Puerto Rico Governor-Elect Ricardo Rossello (New Progressive Party) is quoted this morning in El Nuevo Dia as saying that he will begin talks with creditors as soon as next week.
His goal is to save up to $800 million a year in debt costs over five to seven years. Options for accomplishing this including renegotiating as well as deferring payment of principal. “All these alternatives are on the table,’” he explained.
His “mentality,” however, “is to avoid endless litigation in bankruptcy proceedings and proceed with a willingness to deal with the reality of Puerto Rico and see what the best alternatives are to renegotiate” debt terms.
Rossello took pains to emphasize that he has “a totally different vision” than that reflected in the fiscal adjustment plan of incumbent Governor Alejandro Garcia Padilla (Popular Democratic Party/PPD) submitted to the Puerto Rico Financial Oversight and Management Board less than a month ago. He will:
- Not raise taxes.
- Reduce spending, beginning with 10% during the first year, developing spending plans from zero rather than from current levels.
- Collect taxes not paid, including $600 million a year in Sales and Use Taxes.
- Lower the costs of doing business, including through expediting permitting and reducing regulations.
The Governor-Elect will outline his plan to the Board as soon as he can meet with it. He noted that he has already met informally with Chairman Jose Carrion and a couple of the other members, and he disclosed that he would soon write to the panel regarding his proposals.
Asked if he would audit the legitimacy of bond issues as called for by a law enacted more than a year ago and pledged by the second-place finisher in the election, he replied that he would audit all government spending, suggesting improprieties in other expenditures.
Questioned as to whether he would support the proposal of companies in the States with foreign manufacturing subsidiaries in Puerto Rico and Gov. Garcia Padilla to lower the Federal tax rate on income from the subsidiaries from 35% to 2.625%, he explained that he would if it is the best alternative for economic development and it is viable. The proposal has been judged negatively by key members and staff of both national parties in the U.S. Congress and by the U.S. Treasury Department.
Rossello stressed the need for Federal financial assistance for the territory. He pointed out that the fiscal control board for Washington, DC was successful after the Federal government added financial assistance to its establishment of the board. The additional action eliminated a limit on contributions to the district’s Medicaid program and assumed local public pension obligations.
The Governor-Elect underscored that his primary vision for improving the territory’s economy was a transition to U.S. statehood. He explained that he would initiate this through a process that would elect proposed U.S. senators and representatives to lobby for equality along with Resident Commissioner-Elect Jenniffer Gonzalez (R) and include another plebiscite on the issue. He revealed that he will have a specific plan for this by December 1st.
He also disclosed that he intends to have cabinet nominees by that date and name a team this week to work on the transition to his administration. Current members of Rossello’s transition team include: (1) Carlos Vivoni, who served as Secretary of Housing under Governor Pedro Rosello, (2) Edward Calvesbert , Deputy Secretary of Economic Developoment at Puerto Rico’s Department of Economic Development and commerce under Governor Fortuno, and (3) Jose Izquierdo, an advisor to Governor-Elect Rosello on economic issues.
Rossello running-mate and Gonzalez was separately quoted this morning as saying that her priorities in her job as representing the territory to the Federal government — in addition to statehood — would be ending the unequal treatment of Puerto Rico in programs beginning with Medicaid and Medicare and the exclusion of the islands from other programs, including the U.S.-Spain trade treaty.
She also said that she would work to continue the application to Puerto Rico of the nine percent tax deduction for manufacturing income from domestic (vs. foreign) corporations. She would also try to enable airlines to transit through the islands largest airport passengers traveling from one foreign destination to another.