Statement of Jenniffer González-Colón Before the Financial Oversight and Management Board for Puerto Rico

Good Morning Chairman José Carrión and Members of the Board.

Thank you for holding this public meeting to discuss initiatives and recommendations on how to restore economic growth in Puerto Rico. As Puerto Rico's Resident Commissioner in Congress and the territory's sole representative before the Federal government, I appreciate the opportunity to provide you with my perspective on the challenges and opportunities of implementing the recommendations included in last December's Congressional Task Force on Economic Growth in Puerto Rico Report.

On June 30, 2016, after many months of negotiations, the Puerto Rico Oversight, Management, and Economic Stability Act, commonly known as PROMESA, was enacted into law as Public Law 114-187. Section 409 of PROMESA established an eight-member bipartisan and bicameral Congressional Task Force charged with creating policy recommendations that would promote economic growth and long-term prosperity in Puerto Rico. This, as I see it, was a clear recognition by Congress that, while PROMESA focused on improving the short-term financial stability of the territory, more needed to be done to spur economic growth, job creation and investment in Puerto Rico.

Specifically, Section 409(g) of PROMESA required the Task Force to prepare a report no later than December 31, 2016, that identified obstacles to economic growth in Puerto Rico and recommend legislation that would meet the following goals:

(1) Promote long-term economic growth and stability;

(2) Spur new job creation;

(3) Reduce child poverty; and,

(4) Attract investment in the Island.

Consistent with this mandate, the Task Force worked across party lines for close to six months to come up with policy recommendations that could be implemented by the Federal government to help Puerto Rico's economy stabilize and grow.

The resulting report identified no less than 40 formula-based Federal programs where Puerto Rico is treated differently than the 50 States, and, in some instances, even differently than the other territories. It also concluded that Puerto Rican entities – whether it be the territorial government, municipal governments, for-profit firms, or non-profit organizations – fare very poorly when applying for Federal competitive programs relative to entities in other U.S. jurisdictions. Evidently, this is the consequence and price to pay for Puerto Rico not being a State, and it is a steep price indeed.

I am committed to pursuing the report's recommendations. No other Resident Commissioner had a bipartisan congressional report on the island like I have. That should be the blueprint of an aspirational agenda. Since the first day after I was sworn in as a Member of Congress, I have introduced bills to implement those recommendations, and I am working on the legislation with the Members of the House and the Senate who served on the Task Force.

The first bill that I sponsored, H.R. 259, would translate into law the Task Force's most significant recommendation. It is on a matter that has concerned the Board: The territorial government losing 1.3 billion dollars a year or 80% of its current Federal funding used for Medicaid this year due to the provisions and implementation of the 2010 Affordable Care Act or ‘Obamacare,' a loss not faced by the States.

I am pleased to report that key leaders in the House and Senate understand the need to prevent Puerto Rico from falling off the Obamacare Medicaid cliff. To secure the continuation of this funding is critical for the people of Puerto Rico and the future of our Islands, and I appreciate the Fiscal Oversight Board's written commitment of March 21 to join my efforts to that effect. Given the uncertainty of the Obamacare repeal and replace legislation after the House leadership was forced to withdraw the bill last week, we must ensure that our Medicaid cliff issue is addressed in any appropriate upcoming legislative vehicle, whether it be the Continuing Resolution extension, the reauthorization of the S-CHIP program, or any other relevant bill. We will need to have a united front that includes both the Government and the private sector to successfully achieve this task, but I cannot overstate the importance of the Board's support of this endeavor.

I also filed H.R. 261, that would automatically enroll Puerto Ricans for Medicare Part B benefits, which help pay for health care that does not require hospitalization. Right now, unlike the residents of a State, they are not automatically enrolled for these benefits when they enroll in Medicare. As a result, thousands of senior citizens are paying millions of dollars in lifetime late penalties for not enrolling within four months of turning 65 years old.

Another of my bills (H.R. 797) would, as recommended by the Task Force, eliminate the requirement that the Government of Puerto Rico match Medicare Part D funds for prescription drugs for low-income Puerto Ricans under the Enhanced Allotment Program (EAP). Because of Puerto Rico's difficult fiscal condition, the Island has been unable to access about half of its $50 million annual EAP funding.

Another bill of mine to fulfill a Task Force recommendation, H.R. 798, would enable workers in Puerto Rico with one child or two children to claim the additional child tax credit, just as families with three or more children are currently able to claim the credit. It has been estimated that this proposal would inject $2.9 billion into Puerto Rico's economy over the next decade, benefitting about 355,000 Puerto Rican families and 404,000 children with an average annual household payment of $770.

I also introduced a bill with Congressman José Serrano and Ways & Means Committee members Carlos Curbelo and John Lewis (H.R. 1403) for the recommendation to amend Section 199 of the Internal Revenue Code, to ensure, that the domestic production activities deduction applies to Puerto Rico on a permanent basis as in the States. This legislation, which had already been introduced by then Congressman – and now HHS Secretary Tom Price – in the last Congress, would reduce Federal taxes for U.S. companies that operate in Puerto Rico in branch form, companies that generate thousands of well-paying jobs and represent $3.5 billion of economic activity in Puerto Rico.

I will soon be introducing a bill for the Task Force recommendation that Puerto Rico be granted the $3 per proof gallon of the Federal tax on rum distilled in Puerto Rico and foreign countries that it is not given now – about $100 million a year. Until this year, the territory was granted $2.75 per proof gallon of this on a temporary basis.

A bill that I cosponsored, H.R. 1366, would enact the recommendation to extend to Puerto Rico the requirement that investment funds, that operate within a State register with the U.S. Securities and Exchange Commission. This would protect small local investors.

I am also working with Task Force Member Nydia Velazquez and other leaders of the House Committee on Small Business, on which we both serve, on legislation that would incorporate the Task Force's small business legislation recommendations. The bill would: provide for increased access to the Small Business Administration's Capital and Microloan Programs with reduced fees; give preference to Puerto Rican small businesses in competing for Federal contracts; expand Puerto Rican access to SBA disaster assistance; and establish a Veterans Business Outreach Center, and a Federal and State Technology Partnership in the islands.

Additionally, I am working with other Members of the House and of the Senate to promote the Martín Peña Canal Project and the Arecibo Space Radio Observatory in legislation for the appropriation of funds, following up on Task Force recommendations.

This covers the Task Force's unanimous recommendations for legislative action. In the cases of many other Federal program inequalities and laws, the Task Force could only agree to recommend that Congress consider the issues.

I will, however, be proposing legislation in many of these areas. Three initiatives would certainly impact the economy the most.

One would extend to the Puerto Rico incentives for outside investment that are available in designated underdeveloped and distressed communities in the States. These include a tax credit for wages paid to workers, deduction of the cost of plants and equipment from taxable income in the year of purchase instead of multi-year depreciation, and an exemption from taxation for capital gains from the investment. I have been working in these initiatives with the Puerto Rico Private Sector Coalition.

A second initiative would extend to Puerto Rico the Earned Income Tax Credit payments to low income workers. It is ironic that this most effective anti-poverty tool does not apply to our nation's most poverty-stricken jurisdiction. My bill would make work pay better, benefitting employers as well as employees, and pump $600 million a year into the economy as the workers buy necessities.

A third of these bills would extend Supplemental Security Income (SSI) payments to elderly and disabled Puerto Ricans. This would provide almost $1.8 billion a year to 320,000 Puerto Ricans.

The Task Force also made recommendations for administrative actions by Federal Executive branch agencies. These, too, are on my agenda as Resident Commissioner.

Chairman Carrión and Members of the Board, this is an ambitious agenda – but it is the right and imperative one. Unfortunately, Puerto Rico's resident commissioner is constrained in working on it, by not having a vote in the House other than on the committees in which I serve, not having four other voting Members of the House, not having two Senators, not being able to vote for the president of the United States.

That is why it is essential, that the Board join in the effort, to transform the Task Force's recommendations into law as it seeks to improve the territory's fiscal situation. The law that led to the Task Force's recommendations was the same one that established the Board and led to your appointments. You are appointees of the president of the United States and all but one of you were named at the recommendation of leaders of the Congress. They will look to you for guidance as to the appropriate policies for the territory. Your recommendations will carry great weight.

Just as you state in your recent letter to me, advocating for more equitable treatment of the territory in healthcare programs, I request you urge the Congress to implement the Task Force's recommendations for Child Tax Credit equality for Puerto Rican workers, restoring the tax deduction for domestic company manufacturing in Puerto Rico and the higher amounts of grants of the Federal tax on rum, measures to help small business in the island.

I hope that you will also support legislation on other matters that the Task Force recommended and that I will be introducing. These include: extending tax incentives for investment in underdeveloped communities in the States, the refundable portion of the Earned Income Tax Credit, and Supplemental Security Income.

Let me conclude, however, by stating the obvious. While we are fighting to enact into law the Task Force recommendations that require legislative action, the fact is none of this would be necessary if Puerto Rico were a State. The sad reality is that Puerto Rico's outdated, unequal, and undignified status as a territory is the root cause of most of the islands' socio-economic problems.

In short, Puerto Rico's territory status is the real problem, and the problem will not go away by ignoring it. The Task Force recommendations that we are working so hard to implement are good and important ones. They are needed and would help the Island. . . but they would not result in the economic growth that Puerto Rico needs. In my view, they constitute a starting point on the further benefits that will come with equality within the Nation. The time has come to act decisively to end years of improvisation and implement sustainable, pro-growth economic policies that are based upon the bedrock principles of civic equality and political empowerment. The time has come to treat the U.S. citizens of Puerto Rico as equals. Only then will our islands be able to fulfill their infinite potential.