Comptroller Stringer Releases Plan to Finance Puerto Rico’s Recovery and Support Displaced Puerto Rican Citizens
October 17, 2017
Six commonsense proposals would increase access to capital, relieve budget pressure, and provide resources for displaced Puerto Ricans
(New York, NY) — As the crisis in Puerto Rico continues and our fellow Americans are in dire need of swift, comprehensive recovery efforts, New York City Comptroller Scott M. Stringer today released a six-point plan to finance Puerto Rico’s rebuilding efforts and support displaced Puerto Rican citizens.
In a policy brief, Comptroller Stringer examined a number of federal initiatives — from loan guarantees, to private activity bonds, to education aid — that have been successfully used to help other communities recover from disaster and outline how they could be applied to the Puerto Rican recovery effort. In addition, the brief highlights how federal safety net programs, like Medicaid and SNAP, can be leveraged to ease the stress on Puerto Rico’s budget — especially in light of the liquidity crisis that is already taking hold of the Commonwealth.
“The images are startling. The stories are heartbreaking. And the extraordinary shortcomings of the federal response only exacerbate the problem. FEMA must shift into high gear because the situation is truly urgent. This is about life and death, and that’s why we’re putting forward these commonsense ideas,” New York City Comptroller Scott M. Stringer said. “Americans always step up in times of crisis. Here in New York, we are going to continue exploring solutions — and we’re going to do everything we can do help our brothers and sisters in Puerto Rico.”
“New York and Puerto Rico are inextricably linked and as the Island undergoes this catastrophe we must stand together in offering help and support. I want to thank the Comptroller for his leadership and his work to develop additional ideas on how we can maximize assistance to our brothers and sisters in Puerto Rico,” said Congresswoman Nydia Velazquez.
Financing Recovery and Easing Puerto Rico’s Budget Crunch — Some estimates place the cost of rebuilding in Puerto Rico above $95 billion. Comptroller Stringer’s plan includes three proposals that will help finance Puerto Rico’s recovery and ease pressure on the Commonwealth’s already-strained budget:
- Federal Loan Guarantees for Public Sector Infrastructure — In addition to direct funding through FEMA and Disaster Recovery Block Grants, Congress should provide federal loan guarantees for public sector infrastructure rebuilding, financing critical projects that will get power lines up, roads repaired, and water flowing across the island. Without these federal guarantees, the Puerto Rican government — already burdened with a debt crisis — would likely be unable to borrow any capital for rebuilding efforts.
- Disaster Recovery Private Activity Bonds — After other disasters, like the September 11th attacks on New York City and Hurricane Katrina, Congress authorized “Disaster Recovery Private Activity Bonds” which helped finance the reconstruction of Lower Manhattan (called “Liberty Bonds”) and New Orleans. Congress should once again authorize these bonds, which are exempt from federal taxes on interest and typically fund the rebuilding of utilities, hospitals, hotels, housing, and commercial office buildings. While the program is administered by the government, the firms or organizations that receive the funds are entirely responsible for repaying the bonds.
- Federal Safety Net Programs — Puerto Rico’s budget is already facing immense pressure due to the Commonwealth’s debt crisis, and the cost of rebuilding — along with supporting citizens who need necessities like potable water and food — threatens to further ravage the island’s finances. Congress must explore expanding vital federal safety net programs that will ease the Commonwealth’s budget crunch and help Puerto Ricans as they rebuild. Options include:
- Medicaid — In the immediate term, the federal government should assume full responsibility for funding Medicaid in Puerto Rico by waiving the “local matching” requirement in the Medicaid program — allowing the Commonwealth to focus on rebuilding. Long-term, the federal government should increase the “federal matching share” of Medicaid to 83% — roughly the rate Puerto Rico would be entitled to if it were a state. This move would provide about $400 million in annual budget relief.
- Supplemental Nutrition Assistance Program (SNAP) — Puerto Rico currently operates an independent nutrition assistance program financed by federal block grants separate from the “SNAP” program — an entitlement — available to States. Due to this difference, just 26% of Puerto Ricans benefit from the program, despite a poverty rate of 45%. The Federal government should temporarily extend the SNAP entitlement program to Puerto Rico, helping more families access the resources they need to put food on the table.
- Earned Income Tax Credit (EITC) — Because Puerto Rican citizens do not pay federal income tax, they are ineligible for the EITC, which helps lift millions of families across the country out of poverty. To assist Puerto Rican families as they recover from this disaster, Congress should allow Puerto Rican residents to apply for the EITC and, if eligible, receive a tax credit starting this year.
- Child Tax Credit — Currently, only Puerto Rican households with three or more children who meet certain income requirements are eligible for Child Tax Credits. Congress should remove this limitation, allowing Puerto Rican families of any size to receive the refundable tax credit as they rebuild.
Supporting Displaced Puerto Ricans — In addition to programs that provide capital for rebuilding and ease Puerto Rico’s budget worries, Comptroller Stringer’s plan calls for three federal initiatives that will support displaced Puerto Rican residents. They include:
- Education Aid for Displaced Students — In the aftermath of Hurricane Katrina, Congress created a $880 million program to assist school districts and private schools that were educating displaced students. States received $1,500 per eligible student per quarter, and could use the funding for a number of purposes, from hiring teachers, to buying teaching materials, to supplying counseling services. Congress should likewise create a temporary aid program for school districts that see an influx of displaced Puerto Rican students.
- Education Aid for Displaced Homeless Students — Congress also provided $20 million in funding specifically to support homeless students displaced by Hurricane Katrina, distributed through the McKinney-Vento Homeless Assistance Act. Congress should similarly appropriate funds for a program to support displaced homeless students from Puerto Rico.
- Higher Education Aid — In addition, Congress provided significant funds to support higher education institutions in the region impacted by Hurricane Katrina and those across the country that enrolled displaced students. Congress should once again establish an aid program for institutions of higher education in Puerto Rico and that enroll displaced Puerto Rican students.
To view the full policy brief, click here.