NACo, joined by other local government organizations, recently sent a letter to Congressional leaders stressing the need to keep state and local government fiscal matters separate from any efforts to address Puerto Rico’s financial crisis. As the situation has unfolded, NACo has remained vigilant to attempts to use the debate to advance initiatives that would harm county governments. The rhetoric during the debates over solutions to the territory’s fiscal crisis has raised concerns and harmful provisions, such as the inclusion of language from the Public Employee Pension Transparency Act (PEPTA) (H.R. 4822), have already been included in at least one Senate proposal, the Puerto Rico Assistance Act (S. 2381).
The Puerto Rico Assistance Act (S. 2381), introduced in December of 2015 by Sen. Orrin Hatch (R-Utah), includes language from H.R. 4822, the Public Employee Pension Transparency Act (PEPTA). PEPTA, introduced by Rep. Devin Nunes (R-Calif.) in each of the last three sessions of Congress, would create a new layer of reporting for state and local government pensions to the U.S. Treasury, require a new calculation of unfunded liabilities on top of current accounting standards requirements, and tie non-compliance with these requirements to the loss of the ability to issue tax-exempt municipal bonds, a critical source of financing for local governments. NACo, in conjunction with the Public Pension Network, sent a letter to all representatives urging opposition to PEPTA.
Additionally, critics of efforts to address Puerto Rico’s debts characterize them as government bailouts. Some also argue that state and local governments experiencing fiscal stress may also seek to utilize the same relief offered to Puerto Rico. However, the bankruptcy relief sought by Puerto Rico is not a legal option for most states and local governments. NACo and other state and local government organizations have issued annual updates to the State and Local Fiscal Fact Sheet to address these concerns.
After years of increasing fiscal challenges, Puerto Rico now faces two significant debt payment deadlines this year: $422 million was due May 1 and $780 million in general obligation bonds is due July 1.
Recently, the House Natural Resources Committee, which has jurisdiction over Puerto Rico matters, abruptly canceled a vote on a bill, H.R. 4900, that would restructure Puerto Rico’s debt when it appeared that there was not enough support to get the bill out of committee. This resulted in Puerto Rico missing its first debt payment deadline on May 1 and has fed growing concern that it will miss its second, larger debt payment deadline in July absent federal intervention.
NACo will continue to monitor developments and report them as they occur.
Contact: Mike Belarmino at email@example.com or at 202.942.4254