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http://hosted.ap.org/dynamic/stories/C/CB_PUERTO_RICO_STATEHOOD?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2017-06-11-17-26-34

June 11, 6:47 PM EDT

Puerto Rican voters back statehood in questioned referendum

By DANICA COTO
Associated Press

SAN JUAN, Puerto Rico (AP) — Puerto Rico’s governor announced that the U.S. territory has overwhelmingly chosen statehood in a nonbinding referendum Sunday held amid a deep economic crisis that has sparked an exodus of islanders to the U.S. mainland.

Nearly half a million votes were cast for statehood, more than 7,600 for free association/independence and nearly 6,700 for the current territorial status, according to preliminary results. The participation rate was just 23 percent with roughly 2.26 million registered voters, leading opponents to question the validity of a vote that several parties had boycotted.

“From today going forward, the federal government will no longer be able to ignore the voice of the majority of the American citizens in Puerto Rico,” Gov. Ricardo Rossello said, announcing the victory. “It would be highly contradictory for Washington to demand democracy in other parts of the world, and not respond to the legitimate right to self-determination that was exercised today in the American territory of Puerto Rico.”

U.S. Congress, however, has final say in any changes to the island’s political status.

It was the lowest level of participation in any election in Puerto Rico since 1967, according to Carlos Vargas Ramos, an associate with the Center for Puerto Rican Studies at Hunter College in New York. He also said that even among voters who supported statehood, turnout was lower this year compared with the last referendum in 2012.

“Supporters of statehood did not seem enthusiastic about this plebiscite as they were five years ago,” he said.

Puerto Rico’s main opposition party rejected the pro-statehood result.

“The scant participation … sends a clear message,” said Anibal Jose Torres, a party member. “The people rejected it by boycotting an inconsequential event.”

Rossello, however, vowed to push ahead with his administration’s quest for statehood, which was his top campaign promise. He said he would create a commission to ensure that Congress validate the referendum’s results.

“In any democracy, the expressed will of the majority that participates in the electoral processes always prevails,” he said. “Puerto Rico voted for statehood.”

The referendum coincides with the 100th anniversary of the United States granting U.S. citizenship to Puerto Ricans, though they are barred from voting in presidential elections and have only one congressional representative with limited voting powers.

Among those hoping Puerto Rico will become a state is Jose Alvarez, a 61-year-old businessman.

“Now is the moment to do it,” he said. “We’ve spent a lot of years working on a socioeconomic model that has not necessarily given us the answer.”

Many believe the island’s territorial status has contributed to its 10-year economic recession, which has prompted nearly half a million Puerto Ricans to flee to the U.S. mainland and was largely sparked by decades of heavy borrowing and the elimination of federal tax incentives.

Puerto Rico is exempt from the U.S. federal income tax, but it still pays Social Security and Medicare and local taxes and receives less federal funding than U.S. states.

Those inequalities and the ongoing crisis prompted 66-year-old Maria Quinones to vote for the first time in such a referendum, the fifth on Puerto Rico’s status.

“We have to vote because things are not going well,” she said. “If we were a state, we would have the same rights.”

Quinones said many of her relatives are among the nearly half a million Puerto Ricans who have moved to the U.S. mainland in the past decade to find a more affordable cost of living or jobs as the island of 3.4 million people struggles with a 12 percent unemployment rate.

Those who remain behind have been hit with new taxes and higher utility bills on an island where food is 22 percent more expensive than the U.S. mainland and public services are 64 percent more expensive.

Those who oppose statehood worry the island will lose its cultural identity and warn that Puerto Rico will struggle even more financially because it will be forced to pay millions of dollars in federal taxes.

“The cost of statehood on the pocketbook of every citizen, every business, every industry will be devastating,” Carlos Delegado, secretary of the opposition Popular Democratic Party, told The Associated Press. “Whatever we might receive in additional federal funds will be cancelled by the amount of taxes the island will have to pay.”

His party also has noted that the U.S. Justice Department has not backed the referendum.

A department spokesman told the AP that the agency has not reviewed or approved the ballot’s language. Federal officials in April rejected an original version, in part because it did not offer the territory’s current status as an option. The Rossello administration added it and sent the ballot back for review, but the department said it needed more time and asked that the vote be postponed, which it wasn’t.

No clear majority emerged in the first three referendums on status, with voters almost evenly divided between statehood and the status quo. During the last referendum in 2012, 54 percent said they wanted a status change. Sixty-one percent who answered a second question said they favored statehood, but nearly half a million voters left that question blank, leading many to claim the results weren’t legitimate.

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http://thehill.com/latino/336667-puerto-rico-goes-to-the-polls-for-statehood

By Rafael Bernal – 06/07/17 06:00 AM EDT 1,103

http://players.brightcove.net/1077863425/B104N2wlg_default/index.html?videoId=5461872792001

Puerto Rico’s government is banking on a push for statehood to solve the structural issues that led to its financial crisis.

Puerto Ricans will vote Sunday to decide the territory’s status.

If statehood wins, as expected, the island will enact what’s known as the Tennessee Plan, an avenue to accession by which U.S. territories send a congressional delegation to demand to be seated in Washington.Puerto Rico will send two senators and five representatives, chosen by Gov. Ricardo Rosselló (D), later this year, once the plan is put into action.

Statehood remains a long shot as many Republicans are wary of adding a 51st state that could add two Democratic senators and seven Democratic electors to the Electoral College.

Others, noting the examples of Alaska and Hawaii, both added to the union in 1959, say it can be difficult to predict how territories will vote as states.

“Those are the same people that 60 years ago said that Hawaii was going to be a super Republican state and Alaska was going to be super Democratic, and that’s why we brought them in together,” said José Fuentes Agostini, the head of Puerto Rican Republicans in the states.

The Puerto Rican Republican Party is adamantly pro-statehood. And the national Republican Party has supported statehood since the 1940s, most clearly in its 2016 platform.

“We support the right of the United States citizens of Puerto Rico to be admitted to the Union as a fully sovereign state,” the platform stated. “Once the 2012 local vote for statehood is ratified, Congress should approve an enabling act with terms for Puerto Rico’s future admission as the 51st state of the Union.”

President Trump, who angered Puerto Ricans by decrying a potential “bailout” of their financial system on the campaign trail and as president, also indicated openness to the idea.

As a candidate, he said, “The will of the Puerto Rican people in any status referendum should be considered as Congress follows through on any desired change in status for Puerto Rico, including statehood.”

Puerto Rican voters in the states have predominantly voted for Democrats, translating to broad party support for statehood. Many also argue that Puerto Rico’s status as a territory is intrinsically linked to its economic challenges.

“Status is a major part of the problem Puerto Rico faces all the time. In my opinion, the main problem,” said Rep. José Serrano (D-N.Y.), who was born on the island.

Statehood supporters argue that territorial status has held back the island’s economy by creating a legal structure where Congress can pick and choose how national laws — most notably tax laws — apply to Puerto Rico.

“The thought that is given to national policy is not applied to Puerto Rico, and then people try to come up with special deals, usually because they’re trying to save a few dollars,” said Jeffrey Farrow, a territorial expert and former White House aide.

“Those special deals almost never work and almost always exacerbate the problem.”

Still, the plan faces legal challenges and opposition on the island — despite the fact that Puerto Ricans in 2012 voted by a wide margin to become a state.

Then-Gov. Alejandro García Padilla (D), a member of the anti-statehood Partido Popular Democrático (PPD), opposed statehood. His party and the small pro-independence party have vowed to boycott Sunday’s vote.

Following the 2012 plebiscite, opponents of statehood argued that participation had not been high enough to reflect the true will of the people.

Rosselló and Resident Commissioner Jenniffer González Colón (R) belong to the Partido Nuevo Progresista (PNP) within Puerto Rico. It is promoting participation in the vote.

Statehood opponents are counting on the boycott to lower turnout. They say that unless 50 percent of the total voter roll approves statehood, it will not be a credible vote.

According to a poll by San Juan-based newspaper El Nuevo Dia released last week, 72 percent of registered voters plan to vote, and 20 percent have already decided to boycott the election.

Opposition parties say a boycott is justified because the Department of Justice (DOJ) has not approved the final ballot.

Rosselló initially submitted a ballot that did not allow voters to vote to continue the status quo, only giving the option of voting for independence or statehood.

Justice required Rosselló to include the status quo in a revised ballot, which he did, but the DOJ said it would not have enough time to review the revised ballot before the plebiscite.

The ballot has also won attention from Congress.

Sen. Roger Wicker (R-Miss.) spoke out against it, arguing it “unfairly stacks the deck in favor of statehood.”

He penned a letter to Attorney General Jeff Sessions objecting to the ballot’s title, “Plebiscite for the Immediate Decolonization of Puerto Rico.” Wicker said that Puerto Rico has not been a colony since its annexation from Spain in 1898.

Proponents of statehood insist that territorial status for 3.5 million citizens amounts to colonialism.

In Washington last month, Rosselló called for an end to “500 years of colonial status” and “100 years of U.S. citizenship without full rights.”

Despite opposition in San Juan and Washington, Puerto Rico’s top officials will follow through with the plan of sending a delegation to Congress, under a law signed by Rosselló on Monday, assuming statehood wins out.

Whether that delegation will be received is unclear. Speaker Paul Ryan’s (R-Wis.) office did not return a request for comment.

California is not far behind, I’ve been told that by this fall we will be seeing similar effects to Puerto Rico. When they come out of this they will be ready for statehood. Will we?

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https://www.yahoo.com/news/puerto-ricos-bankruptcy-leaves-us-island-facing-hard-020039188.html
People walk past murals protesting the state of the economy in San Juan, Puerto Rico, as the former Spanish colony of 3.5 million, now a US territory, struggles under a mountain of debt (AFP Photo/Mark RALSTON)
San Juan (AFP) – In San Juan, chants of “the debt is illegal” and “colonial dictatorship” fill the morning air, as students from the University of Puerto Rico block a palm-lined avenue.

Across the street, a board of overseers imposed by Washington is meeting with student representatives to hear their demands as they mull ever deeper cuts to pull this “Greece of the Caribbean” out of bankruptcy.

To some, it’s a necessary corrective to get a stumbling Puerto Rico back on its feet.

But to others like Mariana de Alba, a 27-year-old law student at the protest, it all smacks of colonial subjugation.

“What they’ve come to do is to cut back the public budget and the island’s public services to give it to the big bond holders, to pay off a debt that we don’t even know whether it is legitimate,” she says.

The Financial Oversight and Management Board for Puerto Rico — made up of seven members appointed by the US president and one by the island’s governor — is tasked with getting a handle on the territory’s crushing $74 billion debt.

But in an island proud of a cultural identity expressed in its language, food and music, the board is widely seen as having an intolerable stranglehold on Puerto Rican life.

As in Greece, where the arrival of the European “troika” repulsed much of the population, Puerto Rico had long shrugged off the dangers of unrestrained borrowing — until the crash.

But unlike its Mediterranean counterpart, Puerto Rico is not independent.

A former Spanish colony that became an American territory at the end of the 19th century, the island of 3.5 million has had its own government since 1952 when it became a “free associated state,” or commonwealth, of the United States.

On Sunday, its inhabitants will vote on its relationship with the United States, in a non-binding referendum.

They can choose from three options — statehood, independence or another form of so-called “free association” or the status quo.

– ‘Blind cuts’ –

Even though Puerto Ricans are American citizens, they cannot vote in the US presidential elections.

And the Spanish-speaking island, with its white beaches and turquoise seas, can seem far away from Washington.

But its economic ties to the US are still very tight — too much so, some say.

Long a popular tourist destination, Puerto Rico also enjoyed an exemption from US federal taxes that led many US companies to set up manufacturing operations on the island, an arrangement that lasted for decades until the tax breaks were ended in 2006.

Related:
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To offset the loss in revenues, Puerto Rico turned to the US municipal bond markets for relief, offering investors attractive tax-exempt bonds that provided ready cash but sank the island deeper into debt.

As unemployment rose and recession set in, Puerto Ricans left the island in droves. One in 10 Puerto Ricans emigrated over a 10-year period.

The exodus — a massive population shift that has left more Puerto Ricans in the United States than in Puerto Rico –aggravated the debt crisis by siphoning off the island’s tax base.

Unable to repay its creditors, Puerto Rico declared bankruptcy in early May.

The bankruptcy — the largest ever by a local US government — caused barely a ripple in the United States, but in Puerto Rico, it has fueled joblessness and protests.

At the University of Puerto Rico, closed since the end of March by student protests, chairs and desks have been chained to its gated entrance.

“They have to stop making blind cuts,” said Alba.

– ‘In shock’ –

Governor Ricardo Rossello — who took office in January, and now lives in La Fortaleza, an imposing walled palace overlooking San Juan’s harbor — has presented an austere 10-year plan to rescue the economy.

But the 38-year-old governor was unable to persuade creditors to lower debt payments to a “sustainable level.” So he declared bankruptcy.

It’s now up to the US courts to resolve the matter.

In the face of this financial morass, the two parties that have alternated in power since the 1950s — Rossello’s New Progressive Party and the opposition Popular Democratic Party — are blaming each other for the mess.

Rossello “has had to do the work that the previous administration did not do,” said Christian Sobrino, the governor’s chief economic adviser and the head of the Government Development Bank for Puerto Rico.
Sobrino is optimistic that Rossello can stabilize the island’s economy within four years, relying on private investment, particularly in the tourism industry, which he feels has room to grow.

But relaunching the island’s economy is likely to be more difficult under US President Donald Trump, who is pushing for deep cuts in food assistance and medical insurance programs for the poor. And Trump has spoken out on several occasions against bailouts for Puerto Rico.

“People are in shock. They have never experienced a situation like this one,” said Gerson Guzman, head of the General Workers Union, which represents health care workers.

The cutbacks “could provoke the collapse of Puerto Rico’s public health system,” which faces threats like the mosquito-borne Zika virus, he warns.

Outside Puerto Rico’s biggest public hospital, where patients and their families wait in the heat for their turn to see a doctor, Ana Quinones, a 44-year-old pharmacy technician, says her salary has been frozen for four years.

Her two daughters dream of moving to the United States.

“We have already established ourselves. But our children, our grandchildren — what are we going to leave them?” Quinones asks.

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https://www.usatoday.com/story/money/2017/05/03/puerto-rico-bankruptcy/101243686/
Puerto Rico declares bankruptcy. Here’s how it’s going to unfold.
Nathan Bomey , USA TODAY Published 1:39 p.m. ET May 3, 2017 | Updated 4:29 p.m. ET May 3, 2017

Puerto Rico’s financial oversight board has filed a form of bankruptcy for the island under Title III of last year’s Puerto Rico rescue law, which is known as PROMESA. USA TODAY
EPA PUERTO RICO MAY DAY POL CITIZENS INITIATIVE & RECALL PRI SA

(Photo: THAIS LLORCA, EPA)

Facing mountainous debt and population loss, the board overseeing Puerto Rico filed Wednesday for the equivalent of bankruptcy protection in a historic move that’s sure to trigger a fierce legal battle with the fate of the island’s citizens, creditors and workers at stake.

The oversight board appointed to lead the U.S. territory back to fiscal sustainability declared in a court filing that it is “unable to provide its citizens effective services,” crushed by $74 billion in debts and $49 billion in pension liabilities.

The filing casts a shadow of uncertainty over the future of Puerto Rico pensioners, American retirees who own the island’s debt, institutional investors who backed the island in good times and businesses with lucrative contracts.

But it could also provide hope to residents seeking to preserve access to basic services such as public safety and health care, while also offering a potential route to economic stability for an island that has been suffering for years. Puerto Rico officials have complained that their debt crisis has cut off funds needed to pay doctors and run schools.

Puerto Rico has lost 20% of its jobs since 2007 and 10% of its population, sparking an economic crisis that worsens by the day.

The island’s response has worsened matters. Politicians raised taxes, allowed governmental bureaucracy to balloon, borrowed to pay the bills and promised pensions that the island could not afford.

“The result is that Puerto Rico can no longer fully pay its debt and pay for government services,” the oversight board said in the court filing. “Nor can Puerto Rico refinance its debt — it no longer has access to the capital markets. In short, Puerto Rico’s crisis has reached a breaking point.”

The island’s slumping economy was, perhaps, the final straw. Some six in 10 Puerto Ricans are unemployed or not interested in working, and nearly half are enrolled in Medicaid.

Puerto Ricans are U.S. citizens and can move to the mainland at any time, draining the island’s tax base. Tens of thousands have streamed into Florida.

The legal case is not technically considered a bankruptcy filing under the federal code that governs municipal cases, but it’s similar. Instead, it was filed through a bankruptcy-like mechanism dubbed Title III of legislation authorized by Congress and signed into law by President Obama in 2016.

Here are key questions:
What happens next?

U.S. Supreme Court Chief Justice John Roberts will appoint a life-tenured judge, likely a U.S. District Court judge, to oversee the case, said Melissa Jacoby, a University of North Carolina law professor and expert on municipal bankruptcy.

That’s different than Chapter 9 municipal bankruptcy cases, where a bankruptcy judge controls the process.

The person appointed to oversee the case will have significant power over how it unfolds.

This particular debt-cutting process has never occurred, so the lack of legal precedent could leave the judge with much sway over the future of Puerto Rico.
What does the oversight board do?

The oversight board will aim to negotiate debt cuts with creditors, after which it will propose a plan of adjustment. The judge will decide whether to authorize the plan, which could lead to massive debt cuts.
How will investors be treated?

They’re in trouble.

To be sure, it depends on the status of their debt. If they hold secured bonds, they might get paid in full. But unsecured bondholders could suffer significant cuts, depending on which types of debt the judge determines to be vulnerable.

Financial creditors, including major investors that had bet on Puerto Rico bonds that were exempt from federal, state and local taxes, argue that their investments were made when the island was not eligible for bankruptcy.

But Congress passed the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) specifically to create a process that allows the island’s numerous debt-saddled governmental entities to achieve debt relief.

Complicating matters is the various governmental entities included in the bankruptcy filing, each of which has its own investors and creditors wanting to be paid.

“It really isn’t clear how creditors stack up against each other,” Jacoby said.

Moody’s Investor Service Vice President Ted Hampton concluded Wednesday that the bankruptcy filing is actually “a positive step for bondholders overall” because it will bring about “orderly process that should be better for creditors in the aggregate than a chaotic and uncertain period involving proliferating lawsuits.”
What happens to Puerto Rico pensioners?

They might face cuts because Puerto Rico has run out of pension funds.

In the Chapter 9 bankruptcy of Detroit, retirees agreed to accept cuts after a federal judge ruled that their pensions could be cut in municipal bankruptcy. That could pave the way for a similar ruling in Puerto Rico.

The PROMESA law states that the oversight board must identify a fiscal plan that will “provide adequate funding for public pension systems.”

Puerto Rico pensioners also have certain legal protections, but inside of bankruptcy those protections can collapse. That’s exactly what happened in Detroit.

That’s why pension cuts and reductions to health care insurance could be in the cards.

But pensioners may still fare better than investors, Municipal Market Analytics analyst Matt Fabian suggested Tuesday in a research note. That’s because pensioners are more politically empathetic than Wall Street creditors and bond insurers.
Could Puerto Rico sell off assets to pay some debts?

That’s possible. In Detroit, which had $18 billion in debt, the city faced pressure from creditors and pensioners to consider selling off the city-owned Detroit Institute of Arts. The city instead negotiated a deal to avoid liquidating art and collected an infusion of cash from private donors and the state of Michigan.

The city could not be forced to sell assets because Chapter 9 bankruptcy prevents federal judges from ordering municipalities to take such actions.

Similarly, PROMESA dictates that the court may not “interfere with” the island’s “property or revenues,” without the oversight board’s consent.

So a judge may not be able to order the island to sell off beachfront property.

But that doesn’t mean creditors won’t try to pressure the island into it.

“I wouldn’t be surprised because we’ve seen it in other contexts,” Jacoby said.