Washington Watch – Spotlight on Puerto Rico: HUD Stalls Transfer of CDBG Funds

By Jennice Fuentes / Fuentes Strategies

El Nuevo Día reports that the U.S. Department of Housing and Urban Development (HUD) is currently waiting for the Puerto Rican government to show that it can properly manage the $1.5 billion in Community Development Block Grants for Disaster Recovery (CDBG-DR) that have been assigned to the Island before it begins to disburse the funds. “They’re still in the process of setting up its financial management program for emergency funds, in order to ensure that the money reaches the people who need it the most,” said Brian Sullivan, HUD spokesperson. According to Sullivan, HUD is collaborating with the Puerto Rican government to set up the infrastructure for the management of the funds. “We hope they finish as soon as possible,” he said.

According to Puerto Rico Housing Secretary Fernando Gil Enseñat, the belated disbursement of the funds could delay the implementation of the Island’s action plan to repair homes, relocate communities, help people with their mortgages, and spur economic development, until February or March 2019. The Department of Housing is also at work on preparing an action plan for a second, future installment of $8.285 billion in CDBG-DR funds.

Curso en línea relacionadoRepensar una isla: Fondos CDBG-DR y la recuperación de Puerto Rico – 1.75 horas crédito [MISC-2018-1057]

The Fiscal Oversight Board (FOB) has issued a statement arguing that disaster mitigation and reconstruction funds are a matter pertaining “mainly to the Puerto Rican government.”

Governor Signs Tax Reform Measure, FOB Certification Uncertain

Promising that it would inject $400 million per year into the economy until 2023, Governor Ricardo Rosselló signed a new tax reform bill into law. The bill reinstates Puerto Rico’s Earned Income Tax Credit (EITC) and will grant marginal benefits to small business-owners and self-employed taxpayers. However, these benefits depend on Fiscal Oversight Board (FOB) approval, which has not yet been granted, contrary to statements by the Rosselló Administration. In fact, FOB Executive Director Natalie Jaresko gave Governor Rosselló until December 19th to explain how the tax reform’s changes would affect the Island’s revenues.

Upon signing the bill, the Governor asserted that the new law’s revenue neutrality had «indeed been validated” by the FOB. Outgoing Secretary of Public Affairs, Ramón Rosario Cortés, reiterated this claim saying that the FOB had already received studies showing the “revenue-neutral” effects of legalizing coin-operated gaming machines outside of casinos, one of the FOB’s chief causes of concern. “If the Board were to make a decision as devastating as the invalidation of the new tax code, it is the Puerto Rican people they’d be harming, as well as its economic development. We’re talking about $2 billion that would be injected into the economy in the next five years.”

Jaresko has indicated that the FOB is awaiting the fiscal impact certification for the tax law, as required by the PROMESA federal law.

Congress Bans Cockfighting in the Territories

Congress took the first step yesterday in eliminating cockfighting, a centuries-old tradition in Puerto Rico. After the U.S. invasion of Puerto Rico in 1898, Congress banned cockfighting on the Island but reinstated the legality of the practice thirty years later. Currently, cockfighting is an $18 million a year industry that employs 12,500 people, according to Puerto Rico’s non-voting delegate in Congress, Resident Commissioner Jenniffer González. For years, cockfighting has been illegal in the 50 states, but Congress made an exception for the Commonwealth and the territories. After President Trump signs the new farm bill, which includes the provision to ban cockfighting in U.S. territories, the ban will come into effect within a year.

The Senate overwhelmingly approved the farm bill conference report and the House is expected to follow suit, so the likelihood of stopping the provision – at least in the short-run – is highly unlikely.