Second session of Congressional hearings 

Today, Wednesday, October 30, 2019 at 2:00 P.M., in Room 1324 of the Longworth House Office Building, the Committee on Natural Resources will hold a two-panel legislative hearing on a discussion draft of a bill,  “To amend the Puerto Rico Oversight, Management, and Economic Stability Act or ‘PROMESA,’ and for other purposes.” This will be the last of two hearings on the topic. The first hearing took place last Wednesday.

At today’s hearing, at least nine non-government witnesses representing Puerto Rico’s various sectors are expected to testify, including representatives from: the  Puerto Rico Economists Association, Puerto Rico Products Association, Oxfam, Foundation for Puerto Rico, the National Council for Science and the Environment, and other organizations.  Although the University of Puerto Rico President was not invited to testify, a student representative from the university is expected to testify

 

Governor Signs Executive Order Increasing Cooperation with FOMB

Governor Wanda Vázquez Garced signed two executive orders to improve coordination between Puerto Rico’s executive branch and the Financial Oversight and Management Board for Puerto Rico (FOMB). The first of these executive orders, Order 2019-057, outlines the process which the government will use to notify the FOMB of new laws and their impact on the budget, certify fund availability and allow agencies to request the reallocation of funds.  The second, Order 2019-056, governs how coordination on tasks undertaken by the Puerto Rican government, the FOMB, and the federal government will take place.  

“The legal framework created by PROMESA acknowledges the powers of Puerto Rico’s elected government. In that sense, the statute did not have the effect of eliminating the elected government’s powers, but rather, calls for collaboration between the government and the Board, with the aim of ending the fiscal crisis Puerto Rico is undergoing,” wrote Vázquez in Order 2019-057.

 

Power Bill Hike Approved, then Put on Hold

The Puerto Rico Energy Bureau recently announced that, beginning on November 1, Puerto Ricans would see a new energy efficiency charge on their power bills, which would increase the total cost of the bill by $0.64 to $1.79 per month. The charge would remain in place until June 30, 2020. According to the Bureau, the increase will collect $13 million to fund the creation of new energy efficiency programs. 

The power bill increase was severely criticized by many, including Governor Vázquez Garced, who publicly called on the Energy Bureau to reverse its decision. After meeting with the governor, Edison Avilés, the Energy Bureau’s president, shared his plans to try to identify revenue-generating alternatives that did not involve a price hike.

 

Puerto Rico Government announces $20.3 billion Plan for Power Grid

Last week, the Puerto Rico government unveiled its Grid Modernization Plan (GridMod Plan), which aims to radically remake the Island’s power grid over the next few decades. Under the plan, Puerto Rico would be divided into eight independently operating microgrids, complemented by peaking units and corporate conglomerates generating their own power.  The Puerto Rico Electric Power Authority (PREPA), would become one of multiple pillars upholding the power grid.

The GridMod Plan is expected to cost $20.3 billion to execute, with $14 billion expected to come from a combination of FEMA funds and HUD Community Development Block Grant – Disaster Recovery (CDBG-DR) money.  According to Chávez, the remaining $6 billion would be obtained from other sources of state and federal funding, or via public-private partnerships.  

 

Treasury Department Drafts Plan to Tax Online Commerce

The Puerto Rico Treasury Department has drafted a plan to collect the Island’s Sales and Use Tax (SUT) from purchases made from online retailers like Amazon and eBay, even if they have no physical presence in Puerto Rico.  If enacted, Puerto Rico would join New Jersey and Arizona in taxing these purchases.   Under the new plan, purchases subject to the SUT would not only include physical items, but also things like downloads and subscriptions, which would also be taxed.