WASHINGTON — A House committee panel hearing next week on the need for a federal financial oversight authority in Puerto Rico could pave the way for legislation to be offered to address the territory's problems, according to congressional aides and lobbyists.
The House Natural Resources Committee's Subcommittee on Indian, Insular, and Alaska Native Affairs will hold the hearing on Jan. 26. Witnesses for the hearing have not been announced.
The Natural Resources Committee has so far taken the lead on holding hearings after House Speaker Paul Ryan, R-Wis., in December instructed all House committees with jurisdiction over Puerto Rico to develop a reasonable solution for the commonwealth by the end of March. The House Judiciary Committee, with its oversight on bankruptcy legislation, is the other House committee with jurisdiction in the Puerto Rico discussions. It held a hearing last February.
Lawmakers have been considering possible solutions for Puerto Rico, which has already defaulted on portions of its $70 billion of debt, including extending Chapter 9 bankruptcy to either the entire island or the commonwealth's public authorities, imposing a federal financial control board, and increasing the flow of federal money to the island through things like Medicare, Medicaid, and the Earned Income Tax Credit.
Resident Commissioner Pedro Pierluisi, Puerto Rico's nonvoting member of Congress who sits on the Natural Resources Committee, said in a statement he expects that a legislative package for Puerto Rico is likely to be unveiled following the Jan. 26 hearing.
He said that if the package includes a federal control board, which has been unpopular with Puerto Ricans, without also granting some restructuring authority and equal treatment under federal programs, he will oppose it and that "it will not become law."
"Over the years, Congress has a history of trying to provide Puerto Rico with 'special' treatment, and these efforts—whether well-intentioned or ill-intentioned—almost always end up harming Puerto Rico," Pierluisi said. "My constituents are not laboratory rats upon whom the federal government should be undertaking policy experiments. Equality is the best policy."
Others following congressional action on Puerto Rico said the resident commissioner's expectation of legislation soon after the hearing is premature.
A congressional aide, who spoke on the condition of anonymity, said Republicans and Democrats have not made progress on legislation, much like they failed to agree on provisions before the omnibus was passed at the end of last year. The aide added the committee hearing will be a time for both parties to create a foundation from which to work on such a package.
In general, Republicans have been trying to get legislation with as much federal control as possible and as little restructuring power given to the commonwealth as possible, while Democrats are seeking as much restructuring as possible paired with as little federal control as possible, the aide said.
The hearing "will inform the Committee's path forward," said an aide for the Natural Resources Committee.
A Puerto Rico lobbyist said a main question for the hearing and in any subsequent congressional discussions will be which group a legislative package puts in control of Puerto Rico's finances, the elected Puerto Rico politicians or the federal government. Republicans have been skeptical of Puerto Rico's financial record, especially after Gov. Alejandro Garcia Padilla said his administration does not have audited financial statements for the past few years.
Further agreement between Republicans and Democrats on a solution will require some compromise on the restructuring and oversight board questions.
The only Republican bill introduced that is similar to what Democrats have proposed came from Rep. Sean Duffy, R-Wis., on Dec. 9 The bill would provide public authorities in Puerto Rico with Chapter 9 bankruptcy protection in exchange for the commonwealth's acceptance of oversight from a presidentially-appointed five-member Financial Stability Council. Members of the council would review an annual financial plan and budget from the governor and would have to approve it before the materials would be sent to Puerto Rico's legislature. Any borrowing the commonwealth plans would also have to go through the council.
Duffy's bill was referred to both the House Natural Resources Committee and the House Judiciary Committee but the natural resources committee has the ability to consider it first, the lobbyist said.
