Thirty-four congressional Democrats — including the incoming chairman of the House committee with jurisdiction regarding PROMESA and three senators who are 2020 presidential hopefuls — have written the PROMESA Financial Board sharply criticizing the Board’s Fiscal Plan for Puerto Rico and the agreement of the Board and the territorial government with creditors of the government’s Sales Tax Financing Corporation (COFINA).
The letter organized by the Progressive Caucus co-chaired by expected House Natural Resources Committee Chairman Raul Grijalva (AZ) also challenges the Board’s $1.5 billion in operating costs through Fiscal Year 2023 and questions potential conflicts of interest of Board Members with potential beneficiaries of Board policies, including Banco Popular, Puerto Rico’s Government Development Bank, and Santander Securities. Board Members have or have had ties with the three institutions.
The 34, who include Senators Kirsten Gillibrand (NY), Elizabeth Warren (MA), and Bernie Sanders (VT), also complain about a Puerto Rico law (“Act 22”) that enables “ultra-rich” who “reside in Puerto Rico part-time” to avoid paying taxes on capital gains, interest, and dividends, resulting in “lost potential revenue for Puerto Rico and the federal government.” It is also true that the law has resulted in states losing revenue as well, and the law enables individuals to avoid paying any tax on capital gains on stock and bond trading in the States because of its interaction with a Federal law.
The authors, who also include three House Members from the States of Puerto Rican origin, additionally, ask the Board to “suspend all debt payments until all Puerto Ricans have access to electricity, clean water, primary and secondary education, and basic health care” — standards that arguably are already met, even if not well.
The letter charged that the Board’s Fiscal Plan “appears to directly contradict” PROMESA’s requirement that it “ensure funding of essential public services” and “provides for a debt burden that is sustainable” and funds “investments necessary to promote growth.”
The Members of Congress expressed “great surprise and consternation” that “even more funds will be available to creditors to claim than before” Hurricane Maria.