Spotlight on Puerto Rico: Rosselló fills top posts with campaign aides

Ricardo Rosselló Nevares

By Jennice Fuentes / Fuentes Strategies

Governor-elect Ricardo Rosselló has announced his selections for several top posts within his incoming administration; all appointees announced thus far are close aides of his campaign and transition. In a surprise move, Rosselló appointed New Progressive Party (NPP) Secretary General, William Villafañe as Chief of Staff. Many analysts had assumed that campaign manager and transition chairman Elías Sánchez would fill that slot. Instead, Sánchez was selected to be the Governor-elect’s representative on the Fiscal Oversight Board (FOB). This appointment was met with some skepticism by the press and others because of possible conflicts of interest. Rosselló assured the public that, like voting members of the board, Sánchez would not be paid for this work and would continue his work in the private sector as a lawyer and consultant.

The new Deputy Chief of Staff will be Itza García who is a lawyer that has led the “Plan for Puerto Rico” for Rosselló, a platform-like public process that has served as a blueprint for the incoming administration. The Legal Director at La Fortaleza will be Alfonso Orona, a lawyer and long-time Rosselló loyalist who worked for the former Governor Luis Fortuño.

Likelihood of U.S. Congressional action on Puerto Rico dims

Since the general election, hope has dwindled that the 115th Congress would address some of the major fiscal and healthcare issues plaguing the Commonwealth. After the election, Republican leaders on Capitol Hill decided against the approval of an omnibus funding bill, which would have served as a legislative vehicle to move some of the economic measures pushed by the Congressional Task Force on Puerto Rico’s Economic Development. The Task Force is set to release a report, before the end of the year, on recommendations for adjustments in federal policy to grow the island’s economy. Manufacturing incentives, funding to alleviate the Medicaid cliff or to provide Earned Income Tax or Child Tax Credits to Puerto Rico were some of the initiatives that had been mentioned. GOP Congressional leaders dashed those hopes with the decision to pass a “clean” Continuing Resolution that would fund the federal government through next spring.

Fiscal Board continues to hire consultants, complaints of conflicts arise

The Fiscal Oversight Board (FOB) for Puerto Rico, mandated under PROMESA, continues to hire consultants that appear to have conflicts of interest or partisan ties. The law firm, O’Neill & Borges has been tapped as local counsel. That firm recently hired Resident Commissioner Pedro Pierluisi’s son as an associate and was the firm where Pierluisi himself was a partner prior to his election to Congress. Pierluisi’s brother-in-law, José Carrión III, is the chairman of the FOB. However, board spokespersons said Carrión recused himself from the decision to hire the firm.

Meanwhile, two top U.S. Treasury officials (Adam Chepenik and Luyen Tran) are detailed as the only board staff so far. The board has set mid-January as a deadline to hire an Executive Director and General Counsel, both likely to be chosen with the assistance of a head-hunting firm.

PREPA restructuring delayed

The Electric Power Authority (PREPA) hoped to go to the bond market with a new issuance before year-end in what would have been a major step forward in the public corporation’s debt-restructuring. Unfortunately, that transaction has been delayed and some are now questioning the viability of the restructuring agreement that was reached between the utility’s creditors and Chief Restructuring Official Lisa Donahue, who’s company Alix Partners has pocketed more than $43 million in the last two years.

Governor responds to board rejection of fiscal plan

Governor Alejandro García Padilla wrote a letter responding to the Fiscal Oversight Board’s rejection of the Governor’s 5-year fiscal and economic growth plan. The plan is a key pre-requisite for the board to be able to enter into debt restructuring. Board Chair Carrión said that the Board intends to approve a plan no later than January 31, 2017 and gave the Governor until December 15 to submit a new plan. The Board’s rejection was based on several deficiencies they said were glaring, such as a lack of a 10-year plan, assumptions of funding such as Act 154 excise tax creditability that is set to expire, as well as extensions in Affordable Care Act funding which also expire.