Puerto Rico lawmakers introduce board’s labor reform bill

For the first time in Puerto Rico’s history, legislators on Thursday introduced a bill created by a federal control board overseeing the island’s finances that aims to impose austerity measures the U.S. territory’s government has rejected.

The bill would reduce vacation and sick leave by half, eliminate a popular Christmas bonus and increase the minimum wage for certain workers if Puerto Rico manages to increase its labor participation rate as it struggles to recover from Hurricane Maria amid an 11-year recession.

Now that the bill has been submitted, it will lead to what many anticipate will be a fierce debate between Jose Carrion, president of a board that Congress established two years ago, and the president of Puerto Rico’s Senate, Thomas Rivera Schatz. He ordered Carrion to appear at a public hearing on May 1, the same day that tens of thousands of Puerto Ricans are expected to go on strike to protest austerity measures the board approved last week in a 6-1 vote.

“(Carrion) can explain to us the ‘virtues and benefits’ that this so-called ‘labor reform’ might have, if any,” Schatz said in a written statement.

Carrion has said the board would consider going to court if Puerto Rico’s government refuses to implement the recently approved measures. They are part of seven fiscal plans that will serve as Puerto Rico’s economic blueprints in upcoming years as it struggles to emerge from a financial crisis and restructure a portion of its $72 billion public debt load.

The bill was submitted the same day the board ordered Puerto Rico’s government to submit a proposed fiscal year 2019 budget by May 4 that is consistent with fiscal plan figures.

Several economists have said they believe the fiscal plans are overly optimistic when estimating how much federal funds Puerto Rico will receive as a result of Hurricane Maria, a Category 4 storm that struck on Sept. 20 and caused more than an estimated $100 billion in damage. Martin Guzman, an economist at Columbia University, said Thursday during a visit to the U.S. territory that the fiscal plans also underestimate the impact of new austerity measures.

“This is not the time to make structural changes,” he said, adding that reforms, “don’t usually generate growth miracles.”

He and other economists also called for an audit of Puerto Rico’s debt before it can be restructured. A federal court judge is currently holdings hearings after Puerto Rico filed for the biggest U.S. municipal bankruptcy in May 2017.

Greg Clark, head of municipal research of New York-based Debtwire, said in a phone interview that the lack of audited financials since 2015 means there is no baseline to judge the validity of projections presented in the fiscal plans.

“That’s where I think the big flaw is,” he said. “I’m still surprised the board hasn’t taken care of that kind of thing.”

In addition, Clark said the austerity measures that the board approved will be a tough sell in Puerto Rico: “The legislature there has become more populist…and that doesn’t bode well for the passage of these types of things.”

By DANICA COTO

The Associated Press

Puerto Rico lawmakers introduce board’s labor reform bill

Puerto Rico’s Francisco Lindor Joins an Exclusive Home Run Fraternity

It was not the fastest home run hit this season, nor was it the farthest. But as the ball left Francisco Lindor’s bat on its way to the stands for a two-run home run during the Cleveland Indians’ win over the Minnesota Twins in Puerto Rico’s Hiram Bithorn Stadium on Tuesday, it most likely would have set a season high for crowd noise, if only M.L.B.’s Statcast service could track such a statistic.

Born in Caguas, P.R., Lindor attended high school in the United States, but in his homeland he is still known as Paquito. The fans let him know it on Tuesday, cheering his nickname until he came out for the type of curtain call typically reserved for a moment bigger than a player giving his team a 2-0 lead in the fifth inning of a game in mid-April.

Cleveland Indians

✔@Indians

We're not crying; you're cr-- ...

WHO ARE WE KIDDING? WE'RE ALL CRYING! #RallyTogether | #PuertoRicoSeries

8:53 PM - Apr 17, 2018

• 18.4K
• 7,752 people are talking about this

Twitter Ads info and privacy

It was a key moment for the Indians in the team’s eventual 6-1 victory, but it was, understandably, a far bigger moment for baseball-obsessed Puerto Rico as the United States territory continues its recovery from the devastating effects of last year’s hurricanes.

“Unreal,” Lindor said in an interview broadcast by Fox after the game. “It’s a dream playing in front of the crowd. Seeing how the crowd got up, it was special.”

It was the second home run of the year for Lindor, who has not been playing to his usual standards so far this season, and it gave him a spot in the exclusive club of players who have hit a home run in their native land while playing outside the contiguous United States and Canada.

The list of previous players to accomplish a similar feat is rather brief, largely as a result of Major League Baseball having held so few regular-season games outside its typical parks.

Photo

Fans at Hiram Bithorn Stadium were ecstatic from the moment the ball left Lindor's bat.CreditRicardo Arduengo/Getty Images

HIRAM BITHORN STADIUM San Juan, P.R.

As to be expected, the list is dominated by Puerto Ricans, with each of the territory’s previous instances coming during the 43 games played by the Montreal Expos at Hiram Bithorn during the 2003 and 2004 seasons. Jose Vidro, a second baseman for the Expos, leads all Puerto Rican players with three home runs at Hiram Bithorn, while Javy Lopez, a catcher for the Atlanta Braves, has the second most with two — both of which came in a Braves victory on April 17, 2003. Bengie Molina, Felipe Lopez, Juan Gonzalez and Ramon Castro each hit one.

TOKYO DOME Tokyo

The Yankees’ trip to Tokyo in 2004 is known mostly for subsequent complaints about how the trip affected the team afterward, but in the second of the two games the Yankees played there, the fans at Tokyo Dome were treated to Japan’s Hideki Matsui hitting a two-run blast to right-center that nearly matched Lindor’s homer as far as crowd noise. Matsui’s moment had the added bonus of having come in the stadium that served as his home base during 10 seasons with the Yomiuri Giants.

Video of Hideki Matsui of Japan hitting a home run at Tokyo Dome in 2004. Video by MLB

ESTADIO DE BÉISBOL MONTERREY Monterrey, Mexico

There were three major league games played in Monterrey in 1996, and one played in 1999, and while no Mexican players homered, Vinny Castilla of Oaxaca was 4 for 5 in the Colorado Rockies’ win over the San Diego Padres on April 4, 1999.

Christian Villanueva, a 27-year-old infielder for the San Diego Padres, will get a chance to be the first Mexican major leaguer to hit a home run in Mexico when his team travels to Monterrey for three games in May. Considering Villanueva has six home runs in just 45 at-bats so far this season, he seems like a fairly promising candidate.

Cleveland’s Francisco Lindor, who hails from Puerto Rico, hit a two-run home run in the fifth inning of his team’s game against the Minnesota Twins on Tuesday at Hiram Bithorn Stadium in San Juan, P.R.

Benjamin Hoffman
Puerto Rico’s Francisco Lindor Joins an Exclusive Home Run Fraternity

US awards $18.5 billion in recovery grants for Puerto Rico

The U.S. government announced Tuesday that it will award $18.5 billion worth of disaster recovery grants to Puerto Rico to help repair homes, businesses and its crumbling power grid as the U.S. territory struggles to recover from Hurricane Maria.

It is the largest single amount for such assistance ever awarded by the U.S. Department of Housing and Urban Development, said Deputy Secretary Pamela Patenaude during a visit to the U.S. territory.

"Our goal is to get people back into their homes, get people back to work and to build a stronger Puerto Rico for future generations," she said.

The money will be issued through the agency's Community Development Block Grant program.

Patenaude said that Puerto Rico planning officials will develop a disaster recovery plan in upcoming weeks.

The announcement comes as 54,000 power customers remain in the dark more than six months after the Category 4 storm hit. Officials have said they expect power to be fully restored across the island by May, just days before the Atlantic hurricane season starts.

HUD already had allocated $1.5 billion to Puerto Rico in February for post-hurricane recovery efforts.

Maria hit on Sept. 20 and caused more than an estimated $100 billion in damage. It destroyed around 70,000 homes and damaged another 300,000.

HUD also said it plans to award the neighboring U.S. Virgin Islands $1.6 billion in disaster recovery funds to help it recuperate from hurricanes Irma and Maria.

Both storms left the U.S. Virgin Islands reeling. Hurricane Irma passed near St. John and St. Thomas on Sept. 6 as a Category 5 system, killing three people and causing widespread and significant destruction to homes and businesses. Maria passed to the south of St. Croix two weeks later, resulting in major flooding and wind damage to homes there.

FILE - In this Oct. 19, 2017 file photo, homes in the Cantera area are covered with FEMA tarps, where buildings from the Hato Rey area stand in the background in San Juan, Puerto Rico. The U.S. government announced Tuesday, April 10, 2018 that it will award $18.5 billion worth of disaster recovery grants to Puerto Rico to help repair homes, businesses and its crumbling power grid as the U.S. territory struggles to recover from Hurricane Maria. (AP Photo/Carlos Giusti, File)

US awards $18.5 billion in recovery grants for Puerto Rico

Puerto Rico files fiscal plan without layoffs, pension cuts

Puerto Rico’s government submitted a required fiscal plan on Thursday that excludes pension cuts and layoffs sought by a federal oversight board as legislators in the U.S. territory angered by its demands debate a bill that would withhold payments for board member salaries, among other things.

Gov. Ricardo Rossello told reporters that he hopes his administration and the board can reach an agreement on the fiscal plan so they can move toward restructuring a portion of the island’s more than $70 billion public debt load amid an 11-year recession. He said that if the board certifies a fiscal plan that contains layoffs and a 10 percent cut to a pension system already facing nearly $50 billion in liabilities, his administration will not implement those measures.

“We are asking the board to reconsider their position of trying to impose public policy and let the government of Puerto Rico do its job,” Rossello said.

The board has not yet commented publicly on the fiscal plan, which Puerto Rico’s government revised to meet some of the board’s demands.

Rossello did not say whether he supports a bill recently approved by Puerto Rico’s Senate that would withhold public funds slated for a board operating with a $60 million budget but seeking an $80 million one for upcoming years. Nearly $2 million worth of public funds are spent on the board’s salaries, including $625,000 a year for its executive director.

Rossello said he understands the frustration that is building against the board.

“I will not limit myself to actions I can take in the future,” he said regarding the bill that will go to the island’s House of Representatives for consideration.

The fiscal plan anticipates a $6.4 billion surplus over five years, but Gerardo Portela, director of Puerto Rico’s financial authority, said the island’s government would face a nearly $10 billion deficit if it pays its public debt.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

By Danica Coto
Puerto Rico files fiscal plan without layoffs, pension cuts

Puerto Rico to close 283 schools amid sharp enrollment drop

Puerto Rico’s Department of Education announced Thursday that it will close 283 schools this summer following a sharp drop in enrollment amid the island’s long economic slump and the continued departure of families after Hurricane Maria.

Education Secretary Julia Keleher said there would be no layoffs, with teachers and other employees being reassigned to other schools as part of a fiscal plan that aims to save the department some $150 million.

The U.S. territory currently has more than 1,100 public schools that serve 319,000 students.

“We know it’s a difficult and painful process,” Keleher said. “Our children deserve the best education that we are capable of giving them taking into account Puerto Rico’s fiscal reality.”

Keleher said that enrollment has dropped by more than 38,700 students since just last May and that nearly half of the schools are using only 60 percent of their capacity.

After the closures, 828 public schools will remain operational. Keleher said she has invited mayors in the island’s 78 municipalities to propose new uses for the shuttered schools.

The announcement of closures came two weeks after Gov. Ricardo Rossello signed a bill for implementing a charter schools pilot program in 10 percent of public schools and offering private school vouchers to 3 percent of students starting in 2019-2020 as part of an education overhaul.

Aida Diaz, president of a union that represents some 30,000 teachers, said she and others would fight the closures.

“The damage that the Secretary of Education is doing to children, youth and their parents is immeasurable,” Diaz said in a statement sent to The Associated Press.

Yolanda Rosaly, an Education Department spokeswoman, did not immediately return a message for comment.

Those who oppose the closures say they worry about transportation logistics and the needs of special education children. An estimated 30 percent of Puerto Rico students receive specialized education, twice the average on the U.S. mainland.

The drop in enrollment comes as roughly a half million people have fled Puerto Rico for the U.S. mainland in the past decade during the long recession, including an estimated 135,000 since Hurricane Maria in September.

Puerto Rico closed 150 schools from 2010 to 2015, and last year announced it would be closing another 179 schools.

Copyright © 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, written or redistributed.

FILE - In this Oct. 13, 2017 file photo, children discuss their thoughts about Hurricane Maria at Ramon Marin Sola Elementary School in Guaynabo, Puerto Rico. Puerto Rico's governor signed an education reform bill Thursday, March 29, 2018, to create charter schools and vouchers and help turn around a system long known for its bureaucracy and failure to administer dwindling resources. (AP Photo/Carlos Giusti, File)

Puerto Rico to close 283 schools amid sharp enrollment drop

Chairman Bishop’s strategy for stabilizing Puerto Rico

House Committee on Natural Resources Chairman Rep. Rob Bishop (R-Utah) recently sent to letters to the Puerto Rico Electric Power Authority (PREPA) and oversight board created by PROMESA to manage and stabilize Puerto Rico’s public finances.

The letter to PREPA requests documents and information concerning alleged acts of corruption and favoritism in the power restoration operations in the wake of Hurricane Maria. The letter ominously declares, among other statements, that “a lack of faith in Puerto Rico’s institutions remains a major barrier to recovery.” 

The letter to the oversight board is more pointed expressing frustration with the board’s lethargy in discharging its legal mandate to control and manage the public finances of Puerto Rico, specifically with regards to its “inability and unwillingness to reach consensual restructuring agreements with the holders of Puerto Rico’s debt,” and its failure to define what constitutes an essential public service for purposes of prioritizing governmental cuts.

Both letters are within the purview of the committee’s oversight and investigative authority, and should be read as a signal of growing impatience by Congress with Puerto Rico’s handling of its current fiscal crisis and its recuperation efforts after the passing of Hurricane María. This impatience is not unreasonable. These letters, of course, are also added pressure in favor of PREPA and Puerto Rico bondholders’ interest. In fact, Bishop reportedly said that the oversight board’s inaction in certifying a $9 billion restructuring agreement reached between PREPA and its creditors and green-lighted by Congress was “troubling.”

Upon review of the fiscal plan submitted by the Puerto Rico government last week the oversight board — probably partially in response to Bishop’s prodding — mandated a 10 percent cut on governments pensions, amendments to the economic projections, reductions in the savings estimates and limitations on the minimum wage hike proposed by the Puerto Rico government, among other measures. April 20 is the due date for the final approval of the fiscal plan.  

Puerto Rico Gov. Ricardo Rosselló reacted sharply, declaring that he would not allow the oversight board to intervene in matters of public policy, and would not reduce the government pensions as mandated. He also challenged the legal authority the oversight board has to execute these mandates.

The stage has been set for a political confrontation between the government of Puerto Rico and the oversight board for some time. As of yet, it is not clear whether Rossellós remarks were made for purposes of local, insular politics, or whether he aims to challenge Congress itself.

In a not so veiled threat, Bishop did state in his letter to the oversight board that any certified fiscal plan should reflect the board as the sole representative of debtors (that is, the government of Puerto Rico), and that any attempt by the commonwealth to circumvent this uniformity of representation should be met with appropriate budget reductions. At a time when the government of Puerto Rico is tied in bankruptcy-like litigation and in dire need of federal assistance, be it a loan from the Treasury Department to its operational costs, FEMA funds or Medicaid assignments — just to mention three pending issues — it is evident which side is at the short-term losing end of a confrontation.

This situation is made untenable because of our current territorial arrangement. It is apparent to the 3.5 million American citizens in Puerto Rico that the fact that we do not have five representatives and two senators places us in an indefensible position. Bishop’s imperious letters are an exercise in raw political power highlighting the urgent need to address the status issue. Puerto Rico’s problems, in the end, are problems for Congress.

Andrés L. Córdova is a law professor at Inter American University of Puerto Rico. He is also an occasional columnist on legal and political issues at the Spanish daily El Vocero de Puerto Rico.

BY ANDRÉS L. CÓRDOVA
Chairman Bishop’s strategy for stabilizing Puerto Rico

Puerto Rico Governor Slams Congressman Over 'Dictatorial' Letter

Puerto Rico's governor on Monday fiercely defended his administration's right to help steer the insolvent, storm-ravaged island out of bankruptcy after a U.S. congressman said the process should be led by the island's creditors and federally appointed oversight board.

In a scorching, 6,000-word letter delivered on Monday to U.S. Representative Rob Bishop, and seen by Reuters, Governor Ricardo Rossello accused the Republican lawmaker of turning "back the clock many decades to a time when the federal government simply imposed its will" on the U.S. territory.

Bishop, who chairs the House of Representatives Committee on Natural Resources, was at the forefront of a 2016 federal law known as PROMESA, which moved Puerto Rico's finances under the management of a federally appointed board.

In a letter last week, Bishop censured the board for lack of progress on a massive planned debt restructuring in Puerto Rico, directing the board to seek more input from the island's financial creditors on a plan to stabilize the island.

Rossello said on Monday that flew in the face of PROMESA, which calls for the board and the governor to work together. He said the sides had made consensual progress on elements of Puerto Rico's restructuring.

"I cannot and will not permit you to elevate concerns of bondholders on the mainland above concern for the well-being of my constituents," Rossello said in the 13-page rebuke. "Your letter is truly disturbing in its reckless disregard for collaboration and cooperation in favor of an anti-democratic process akin to a dictatorial regime."

Puerto Rico is navigating both the biggest bankruptcy in U.S. government history, with $120 billion in bond and pension debt, and its worst natural disaster in 90 years with September's Hurricane Maria. The storm killed dozens, devastated the island's infrastructure, and has left thousands without power more than six months later.

Rossello's letter, scattered with legal arguments supporting a theory that the board's powers are limited, foreshadows the potential for litigation if his government and the oversight board cannot come to terms on a path forward for the island.

The two sides have been collaborating on an economic forecast, called a fiscal turnaround plan, whose projections will determine, crucially, how much money the island has left over to repay its bondholders.

But they are apart on key issues, namely demands by the board to impose pension cuts and labor reforms. The governor has said those demands constitute specific policy decisions that exceed the board's power.

The board has the authority to certify a plan unilaterally if it cannot reach terms with the governor, and Bishop's letter was seen as a nod to that increasingly likely scenario. In it, Bishop essentially instructed the board to use its powers to enforce austerity measures and start collaborating with creditors rather than with just the government.

A unilateral plan would likely perpetuate already costly litigation over Puerto Rico's financial future, because Rossello could resist implementing the board's plan, and the board could then sue to enforce it, a scenario that has some precedent.

Rossello insisted his government was owed a seat at the table. "Congress did not create a control board ... with plenary policymaking power," the governor said. "Congress expressly rejected such a model."

(Reporting by Nick Brown; Editing by Peter Cooney)

Copyright 2018 Thomson Reuters.

BY NICK BROWN
Puerto Rico Governor Slams Congressman Over 'Dictatorial' Letter

Puerto Rico gov defies board, rejects reform, pension cuts

The powers of a federal control board overseeing Puerto Rico's finances could soon be tested as the U.S. territory's governor on Monday defied its calls to implement more austerity measures amid an 11-year recession.

Gov. Ricardo Rossello rejected demands that his administration submit a revised fiscal plan to include a labor reform and a 10 percent cut to a pension system facing nearly $50 billion in liabilities. He said the plan he will submit Thursday also will not contain any layoffs.

"The board does not have the power to implement issues of public policy," Rossello said. "It's that simple."

The board has not responded publicly yet to Rossello's comments, which came just hours after he sent the board a seven-page letter Sunday night outlining why he will not implement those and other changes.

"The people of Puerto Rico, in the aftermath of Hurricane Maria, have suffered a great deal in terms of reduced government services and economic loss," Rossello said in the letter. "Now the board is attempting to enforce additional cuts on government employee and retirement benefits at the worst possible moment, as Puerto Rico attempts to recover."

The Category 4 storm caused more than an estimated $100 billion in damage when it hit on Sept. 20 at a time when the territory was struggling to emerge from an economic crisis and restructure a portion of its more than $70 billion public debt load. Roughly 80,000 power customers remain in the dark more than six months after the hurricane.

Board spokesman Jose Luis Cedeno did not respond to a request for comment.

The board has the authority to approve its own fiscal plan with the changes it seeks, but Rossello said it does not have the power to force his administration to implement them.

"If the board certifies some of those measures, we won't execute them," he said.

The board has said it will approve the government's fiscal plan by April 20.

On Sunday, the board posted letters in which it revealed that it also has rejected a fiscal plan for Puerto Rico's largest public university and its Highways and Transportation Authority. It said the University of Puerto Rico should increase its per-credit tuition from $57 to $157 by next year, a proposal that local officials have rejected. In addition, it said the transportation authority's fiscal plan does not set aside funding for key projects and needs a debt sustainability analysis.

Rossello's administration did not immediately respond to the board's letters. It has until Thursday to amend and submit those two fiscal plans.

Rossello initially submitted a labor reform bill to Puerto Rico legislators that would have eliminated a Christmas bonus and increased the minimum wage from $7.25 an hour to $8.25 by 2021, among other things. He then withdrew the bill last week in response to the board's demands.

Rossello also criticized a letter sent to the board last week by Utah Republican Rep. Rob Bishop, chairman of the House Natural Resources Committee. The governor said that it was full of errors and that it seemed the U.S. government was more interested in helping creditors obtain part of the money they invested in local government bonds than in helping Puerto Ricans recover.

Katie Schoettler, a spokeswoman for Bishop, said Rossello was not in office or involved in any negotiations when Congress approved a law in 2016 that created the board, which also is overseeing Puerto Rico's debt restructuring.

"Perhaps the governor has a different interpretation of the actual law," she said.

Bishop said in his March 29 letter that he was frustrated with the board's "inability and unwillingness" to reach consensual restructuring deals with creditors and what he called a "lack of respect" for congressional requirements of Puerto Rico's fiscal plan.

On Monday evening, Rossello issued a 13-page letter to Bishop in which he said that his administration has been working closely with the board and that ultimately Puerto Rico's government is the only one with the power to implement public policy.

"Your letter is truly disturbing in its reckless disregard for collaboration and cooperation in favor of an anti-democratic process akin to a dictatorial regime," Rossello wrote. "Regrettably, your letter embodies everything that is wrong with this process and only serves to reinforce the dismissive and second-class colonial treatment Puerto Rico has suffered throughout its history as a territory of the United States, which undermines our efforts to address the Island's fiscal, economic, and humanitarian crises."

By DANICA COTO
Puerto Rico gov defies board, rejects reform, pension cuts