The Commonwealth of Puerto Rico recently exited bankruptcy. Now, after a long process slowed down by natural disasters, political crisis, and the global COVID-19 pandemic, 80% of the more than $70 billion debt has been restructured and guardrails have been put in place to keep the Puerto Rico government on the fiscal straight and narrow.
However, we need more than that if Puerto Rico wants to prevent another bankruptcy in five or ten years: we need to change our mindset of the elected leaders so Puerto Rico will live within its means. Spending more money than you have is always a surefire way to get in trouble.
The best debt policy in the world is a problem if the government keeps passing laws for which it doesn’t have funding readily available. This year, the Oversight Board prevented legislation from being implemented that would have cost close to $80 million in violation of the Fiscal Plan. An additional $113 million worth of bills are at the Legislature right now that Puerto Rico cannot afford.
That is why implementing best practices in budgeting is a key aspect that the Puerto Rico government must continue to work on. For instance, Puerto Rico needs an independent entity that would score new legislation to determine how much is it going to cost taxpayers, similar to the Congressional Budget Office in Washington, DC. The Legislature has funding available to create such an entity.
I didn’t join the Oversight Board in Puerto Rico only to restructure the debt. I joined to ensure that we could help create a stronger Puerto Rico. I was the state budget director for Utah and Michigan. Michigan was dead last among all 50 states in many metrics when I got there, overspending their budget for years. We had to right that ship.
Meaningful reforms are critical in areas like energy, public education, and infrastructure. The Fiscal Plan for Puerto Rico details how to carry out such much-needed structural reforms, which, if implemented, would increase Puerto Rico’s GNP by at least three quarters of a percentile by 2026.
In Puerto Rico, the Oversight Board created a lot more stability for businesses and taxpayers, but the government must operate within its means. Residents and business must speak up to make sure political leaders don’t overspend.
Puerto Rico is going to be a great place; I really believe the future looks bright. We have an opportunity to create a new vision for a Puerto Rico where our children can prosper. Do we rather want to perpetuate the same old problems that held Puerto Rico back for the last decades? I believe we all know the answer.