New Financial Plan for PR

University of PR is getting hit hard, they are more than doubling the cost per credit, almost 3 times (57-157)

For the sake of comparison, my college charges $300 per credit hour for summer courses.  UPR has been very heavily subsidized.

This is an interesting matter of federalism (the relationship between the national government and the states) and should prove to be an especially thorny issue.  On the one hand, as we all know, Puerto Rico is not a state but a territory, or "free associated state".  On the other hand, Article IV of the U.S. Constitution guarantees republican government to the states.  In Luther v Borden the Court chose not to define "republican" government, leaving that to Congress to determine.  But the 14th Amendment's protection of the privileges and immunities of citizenship, and the  requirement of the equal protection of the laws would seem to add substance to the meaning of "republican government."

As a political scientist and a scholar of US Constitutional Law, will be a case to watch!

Post graduate will be closer to what you are paying Warner, I think it was around 250 a credit.

With the existence of Pell Grants, there's no reason UPR should receive any public funds at all.

I know they have Pell Grants, I just saw in one of the news that the money was in today for the Pell grants or something similar.

Can we get the articles in English?   

Sitka wrote:

Can we get the articles in English?   

The link above can take you to the resources section and there you will find the Board documents, they are in English.
Also: http://www.sanjuanweeklypr.com/index.html
and
http://caribbeanbusiness.com

Sitka wrote:

Can we get the articles in English?   

Here's a link to the plans, in English.  You will be prompted to subscribe to the mailing list, but you can simply cancel.

The plan itself is 147 pages.  The picture it paints of the current condition of Puerto Rico is bleak, but I think accurate.  The reforms strike me as comprehensive and necessary.  If the current picture is bleak, the plan ultimately is hopeful that Puerto Rican prosperity can be restored.

The politicians are going berserk, screaming like little girls.   But they are going have to take the medicine no matter how bad it tastes!   

Sitka wrote:

The politicians are going berserk, screaming like little girls.   But they are going have to take the medicine no matter how bad it tastes!   

Correct, the board is playing hard ball and if the politicians delay in implementing the measures, the board will revise the budget down to make up for the amount that was not saved due to the delay, which makes things worse for the politicians. So they have them by the Gonads and overall congress is with the board on that so good luck on getting any type of relief. Taking it to court will waste the PR government funds and the Boards funds which means the budget will be lowered some more to make up for the lost.

It been almost 2 years and nothing has happened, so the board lost patience with the politicians.

Personally, I doubt the plan that's put into action will be anywhere near as solid and sensical as the one proposed by the Board. And whatever plan is adopted will be changed many times post-implementation.

What happens if the legislature simply doesn't go along (which they won't)?

NomadLawyer wrote:

Personally, I doubt the plan that's put into action will be anywhere near as solid and sensical as the one proposed by the Board. And whatever plan is adopted will be changed many times post-implementation.

What happens if the legislature simply doesn't go along (which they won't)?

Then the board will go to court to obligate them to pass the local laws required and if they dont obey it is up to the court what measures including jail time. Congress does have the power to just wipe the entire government clean and impose its own but I do not think they will try. Mean time the board will reduce the government funding for wasting time and money.

No plan is perfect even the the board one, so adjustments will have to be made anyway based on the results they see. It is going to be dynamic in nature.

Yeah, I don't see any politician being jailed for refusing to pass legislation ordered by a court. A clear violation of separation of powers (not that it'd be the first time a court violated the SoPs, but issuing orders to stop an executive action vs  enforcing an order for the legislature to act are completely different matters altogether.

And I agree that the Feds are not going to dissolve the state government and take over. They have expressed no interest in getting even more involved in this mess than they absolutely must. If they were to take over, then they would also be taking responsibility for the unmitigated disaster they'd be taking over.

I suppose, like 98% of political decisions, it'll all come down to the individual legislators and the Governor's calculations of what is best for them politically. If they think the electorate doesn't support the plan but they think they can successfully claim to that same electorate that they were “forced” to pass the plan by order of the US District Court, and therefore avoid getting voted out by that electorate, then they just may pass it. That said, there seems to be too much space for grandstanding pols to refuse to support the plan no matter what a court says, and it would be something else to see the court try to enforce its orders to act.

I support the plan as-is but I put it's chances of ever being implemented at slim.

ReyP wrote:

Sitka wrote:

The politicians are going berserk, screaming like little girls.   But they are going have to take the medicine no matter how bad it tastes!   

Correct, the board is playing hard ball and if the politicians delay in implementing the measures, the board will revise the budget down to make up for the amount that was not saved due to the delay, which makes things worse for the politicians. So they have them by the Gonads and overall congress is with the board on that so good luck on getting any type of relief. Taking it to court will waste the PR government funds and the Boards funds which means the budget will be lowered some more to make up for the lost.

It been almost 2 years and nothing has happened, so the board lost patience with the politicians.

Rey and Sitka

Y'all are so right. Most PR Gov Officials (but not all I feel sure) are only concerned about their being voted back in. Then you have the PR Citizens (Not All I know) that want their cake and eat it to. Everything has a financial Cost, now when it is time to pay the Piper, no one wants to make the sacrifices and cuts to work towards getting out of Debt. The PR People are mad at mismanagement by the PR Gov (AND RIGHTFULLY SO) and the PR Gov (as a whole, but not all) acts like the US Gov, spending like drunk Sailors with no re-course for their actions, just saying to their Gov cohorts, "LETS KICK THE CAN DOWN THE ROAD!!".

BUT, with all that looks bad and everyone pointing fingers and playing Monday morning Quarterback (INCLUDING MYSELF!!), the PR Gov is being forced to make changes and address problems. THIS IS A GOOD THING!!!!

Thankfully, some of the PR Gov Officials had enough backbone, courage and hopefully right motives, to push for the ACTs to be passed. There will be some that will say I am wrong and that is ok. But folks, if you have not seen the headlines, here it is, "PR NEEDS MONEY!!". What money that has been in the PR economy, is NOT enough to right the ship and make PR marketable enough for Investors to take a chance on investing in PR to create jobs and increase tax revenue to pay for the programs and Gov Expenses. BUT, with the ACTs, it creates an avenue for Investors/business owners (big and small) to bring finances into the PR System, which it so disparately needs.

I applaud the PR Gov for getting off their Bums and doing something positive. BUT NOW they need to do the hardest part, as the council says, CUT SPENDING!!!! The PR Gov should embrace that and conduct an Island wide MAJOR PUBLIC PUSH supporting the Councils recommendations with final terms to be negotiated. While doing this push, implement and execute some of the necessary cuts to show the people that the PR Gov is practicing what they preach. Then pull PR People's support in by promoting that "WE ARE DOING THIS TO SAVE OUR COUNTRY" or whatever.

If the PR Gov will bring the people in with doing their part to save Our Nation (which is the truth) AND IF (big "if" I know) the PR Gov will work closely with the Council, get their house in order and cut spending; between the the above mentioned and funds flowing and growing from the ACTs, each year, things will get better and better. Within 5 yrs or so, the whole Island will look totally different and be on solid financial ground. WE ARE RUNNING A MARATHON HERE, NOT A 100YD DASH!!!

This will probably get a few derogatory or disagreeing comments, but the facts are the facts. THE MATH IS ALWAYS THE SAME!!!! You can not spend more than you take in. Simple math!!!!!

As for the Bond Debt, I still say, DEFAULT!!!! Let the purchaser of the Bonds take a Bath!!!!! They will right it off on their taxes for the next XX Years anyway. For the folks that say, "No you can not do that because of all the Retirees who will lose their life savings". Folks, THAT is part of the Law of Investing. There is ALWAYS Risk. If their was an upside, do you think they would give money back? ABSOLUTELY NOT!!!! They knew this when they invested and if the Broker over sold them, then find a new Broker!!!!!

In closing, I see the cup PR has as 1/2 Full instead of 1/2 Empty. There is GREAT opportunity on the island, NOT only to invest (WHICH IS A RISK and I STAND TO LOOSE), but to create jobs, bless Families, and develop a new "ISLAND" lifestyle for my family for years to come.

I am not saying that the above is 100% perfect, but it is a start. Again I applaud the PR Gov for enacting the ACTs, because IT WAS A START!!!! It is not the Silver Bullet.

PR Gov, if you are reading this, PLEASE do not operate like the US Gov!!! Because when the Piper HAS to be paid, and it is coming soon, the outcome WILL NOT be good.

Just my 3 Cents!!!

JOS66 wrote:

Y'all are so right. Most PR Gov Officials (but not all I feel sure) are only concerned about their being voted back in. Then you have the PR Citizens (Not All I know) that want their cake and eat it to. Everything has a financial Cost, now when it is time to pay the Piper, no one wants to make the sacrifices and cuts to work towards getting out of Debt. The PR People are mad at mismanagement by the PR Gov (AND RIGHTFULLY SO) and the PR Gov (as a whole, but not all) acts like the US Gov, spending like drunk Sailors with no re-course for their actions, just saying to their Gov cohorts, "LETS KICK THE CAN DOWN THE ROAD!!".

BUT, with all that looks bad and everyone pointing fingers and playing Monday morning Quarterback (INCLUDING MYSELF!!), the PR Gov is being forced to make changes and address problems. THIS IS A GOOD THING!!!!
Just my 3 Cents!!!

You hit it right on the head. The people are blaming the Board for the cuts and blaming the goverment of PR for getting PR in that condition. But they are blaming the board a lot more because the plan is going to hurt, they have very, very short memories I see it all the time. Yes they want no cuts that affect them and they want the debt to disapear into thin air, and last but not least, they want all the federal money to poor in and make everything as right as rain.

Politicians want two things .... blame the board for everything so they can get reelected and they also want to stop the board from interfering too much on how they run PR so they can continue doing what they used to do before this whole thing started. In other words, give us money, solve our problems but change nothing.

The big problem I see with this fight between the government and the board is that it will waste more time. The board was created around July 2016 and we are in 2018 and not much has occurred. Now congress is pushing the board to get tought and the PR government does not want to play ball. At this rate we are going to waste another year with the infighting and next year budget is going to be even more slim and more painful since there were no savings this year due to the infighting.

The board will not leave by law until PR has had 4 consecutive balanced budgets and has returned to the market. The first balanced buget is not likely to occur for at least 2 more years without the infighting and much later with the infighting. So I am looking at at least 10 years of the Board.

JOS66 wrote:

ReyP wrote:

Sitka wrote:

The politicians are going berserk, screaming like little girls.   But they are going have to take the medicine no matter how bad it tastes!   

Correct, the board is playing hard ball and if the politicians delay in implementing the measures, the board will revise the budget down to make up for the amount that was not saved due to the delay, which makes things worse for the politicians. So they have them by the Gonads and overall congress is with the board on that so good luck on getting any type of relief. Taking it to court will waste the PR government funds and the Boards funds which means the budget will be lowered some more to make up for the lost.

It been almost 2 years and nothing has happened, so the board lost patience with the politicians.

Rey and Sitka

Y'all are so right. Most PR Gov Officials (but not all I feel sure) are only concerned about their being voted back in. Then you have the PR Citizens (Not All I know) that want their cake and eat it to. Everything has a financial Cost, now when it is time to pay the Piper, no one wants to make the sacrifices and cuts to work towards getting out of Debt. The PR People are mad at mismanagement by the PR Gov (AND RIGHTFULLY SO) and the PR Gov (as a whole, but not all) acts like the US Gov, spending like drunk Sailors with no re-course for their actions, just saying to their Gov cohorts, "LETS KICK THE CAN DOWN THE ROAD!!".

BUT, with all that looks bad and everyone pointing fingers and playing Monday morning Quarterback (INCLUDING MYSELF!!), the PR Gov is being forced to make changes and address problems. THIS IS A GOOD THING!!!!

Thankfully, some of the PR Gov Officials had enough backbone, courage and hopefully right motives, to push for the ACTs to be passed. There will be some that will say I am wrong and that is ok. But folks, if you have not seen the headlines, here it is, "PR NEEDS MONEY!!". What money that has been in the PR economy, is NOT enough to right the ship and make PR marketable enough for Investors to take a chance on investing in PR to create jobs and increase tax revenue to pay for the programs and Gov Expenses. BUT, with the ACTs, it creates an avenue for Investors/business owners (big and small) to bring finances into the PR System, which it so disparately needs.

I applaud the PR Gov for getting off their Bums and doing something positive. BUT NOW they need to do the hardest part, as the council says, CUT SPENDING!!!! The PR Gov should embrace that and conduct an Island wide MAJOR PUBLIC PUSH supporting the Councils recommendations with final terms to be negotiated. While doing this push, implement and execute some of the necessary cuts to show the people that the PR Gov is practicing what they preach. Then pull PR People's support in by promoting that "WE ARE DOING THIS TO SAVE OUR COUNTRY" or whatever.

If the PR Gov will bring the people in with doing their part to save Our Nation (which is the truth) AND IF (big "if" I know) the PR Gov will work closely with the Council, get their house in order and cut spending; between the the above mentioned and funds flowing and growing from the ACTs, each year, things will get better and better. Within 5 yrs or so, the whole Island will look totally different and be on solid financial ground. WE ARE RUNNING A MARATHON HERE, NOT A 100YD DASH!!!

This will probably get a few derogatory or disagreeing comments, but the facts are the facts. THE MATH IS ALWAYS THE SAME!!!! You can not spend more than you take in. Simple math!!!!!

As for the Bond Debt, I still say, DEFAULT!!!! Let the purchaser of the Bonds take a Bath!!!!! They will right it off on their taxes for the next XX Years anyway. For the folks that say, "No you can not do that because of all the Retirees who will lose their life savings". Folks, THAT is part of the Law of Investing. There is ALWAYS Risk. If their was an upside, do you think they would give money back? ABSOLUTELY NOT!!!! They knew this when they invested and if the Broker over sold them, then find a new Broker!!!!!

In closing, I see the cup PR has as 1/2 Full instead of 1/2 Empty. There is GREAT opportunity on the island, NOT only to invest (WHICH IS A RISK and I STAND TO LOOSE), but to create jobs, bless Families, and develop a new "ISLAND" lifestyle for my family for years to come.

I am not saying that the above is 100% perfect, but it is a start. Again I applaud the PR Gov for enacting the ACTs, because IT WAS A START!!!! It is not the Silver Bullet.

PR Gov, if you are reading this, PLEASE do not operate like the US Gov!!! Because when the Piper HAS to be paid, and it is coming soon, the outcome WILL NOT be good.

Just my 3 Cents!!!

I couldn't agree with you more. You expressed your points perfectly. It's a step in the right direction and the people of Puerto Rico need HOPE which what you stated is a possible start. If this works out it's a huge win also for Puerto Ricans who felt forced to migrate to the states and will open the possibilities up for so many of them who want to return back HOME.

The free ride is over, ladies & gentlemen. Now we need to lose the antiquated Jones Act. There is so much wrong, about the goins on, on-island. Did you know the auto groups are buying U.S. car brands, from countries like India, where (for example) the Jeep Renegade are made, for "export sales only". They are bringing them on island, and selling them as U.S. made vehicles.

If PR would legalize cannabis for recreational use, the tax revenue realized would be enormous (consider Washington state and Colorado and others ).  The tax revenue stream would go a long ways towards balancing the budget in the long term and, provide some support for the local politicians to placate their constituents regarding budgets for schools and public employees.   

I've said the same thing on several occasions, Sitka, and was shot down by a particular poster.

As I understand it, there is a long list of applications waiting to be considered for the growing and dispensing of cannibis. The application fee itelf is quite substantial, from what I've been told, so applicants already have skin in the game.

Not sure what's hanging up their approval.

Sitka wrote:

If PR would legalize cannabis for recreational use, the tax revenue realized would be enormous (consider Washington state and Colorado and others ).  The tax revenue stream would go a long ways towards balancing the budget in the long term and, provide some support for the local politicians to placate their constituents regarding budgets for schools and public employees.   

This claim comes up often, as does the "blame the Jones Act" claim, but both miss the mark.  While the Jones Act certainly adds some cost to goods in PR, it is not responsible for the economic problems on the island.  Further, legalizing and taxing recreational pot isn't the solution to the island's debt.

Consider Colorado, as Sitka suggests.  Tax receipts exceeded expectations.  The state estimated $70 million in tax revenue, but in 2016, pot taxes were expected to bring in over $110 million.  So you might think that this is a good idea for Puerto Rico.

However, 40% of purchases, at least at the start, were from out-of-state residents.  This would pose a problem on an island.  Yes, some tourists might be drawn to the island because recreational pot was legal, but certainly not to the same degree that people drove to Colorado to buy pot.  So we would expect purchases to lag behind Colorado.

More immediately, Colorado has a population nearly twice that of Puerto Rico, so there's a greater domestic market.  In addition, the media family income in Colorado is $70,000, roughly 3.5 times that of  Puerto Rico, so there's more disposable income to be spent on pot.

It is worth noting that Colorado struggled to establish a taxing scheme to capture taxes on pot.  I think it is fair to say that Puerto Rico's government is less capable of establishing effective and efficient bureaucracies than Colorado, so I have little hope that pot taxes would be effectively collected on the island.

Further, Colorado initially set its tax rather high (around 60% if memory serves) which was not enough to discourage the illegal trade.  Considering that Puerto Ricans are particularly adept at avoiding taxes, I can't imagine that they would gladly pay for licensed, regulated and taxed pot as opposed to getting it from the guy down the street.

Finally, even if Puerto Rico duplicated Colorado's revenue stream, we're talking $100 million for an island government that owes $100 billion.  This doesn't even move the needle.

Well, seems to me that PR has very limited opportunity to increase tax revenue in any other way, considering the already very high sales tax and other limitations. 

The politicians need the support of the public employees and school teachers, etc.   This tactic gives them some political cover claiming the tax revenue will come from tourism and will support schools, police, public works, etc.

OK, that's my two cents worth on the issue.   Any other opinions out there?   

Sitka wrote:

If PR would legalize cannabis for recreational use, the tax revenue realized would be enormous (consider Washington state and Colorado and others ).  The tax revenue stream would go a long ways towards balancing the budget in the long term and, provide some support for the local politicians to placate their constituents regarding budgets for schools and public employees.   

Not sure, with all the taxes, the illegal one is probably cheaper and how the heck can they tell the difference?

Please note that my objection was that pot wouldn't pay the bills.  The moral question of whether it should be legalized is a separate issue.  Raising taxes doesn't necessarily generate more revenue.  Growing the economy generates more revenue, while high taxes retard economic growth.

Regarding PR's economic future, I'd suggest considering the sectors of an economy: agriculture, manufacturing, and service.  Mature economies are weighted towards service.

PR certainly has a comparative advantage in agriculture, though "Operation Bootstrap" (begun in 1947) moved Puerto Ricans off the farms and into the federally-subsidized factories.  PR no longer has much of an agricultural sector, but as the economy collapses and has to be rebuilt, this is an obvious place to begin.  Many want to see PR grow "organic" foods.  This may be a smart move, I don't know.  "Organic" farming is high labor, low yield, which is generally a recipe for failure.  However there could be a sufficient market of people with high disposable incomes (Colorado?) who would pay a premium for "organic," so it may be a successful move.  Of course, this would mean that PR grows expensive food which it exports to rich people, rather than feeding themselves.

The secondary or manufacturing economy is a real problem for PR.  There are a host of obstacles here.  First is the labyrinthine regulatory environment.  Second is taxes -- businesses and employees want low-tax locations.  Third is infrastructure.  All of these might be addressed by the government, but I'm not holding my breath.   I'm sure there are other issues that suggest that PR is unlikely to be a manufacturing center.

The tertiary or service economy also provides opportunities for PR.  Tourism is the obvious choice here.  However, I think PR culture hinders tourism development.  As I recall, more than 95% of tourists to PR come from the U.S.  While some of them may speak Spanish, English is the language of commerce.  Heck, when I've traveled through Asia and the Middle East, I found English spoken more commonly in Delhi and Dubai than I did in San Juan.

Thinking about Puerto Rico's economic development reminds me of a computer game called "Tropico" where you are "El Presidente" and you develop an island.  Puerto Rico should focus on agriculture for export (maybe coffee, pineapple and pork) while encouraging investment in tourism.