of Queens
New York

Raul Rodriguez
Executive Director
East Harlem Council for Community Improvement
New York

Martin Hayden
Vice President, Policy & Legislation
Earthjustice
National

Frances Lucerna
Co-Founder/Executive Director
El Puente
New York

Julio Medina, M.Div.
Executive Director
Exodus Transitional Community
New York

Bruce Goldstein
President
Farmworker Justice
National

Yamira Lee Johnson
Co-Founder
Feed & Fortify Community Organization
Florida

Mark Magaña
President/CEO
GreenLatinos
National

Heriberto Sanchez Soto
Executive Director/CEO
Hispanic AIDS Forum
New York

Juan Molina Crespo
Executive Director
Hispanic Alliance, Inc.
Ohio

Sami Marrero
President
Hispanic American Professional and Business Women's Association
Florida

Andrea Contreras-Munoz
Interim Executive Director
Hispanic Center of Greater Danbury, Inc.
Connecticut

Josephine Mercado
Founder/Executive Director
Hispanic Health Initiatives, Inc.
Florida

Eugenio Russi
Executive Director
Hispanos Unidos de Buffalo
New York

Vanessa Calderon-Rosado
Chief Executive Officer
IBA - Inquilinos Boricuas en Accion
Massachusetts

Jimmy Torres
President
Iniciativa Acción Puertorriqueña
Florida

Sandra Trevino
Executive Director
Junta for Progressive Action, Inc.
Connecticut

Raymond Ocasio
Executive Director
La Casa de Don Pedro
New Jersey

Leticia Rodriguez
Executive Director
La Casa de la Herencia Cutural Puertorriquena, Inc.
New York

Julio Casado
President/Chairman
La Unidad Latina Foundation
National

Guillermo Chacon
President
Latino Commission on AIDS
National

Fernando Morales
Executive Director
Latino Community Services
Connecticut

Juan Cartagena
President/General Counsel
LatinoJustice PRLDEF
National

Jaime Torres
President
Latinos for Healthcare Equity
National

Ivan Quervalu, Ph.D., MSW
Executive Director
Latino Social Work Task Force
New York

Brent Wilkes
National Executive Director
League of United Latin American Citizens
National

Libertad Guerra
Program Director/Chief Curator
Loisaida Inc
New York

Javier Valdes
Co-Executive Director
Make the Road New York
New York

Steve Stritch
Executive Director
Mercy Center
New York

Sandra Rolon
COO
Military Women In Power, Ltd
New York

Peter Fontanes
Chair
Mission 51
National

Nancy Rosado
Vice President
Mission Boricua
New York

Luis Alejandro
Molina National Coordinating Committee
National Boricua Human Rights Network
National

Wanda Gordils
President
National Conference of Puerto Rican Women
National

Janet Murguia
President/CEO
National Council of La Raza
National

Roseni Plaza
Executive Director
National Employment Lawyers Association, New York
New York

Felix Sanchez
Chairman
National Hispanic Foundation for the Arts
National

Elena Rios, MD, MSPH
President
National Hispanic Medical Association
National

Jessica Gonzalez-Rojas
Executive Director
National Latina Institute for Reproductive Health
National

Garrett VeneKlasen
Executive Director
New Mexico Wildlife Federation
New Mexico

Ernesto Loperena
Executive Director
New York Council on Adoptable Children
New York

Amira Odeh
Campaign Director
No Más Botellas
Puerto Rico

Ruben D. Arvizu
Director General for Latin America
Ocean Futures Society
National

Sean Stevens
Executive Director
Oregon Wild
Oregon

Natascha Otero-Santiago
Founder
Parranda Puerto Rico
National

Paul Perez
President
Partnerships for Trenton
New Jersey

Dr. Gabriela Lemus
President
Progressive Congress
National

Jose Carlos Montes
CEO
Puerto Rican Action Board
New Jersey

Cristina Pacione-Zayas
Co-Chair
Puerto Rican Agenda
Illinois

Yvonne Lopez
CEO
Puerto Rican Association for Human Development, Inc.
New Jersey

Anthony Suarez
President
Puerto Rican Bar Association of Florida
Florida

Luis DeRosa
President
Puerto Rican Chamber of Commerce of South Florida
Florida

Jose Lopez
Executive Director
Puerto Rican Cultural Center
Illinois

Iran Rodriguez
President/CEO
Puerto Rican Family Institute, Inc.
New York & Puerto Rico

Hector Diaz
President
Puerto Rican Leadership Council of South Florida
Florida

Maria Valle
Chair
Puerto Rican Parade of Fairfield County
Connecticut

Edwin Martinez
Vice Chair
Puerto Ricans United, Inc.
Connecticut

Dr. Anderson Torres
Executive Director
Regional Aid for Interim Needs, Inc.
New York

Robert Federico
Executive Producer
Repertorio Español
National

Fernando Betancourt
Executive Director
San Juan Center Inc.
Connecticut

Edwin Vargas
President
Semilla de Bienestar
National

Ignacio Salazar
President/CEO
SER- Jobs for Progress National, Inc.
National

Jose A Menendez
Chapter Chair
Sierra Club - Puerto Rico Chapter
Puerto Rico

Heriberto Martínez-Rivera
General Secretary
Sociedad Bíblica de Puerto Rico
Puerto Rico

Ramon Peguero
Executive Director
Southside United HDFC
New York

Julio Mendoza
Executive Director
Spanish American Merchants Association
Connecticut

Maria F. Harlow
Executive Director
Spanish Community of Wallingford, Inc.
Connecticut

Lisette Sosa-Dickson
Executive Director
Spanish Speaking Elderly Council - RAICES
New York

Joyce Rivera
Executive Director
St. Ann's Corner of Harm Reduction
New York

Ana Martinez de Luco
Executive Director
Sure We Can
New York

Jose Oliveras
Executive Director
Teatro Circulo, Ltd.
National

Robert Garcia
Founding Director/Counsel
The City Project
California

Grace Bonilla
President/CEO
The Committee for Hispanic Children and Families
New York

Will Rogers
President
The Trust for Public Land
National

Gloria Marini
President
Union Hispanomundial de Escritores
National

Lorraine Montenegro
Executive Director
United Bronx Parents
New York

Elizabeth Yeampierre
Executive Director
UPROSE
New York

Cecilia Gaston
Executive Director
Violence Intervention Program
New York

Nathaly Rubio-Torio
Executive Director
Voces Latinas, Corp.
New York

Jessica Clemente
Executive Director
We Stay/Nos Quedamos
New York

Greg Dyson
Public Lands Director
WildEarth Guardians
National

Antonio Gonzalez
President
William C. Velazquez Institute
National