The Puerto Rico government and the federal control board that oversees the island’s finances disagreed on Friday about how the U.S. territory should end a long and contentious bankruptcy.
Both sides disagreed over how to generate revenue for Puerto Rico’s transportation authority and a debt restructuring deal for Puerto Rico’s power plant.
A tentative agreement that would restructure the Electric Power Authority’s debt, which is the largest island government agency, remains unconvinced of prominent legislators, including the President of Puerto Rico’s Senate. The deal would reduce the debt of the power company by more than 30%. Bondholders must agree. However, legislators and citizens claim it will lead to greater power bills increases as repeated outages continue.
This lack of support led David Skeel (the board’s chairman), and others to meet this week with legislators in an effort to get the votes they needed.
Skeel stated that there may be alternatives if lawmakers reject the deal. However, he and other board members cautioned it would be more risky and costly.
Antonio Medina, a board member, agreed that it opened the door for bondholders to pursue multiple legal avenues…including receivership.”
A proposed 8.3 percent annual increase in tolls for fiscal year 2024, which would improve road conditions and generate more revenue for Puerto Rico’s Highways and Transportation Authority, is another sticking point between the board and the government of Puerto Rico.
According to the board, only 13 percent of Puerto Rico’s highways are in good shape, as compared to a median of 84% in the U.S. mainland. The board also pointed out that toll fares hadn’t been adjusted in Puerto Rico since 2005.
John Nixon, a board member, stated that the proposed increases were “yes they are huge.” They will have an effect on the public but they must be implemented over time. This is why we are seeing such a large increase.
Gov. Pedro Pierluisi attended Friday’s board meeting and rejected the proposed increase. He said that it was unnecessary because there are other sources for revenue. He pointed out that Puerto Rico’s average toll per mile is the highest in the United States.
He stated that his administration is committed to pulling Highways and Transportation Authority from bankruptcy by the end of year, but that he would not implement any measures that could affect users.
Nearly five years ago, Puerto Rico filed for the largest municipal bankruptcy in American history. It was after declaring it could not pay its $70 billion public debt.
