Washington, D.C. – The government of Puerto Rico and the Oversight Board debated yesterday over the power of the fiscal entity, at the hearing of the House Committee on Natural Resources called to examine the impact of the coronavirus emergency on the island’s financial crisis.
At the same time, committee members had a partisan battle over the hearing taking place remotely and even seeking to blame each other for the origin of the controversial statute.
Although the Board´s Executive Director Natalie Jaresko acknowledged that the Wanda Vázquez Garced administration acted promptly and decisively by implementing a curfew, limiting entry points to the island, and with a $787 million economic stimulus plan, “there were also several setbacks” in the way they have dealt with the emergency.
Jaresko referred to the failed contracts for nearly $40 million for the acquisition of rapid tests, which in her opinion reflected how the government of Puerto Rico “shows poor procurement practices despite the best of intentions.”
The Board went to court this week asking that the Vázquez Garced administration discloses all the documents related to those contracts. “We have requested them seven times but have not received them,” Jaresko said, in response to questions from Democrat Diana DeGette (Colo.).
Republican Bruce Westerman (Arkansas) asked FAFAA executive director Omar Marrero and the Board why the contracts with Apex General Contractors and 313 LLC were never submitted to the Board before being granted.
Marrero said that unfortunately, some agencies considered that as these were purchase orders it was not necessary.
In his written statement, Marrero said the Board had already received 1,000 pages of documents, but the prosecution claims that some information is missing.
At a time when Puerto Rico’s Department of Labor and Human Resources was unable to process applications for federal unemployment assistance and the Department of Natural and Environmental Resources has just warned that due to early retirements the agency only has one employee for beaches maintenance in the San Juan metropolitan area, Jaresko indicated that the early retirement programs approved by the island’s government have created important gaps in the island’s capabilities and operations, and put services at risk.
She argued that by reducing its workforce, the government has allowed the departure of frontline workers.
Democrat Raúl Grijalva (Arizona) chairman of the House Committee on Natural Resources Committee called the hearing to oversee the performance of PROMESA during the financial crisis, before a voting session to be held in the coming weeks on his bill to amend the statute.
At the beginning of the hearing, the first in the history of the committee to be held remotely, Republican Paul Gosar (Arizona), communicating from a car, asked for a recess in the hearing.
Democrats, after an error in the vote of Nydia Velázquez (New York), managed to defeat the Republican motion to suspend the hearing, which was supported by Washington Resident commissioner Jenniffer González.
Grijalva was so surprised that the representative of the people of Puerto Rico wanted to postpone a hearing on issues important to the island that he asked her directly.
Commissioner González, who was the minority’s spokeswoman, was annoyed by the question and said she did so to emphasize, like her Republican colleagues, that the hearing should not have been a remote session. Like Republicans Tom McClintock (California) and Westerman, González logged on to the public hearing from the Committee hearing room.
“If I am here in (Washington) D.C. willing to work and represent the people of the island, why the rest of Congress cannot do that,” responded Gonzalez, who earlier described Grijalva’s efforts to reform the Promise Act as political “talking points” and criticized the forums she held without the participation of the minority.
Grijalva considered the Commissioner never answered the question.
Meanwhile, Puerto Rican Democratic Congresswoman Nydia Velázquez (New York) – who had symptoms of the coronavirus – said that the United States is still in an emergency, that she does not want anyone to face COVID-19 and will not put her staff at risk.
The Committee´s Republican minority leader Rob Bishop (Utah), who joined at the end of the hearing, criticized Grijalva for questioning Commissioner González about her vote not to hold the hearing. “You are a better person than that,” he said.
As reported by El Nuevo Día on Wednesday, Marrero focused his presentation on asking the Committee to eliminate language allowing the Board to have power over the public policy of the elected government of Puerto Rico in any bill seeking to amend PROMESA.
“Despite our best efforts to minimize disagreements, the contours of PROMESA allows the Board to blur the lines between the government and the Board,” Marrero said.
Among the Board’s inappropriate interference with government operations, Marrero highlighted the hiring of lobbyists in Washington, past efforts to control the operation of the Puerto Rico Electric Power Authority (PREPA), blocking special allocations to municipalities, and defunding the operation of the Puerto Rico Public Broadcasting Corporation (WIPR) as part of the new fiscal plan certified on May 27.
He also alluded to the claim made this week by the Board for the Puerto Rico government to deliver all the documents about the contracts with Apex General Contractors and 313 LLC to buy COVID-19 tests and other medical supplies.
The governor’s representative referred to the example given early in the process by the Board´s chairman José Carrión, to explain what the work of the financial entity should be, indicating that they should limit themselves to set “the size of the room, the elected government of Puerto Rico, this current government as any other future government, should have the ability to decide how to arrange the furniture.”
When the government of Puerto Rico resorted to court to question the power of the Board, however, they lost, Jaresko pointed out.
“While we will always collaborate in the best interest of the people of Puerto Rico it is in the same interest that sometimes the Board must disagree with the government and use the tools of PROMESA to advance its mandate,” Jaresko said.
The Board´s executive director told the House Committee on Natural Resources due to the drop in revenue caused by the coronavirus, they have postponed further cuts until the fiscal year 2021-2022. After Hurricane Maria, the 2020 earthquakes, and the coronavirus pandemic, Puerto Rico’s “economy will contract over the next five years.”
Marrero estimated that the government will close this fiscal year, which ends June 30, with a deficit of $1.3 billion. In response to questions from Rep. DeGette (Colorado), Marrero said that so far they have only spent $300 million of the $2.2 billion allocated to the island to stabilize its fiscal situation triggered by the coronavirus.
“The 2020 Fiscal Plan projects a central government deficit from the fiscal year 2032 onward, six years sooner than the previous certified Fiscal Plan projected, and a total primary surplus of about $8 billion between fiscal years 2020 and 2032, compared to an about $23 billion surplus in the previous certified Fiscal Plan, a 65 percent decline for the same period,” Jaresko said.
The Board´s director said that the island can only recover from the crisis and recent natural disasters if it implements structural reforms.
For Jaresko, key reforms should include promoting labor participation through Earned Income Tax Credit (EITC) and food assistance; dramatically improving the education system; facilitating business development; building a low-cost and reliable energy system; and prioritizing capital investment with federal funds that have been allocated to the island following hurricanes, earthquakes, and the coronavirus emergency.
In the face of Republican criticism, Grijalva closed the hearing by warning that the coronavirus emergency is not over and that, as approved by the House majority, the hearings will continue to be held remote, since he believes that Congress should not be dedicated only to passing bills.
“This isn’t about who is more ‘macho’,” said Grijalva, about the Republicans’ insistence on hearings being face-to-face. Commissioner González tried to intervene, saying “I don’t want to be a macho,” but that’s when the broadcast signal ended.