The Puerto Rico Financial Oversight and Management Board today wrote Governor Alejandro Garcia Padilla and Governor-Elect Ricardo Rossello with its initial fiscal prescriptions for the territorial government.
The Board disclosed that it will adhere to its previously-determined schedule of beginning conversations with creditors this week but added that it will work with the insular government on a debt restructuring process. Its one clue regarding the process is that it would seek to simplify the current complex debt structure.
Gov.-Elect Rossello was asked to name a task force to develop his fiscal plan during his first week in office. The Board also announced its intent to soon discuss his ideas with him with the goal of maintaining the Board’s January 31st deadline for a final fiscal plan.
The Board also requested that Rossello develop a package of legislative and administrative reforms by February 15th.
Calculating a $67.5 billion gap in government finances over the next 10 years if the territory were to remain on its current path, the Board called for a number of reforms.
- Liberalizing labor laws.
- Lowering electricity costs and making other infrastructure improvements through public-private partnerships. ‘
- Equalizing taxation of business, replacing the excise tax on purchases by companies in the States from manufacturing subsidiaries organized as foreign corporations, reforming property taxes, and improving tax collection.
- Reforming pension systems.
- Eliminating welfare disincentives to work.
- Instituting an earned income tax credit.
- Reforming education, including means testing University of Puerto Rico tuition.
- Increasing prices on publics services to meet costs.
- Reducing healthcare costs.
- Monetizing government assets.
Click here to view a copy of the Board’s letter.