To gain leverage with lawmakers, Puerto Rico Gov. Alejandro García Padilla is delaying signing an oil tax hike that would support the Highways and Transportation Authority and the Government Development Bank for Puerto Rico.
A source close to the governor explained the governor's actions and motivations to The Bond Buyer on Wednesday.
In early December Puerto Rico's House and Senate passed the oil tax hike to provide liquidity to the GDB. The bill specifies that the Puerto Rico Infrastructure and Finance Authority should sell bonds and use the proceeds to, among other thing, pay off the HTA's $2.2 billion debt to the GDB.
The bill specifies that PRIFA sell up to $2.9 billion of bonds.
Around Dec. 11 García Padilla announced that he would sign the bill. However, the governor's chief of staff also made clear that the governor had concerns about changes the legislature had made to the governor's proposal. Chief of Staff Víctor Suárez said that the governor would be in discussions with legislators about negotiating changes in it.
In early December the Puerto Rico Senate had added provisions in the bill that specified that the bond would have a coupon no higher than 8.5% and a price no lower than 93 cents per a dollar. The Senate also removed a part of the House version of the bill that would have adjusted the oil taxes upward in future years to adjust for inflation.
García Padilla received the bill on Dec. 12. He has 30 days to sign the bill before it dies.
A source close to the governor said the governor is choosing to not sign the bill to retain leverage with legislators to encourage them to change their position on what should be in the bill. The governor is in communication with legislators now, she said.
The legislature will reconvene on Jan. 12. At that point the governor expects that the legislature will vote to adopt a new version of the bill. The governor would than sign the new, improved version, the source close to the governor said.
