The push and pull over Puerto Rico’s budget

May 1, 2014

A macro view of Puerto Rico

April 29, 2014

Puerto Rico Governor Alejandro García Padilla will present his budget tonight. He has promised that it will be balanced, it will not require layoffs of government employees and it will not provide subsidies to Puerto Rico public corporations like PREPA (the Puerto Rico Electric Power Authority) or the highway authority.

Puerto Rico’s electricity monopoly is worth half its debt

April 25, 2014

There is a reason that the uninsured revenue bonds of Puerto Rico’s electricity monopoly, known as “Prepa,” have been trading around 60 cents on the dollar. The utility is only worth about half of its 6.9 billion of long-term debt. Caribbean Business reports:

The fragile tax structure in Puerto Rico

April 23, 2014

The Puerto Rico government set a high hurdle for itself last year when it ramped up its 2014 tax revenue projection to $9.5 billion from the $8.3 billion collected in 2013. It did this by expanding the tax base for the sales and use tax (SUT) by approximately 26 percent, increasing corporate income tax rates and reversing reductions planned for the corporate excise tax (Act 154) paid by multinationals operating on the island.

Puerto Rico government stumbles on teacher pension reform

April 14, 2014

The Puerto Rico government encountered a stumbling block in its efforts to right a sinking fiscal ship on Friday when its Supreme Court ruled that legislation amending the teacher’s pension system was unconstitutional. Reuters reports:

The Puerto Rico corporate tax question

April 1, 2014

The Government Accountability Office published a report estimating the economic advantages and costs Puerto Rico would have if it enters statehood. The biggest cost would be that Puerto Rico citizens would be required to pay federal income tax on their domestic earnings. Currently they pay federal income tax on income they earn outside of Puerto Rico.

Is muniland doping the data?

March 26, 2014

Puerto Rico and New Jersey may have played with the numbers recently to put a better gloss on their weak finances. They seem to be “doping” the data.

Puerto Rico wants to return to the market for another $2 billion

March 21, 2014

I talked with Erin Ade of RT about Detroit and Puerto Rico. The interview starts at 3:40.

Puerto Rico’s local Chapter 9

March 17, 2014

Senate Bill 993 was recently proposed in the Puerto Rico Senate to create a mechanism for public corporations to be restructured. Since Puerto Rico is a commonwealth of the United States, it is excluded from Chapter 9 municipal bankruptcy code. There is currently no legal framework for a reorganization of liabilities. The legislation would establish such a framework.

Puerto Rico’s local Chapter 9, a good start

March 17, 2014

This is a guest post by Puerto Rico attorney John Mudd. He writes about the new legislation filed in the Puerto Rico Legislative Assembly to allow the restructuring of public corporations.