City & State November 4, 2015 - El Camino A SOMOS by City & State

November 4, 2015

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FROM THE EDITOR’S DESK

M O S Gerson Borrero Editor-at-Large

6..... AS PUERTO RICO GOES, SO GOES THE NATION (AND NEW YORK) by Marcos Crespo

8..... WHAT NEW YORK CAN LEARN FROM PUERTO RICO’S VOTER TURNOUT by Jon Lentz

10.... IMMIGRANTS’ IMPACT ON NEW YORK’S ECONOMY by Thomas DiNapoli

12.... WE CAN’T WAIT FOR CHAOS TO AID PUERTO RICO by Scott Stringer

14.... PUERTO RICO’S POLITICAL WISH LIST COMES WITH A CATCH by Wilda Rodríguez

18.... WHEN PUERTO RICO SUCCEEDS, WE ALL SUCCEED by Carl Heastie

20... IT’S TIME FOR LATINO VOICES TO LEAD THE CONVERSATION by Melissa Mark-Viverito

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22.... THE ROOTS OF THE FISCAL CRISIS by Cate Long

28.... ADVOCATES SAY PUERTO RICO HAS IGNORED THE THREAT OF CLIMATE CHANGE by José E. Maldonado

30.... NEW YORK TO LEND A HELPING HAND WITH MEDICAID WAIVER REQUEST by José E. Maldonado

32.... PUERTO RICO’S HEALTH CARE QUANDARY by José E. Maldonado

34.... INTERVIEWS WITH SAN JUAN MAYOR CARMEN YULÍN CRUZ, PUERTO RICO SENATE PRESIDENT EDUARDO BHATIA, FORMER PUERTO RICO SECRETARY OF STATE KENNETH MCCLINTOCK 36.... CONFERENCE SCHEDULE 38.... MAP OF THE CONFERENCE

city & state — November 4, 2015

THE ROAD TO SOMOS SPECIAL ISSUE November 4, 2015

There are times in the news business when the news finds the reporter. It’s happened to journalists who go on a vacation, just as a hurricane hits the very place they went to get away from deadlines and filings. All of a sudden they’re literally in the middle of a storm. Their reporting instincts take over. The calls to and from their editor take over and rest and relaxation go by the wayside. It’s the business we’ve chosen. Last year, when City & State decided to cover the annual Somos El Futuro Fall Conference in San Juan, the motivation wasn’t based on which local político we could get photos of drunk on the beach or being rowdy in the hotel casino. We looked beyond the event’s junket reputation – we weren’t interested in the kind of reporting that drives the tabloids. Our extensive coverage on the Road to Somos via our weekly email blast, including over 100 stories, over 30 TV interviews, and op-eds from the city and state’s top office holders and leading activists and critics, were all part of telling the story and making sense of why Somos matters. Little did we know that in our reporting we were at the initial stages of what would within months become a nightmare for Puerto Rico. Now the island faces a unique debt crisis that no one seems to have a solution for. The challenge isn’t just for the current government of the commonwealth; it’s a problem that needs congressional action and will probably require presidential intervention. In this special issue we have included in-depth reports that put this crisis into perspective. Veteran island-based journalist José Maldonado writes about New York’s efforts to help Puerto Rico deal with its health care costs, while also detailing the historic struggles Puerto Rico has faced. Our Senior Correspondent Jon Lentz writes about what New York can learn from the island’s high voter turnout, a phenomenon that sometimes leads to political instability. And we also feature insights from seasoned journalists and prominent politicians that will help inform the debate at this year’s conference. This special issue has placed us in the middle of the financial storm that has engulfed Puerto Rico – a storm that is of great concern to its diaspora and all who know that this island can’t be left to the whims of quick financial solutions. Puerto Rico matters!

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AS PUERTO RICO GOES, SO GOES THE NATION (AND NEW YORK)

MARCOS CRESPO

city & state — November 4, 2015

Both Puerto Rico and Puerto Ricans are intertwined with the well-being of New York state and our nation. The complex relationship began with a payment to Spain in 1898 for a sum of $570 million in 2015 dollars. The island’s residents became U.S. citizens in 1917 and Puerto Rico became a commonwealth of the United States in 1952. Now, over 116 years after the U.S. Congress ratified the Treaty of Paris, which handed over the once Spanish-controlled territory, the complex relationship between Puerto Rico and the United States continues. Facing a daunting set of economic problems, the island finds itself using more than 70 percent of its economic output to service a debt of over $72 billion. Simultaneously, migration to the U.S. mainland has accelerated, further shrinking its tax base. Puerto Rico’s population has fallen 4.7 percent since 2010 to 3.5 million, a period when the overall U.S. population grew 3 percent. If current rates continue, Puerto Rico will lose over 250,000 residents this decade alone, and its population is set to decline to 3 million by 2050. To put this problem in perspective, California has a population of 35 million and Puerto Rico has

accumulated a debt nearly half as large as that state. Combine this problem with years of low federal reimbursement rates for health care services to the island’s indigent population. In both Mississippi and Puerto Rico, over 52 percent of children are living in poverty, and the island has the highest overall poverty rate in the nation at 44.2 percent. Yet 83 percent of Mississippi’s health care costs for the indigent are covered by Washington, while Puerto Rico only receives 55 percent in assistance. This formula is leading to the closing of health care facilities and the rationing of health care. This has led many to flee the island to obtain health care services on the mainland. New York state is home to 1 million Puerto Ricans and is a prime destination for Puerto Ricans seeking medical care in our hospital

system. The impact and strain on New York’s health care system and funding mechanisms are and will continue to be significant unless the federal government moves to equalize its health care reimbursement rates for island residents. The current debt crisis and health care quandary the island faces was enabled by policies originating in Washington. So it is clear that the solutions also rest with action by Washington. However, like on so many other issues important to Americans, Washington has failed to act diligently and with resolve. Congress enabled this borrowing spree by granting Puerto Rico the unique power to issue bonds that are exempt from federal, state or local taxes. The island’s health care crisis was created by federal bureaucrats who decided to underfund the island’s health

care system for decades. Puerto Rico has taken austerity measures to deal with the economic policies dictated by Washington, leading to mass protests and more pain for our fellow Americans. As the members of the New York state Assembly’s Puerto Rican/Hispanic Task Force travel to the island for its 28th annual fall conference in early November, this situation is a priority issue which leads the list of important conversations we will be having on a wide range of topics that will have a direct impact on Puerto Rico, New York and our nation. In our view, as the health and well-being of Puerto Rico goes, so goes the health and well-being of the mainland. Assemblyman Marcos Crespo is chairman of the Puerto Rican/Hispanic Task Force. cit yandstateny.com

ELECTION LESSONS

WHAT NEW YORK CAN LEARN FROM PUERTO RICO’S HIGH VOTER TURNOUT By JON LENTZ

city & state — November 4, 2015

VOTER TURNOUT IN PUERTO RICO AND THE U.S. (2012) 90% 80% 70% 60% 50% 40%

52.8%

10%

53.5%

20%

58.6%

30%

78.19%

Voter participation in the United States has stumbled along around 60 percent for years, consistently trailing other Western democracies. In New York, which has one of the country’s worst cases of voter apathy, it’s only getting worse. Total votes fell below 1.1 million in the 2013 mayoral race in New York City, which has a population of 8.4 million. The 2014 elections in the state stood out for a lackluster turnout of 28.8 percent, with Gov. Andrew Cuomo winning a second term with the lowest gubernatorial vote total since Franklin Delano Roosevelt in 1930. The smattering of races across the state this fall, many of them lopsided or uncontested affairs, were never likely to spur a rebound. Facing such a dismal track record, some officials and experts have looked to the unlikely example of a neighbor that has long outperformed the United States: Puerto Rico. “In Puerto Rico, where I grew up, the voter participation rates are definitely well above 70 percent,” New York City Council Speaker Melissa Mark-Viverito said during an interview with City & State last month. “So what is it that other places are doing that elicit larger responses?” The speaker offered one possibility: “One of the first things that obviously happens in Puerto Rico that we don’t do in the United States and not here in New York is the day is given to vote.” Election Day is a national holiday in the commonwealth, which presumably makes it easier for residents to get to the polls – and promotes the celebratory fervor that traditionally accompanies voting on the island. “There is a day off, which really centers on the importance of voting,” Mark-Viverito said. “It underscores the importance of people taking that

Puerto Rico

United States*

New York*

Puerto Ricans in the U.S.

* Voter eligible population Sources: United States Election Project, Pew Research Center

moment to do their civic duty. And also there’s a whole culture around voting and elections in general on the island.” Puerto Rico also puts much more of an emphasis on registering voters, rich and poor alike, offering substantial funding to parties for registration efforts. In New York and elsewhere in the U.S., outreach is largely focused on winning over reliable voters, not expanding the voter rolls. “Even coming from Latino elected officials, they suffer from the same incentives or disincentives to mobilize or not mobilize larger segments of

the electorate,” said Carlos VargasRamos, a researcher at Hunter College’s Center for Puerto Rican Studies. “As you know, the system of running elections in the United States is very expensive. By and large, it falls on individual candidates as opposed to the institutions that are the political parties or the political clubs.” The commonwealth also has only one major election every four years, making it easier for voters to remember when to show up. New York, in contrast, has a jumble of local, state and national races from year to year, often with separate primary dates, as

well as the occasional special election. Some differences, however, would not be easily adopted in the mainland United States. One distinctive aspect of the island’s elections is that they are far more competitive, especially compared with the cakewalks many Democratic candidates enjoy in leftleaning New York City. Even more unique is that the island’s elections are intertwined with the question of its status as a commonwealth under U.S. control and whether to stay the course or try to become the 51st state, or even declare independence. “The three major political parties cit yandstateny.com

each represent major status options,” noted Angelo Falcón, co-founder and president of the National Institute for Latino Policy. “Right now you have the commonwealth party that’s in power, they’re going to be opposed by the statehood party, and there’s the independence party, which is a very minor party. So what happens is that somehow, also, another motivating factor is that every time there’s an election, there’s a whole discussion about the future status of this island. It’s kind of like the destiny of the

island is at stake.” Other factors behind the higher turnout in Puerto Rico are seen unfavorably, particularly the spoils system in which the ruling party controls a large number of patronage jobs. Reformers in New York long ago reduced patronage through various reforms, such as a strong civil service system. The island is also plagued by corruption, with such widespread abuse of power that Falcón said it “makes Albany look like an ethics wonderland.”

“When there’s a change in government, in the political party, it has major changes in terms of personnel, even affecting who runs the university,” Falcón said. “There’s a joke in Puerto Rico historically that if your political party lost power, you’re going to have trouble getting an ambulance because the ambulance driver is probably going to be from the other party – and they might not bother picking you up. That patronage really makes the stakes in the political process real.”

The side-by-side comparison of Puerto Rico and New York highlights another outcome that often surprises Americans who have an idealized view of the virtues of the democratic system in the U.S.: The many Puerto Ricans that have relocated to New York have among the lowest voting rates in the state. “The rates of participation in Puerto Rico continue to be much higher in Puerto Rico than in the United States for the population as a whole,” VargasRamos said, “and certainly for Puerto Ricans in the United States.”

(Political corruption in Puerto Rico) makes Albany look like an ethics wonderland. -Angelo Falcón, co-founder and president of the National Institute for Latino Policy

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IMMIGRANTS’ IMPACT ON NEW YORK’S ECONOMY

For nearly two decades, the Hispanic and Latino population has grown in New York and so too has their, and Hispanic immigrants’, impact on our state’s economy. Although the vast majority of this population is centered in New York City and the surrounding counties of Nassau, Suffolk and Westchester, the influence of Hispanic New Yorkers is increasing across the state. Between 1990 and 2014, the Hispanic and Latino population in New York grew by 66 percent, reaching nearly 3.7 million. Nearly half of Hispanic New Yorkers, including Latinos, were born here and more than three-quarters are United States citizens by birth or naturalization. Coinciding with this increase, the number of Hispanic-owned businesses in New York has more than doubled between 1997 and 2012, from 104,000 to nearly 268,000. These Hispanicowned businesses account for 13 percent of all businesses in New York and grew at a rate faster than for all businesses from 2007 to 2012. Immigrants currently account for 43 percent of New York City’s workforce and nearly one-third of the city’s economic output. These individuals have a strong presence in a

wide range of occupations. Immigrants make up the majority of workers in the construction, personal services, leisure and hospitality, and manufacturing industries. Clearly, immigrants, including Hispanic immigrants, are playing an increasingly important role in the New York economy. However, there are too many that are still on the outside of educational and economic opportunity looking in. If we want to build a New York state that truly offers opportunity to all, we need to address key community issues – lifting children and families up in order to open the door to better lives. It’s no secret that increased educational attainment provides workers with the opportunity to obtain higher-skilled and better-paying jobs. Earning a college degree remains the best way to overcome many of the socio-economic issues plaguing our immigrant populations. While the share of Hispanics and Latinos with high school diplomas is approaching the statewide average, the share of those aged 25 to 35 with a bachelor’s degree or higher is hovering around 19 percent – less than half of the rate for the rest of the population.

assistance to undocumented students. We can help New York remain a destination of opportunity by expanding our Tuition Assistance Program and extending assistance to undocumented students by passing the New York state Dream Act. A highly skilled and educated workforce is vital for our state to continue to compete and succeed in the global economy. For New York and America to prosper, we need Hispanic immigrants and Puerto Ricans as full partners in the economy, playing key roles in finance, in education, in medicine and in technology. Making college more affordable for everyone makes economic sense. To build a stronger New York that includes everyone, we must continue to push an inclusive agenda that keeps all of our communities moving forward. In the end, we all benefit from a more skilled workforce and a more diverse New York. Thomas DiNapoli is the New York state comptroller.

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city & state — November 4, 2015

THOMAS DINAPOLI

The financial impact of this discrepancy is stark. The median weekly earnings for those with bachelor’s degrees in 2014 was about $1,100, compared with less than $700 for those with a high school diploma and under $500 for those who didn’t graduate high school. That means the average college graduate makes about $22,000 more every year than the average high school graduate. That’s about $1 million in additional income over a lifetime. It is apparent that we need to open more doors to opportunity – beginning with providing educational opportunity to every Hispanic child, from kindergarten to college, including the children of New York’s undocumented immigrants. New York was one of the first states in the nation to offer in-state tuition rates to undocumented students. We have always been a destination for ambitious and hardworking people in search of opportunity. California, New Mexico, Minnesota, Texas and Washington are already offering financial

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WE CAN’T WAIT FOR CHAOS BEFORE AIDING PUERTO RICO

city & state — November 4, 2015

SCOTT STRINGER It’s fair to ask the Republicans in Congress what exactly they’re waiting for before they consider steps to help our fellow American citizens in the commonwealth of Puerto Rico. Widespread government bond defaults? Massive multi-party litigation over which creditor gets paid first? The government of Puerto Rico having to choose between funding essential services and paying creditors? Potential civil unrest as workers don’t get paid and health and safety is compromised? Unfortunately, all of these scenarios are quite possible if all parties cannot come together to address Puerto Rico’s immediate and long-term needs. In September, the governor of Puerto Rico released a fiscal and economic growth plan prepared by political leaders on the island. Last month, the Obama administration proposed a four-part federal action plan to address the immediate crisis as well as longterm underlying economic stagnation. While reasonable concerns may be raised about aspects of both proposals, they represent serious, thoughtful efforts to resolve problems that have built up over many years. The Obama administration’s plan would bring both new powers and resources to bear on Puerto Rico’s

economic, liquidity and management problems. It would permit the commonwealth and its subdivisions to use the bankruptcy process to restructure debt in an orderly way. It would create a federal oversight board to improve fiscal governance, and strengthen accounting and disclosure capabilities. And the plan would also take steps to address long-standing Medicaid underfunding, while at the same time rewarding work by extending the earned income tax credit to Puerto Rican residents – both measures that will help families and the economy. As a trustee of the New York City pension funds, which have invested in Puerto Rico, I cannot advocate for a change in law that could adversely affect the value of the pension holdings. But ultimately, it is in the best interest of bondholders as well

as the commonwealth to have a clear, orderly process to address Puerto Rico’s grave financial condition. And with the government of Puerto Rico running out of cash, that window may close soon. I know that the federal and Puerto Rican governments continue to explore options to avert a crisis. For example, interposing the federal government in the tax collection process could create a higher-quality revenue stream to deploy in debt restructuring. But the fiscal and economic problems run too deeply to be solved by this tool alone. Other important ideas, such as repealing the Jones Act, or bringing Puerto Ricans under the investor protections of the mainland, as proposed by Rep. Nydia Velázquez through a bill she introduced, would also help to support the long-term recovery of the island’s economy.

When I recently visited Puerto Rico as part of Gov. Andrew Cuomo’s delegation to discuss these pressing economic issues, I was struck by the similarities between the commonwealth and a piece of my own past. As a lifelong New Yorker, I am well-versed in our city’s own history of fiscal distress – and recovery. In the depths of New York City’s fiscal crisis in the 1970s, few could have imagined our vibrant, stable, highly rated municipality of today. But in those dark days, public officials, union and civic leaders and financial institutions came together to provide the short-term financial support and transformative financial management framework that enabled our city’s remarkable comeback. Puerto Rico needs and deserves no less. Scott Stringer is the New York City comptroller.

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PUERTO RICO’S POLITICAL WISH LIST COMES WITH A CATCH

city & state — November 4, 2015

WILDA RODRÍGUEZ As Puerto Rico’s diaspora grows in worth to continental politics, leaders of the island’s two major political parties explore new means to exploit the numbers for their own political advantage. Today, 60 percent of Puerto Ricans live in the continental United States, and by 2020 that number is expected to increase to 66 percent. Most Puerto Ricans are moving to Florida, but some are spreading to other states, including, but not limited to, Ohio, Texas, North Carolina and Rhode Island. 2016 is approaching fast and 5.2 million Puerto Ricans currently residing in the States pose a golden opportunity in a presidential election year. The diaspora is increasingly becoming key to continental elections in swing states such as Florida, and probably in Pennsylvania and Ohio. Not surprisingly, leaders from the Partido Popular Democrático and the Partido Nuevo Progresista have increased their business trips to the States, in an effort to increase their interactions with Puerto Ricans everywhere. Their “business” is to deliver some of the diaspora’s power

to the Democratic and Republican parties. The PPD and the PNP are colonial parties. Political principles and ideology have long been on the back burner for both. What they really contend for every four years in local elections is the power to run the U.S. territory as a business. While their rhetoric includes a lot of references to change and to saving the island’s economy, both parties work to strengthen the colonial establishment. Now they’ve begun recruiting Puerto Ricans in the diaspora to help advance their business efforts, and I am afraid some of my brothers and sisters on the mainland are falling into

this trap. Though I live in Puerto Rico today, I’ve been a member of the diaspora several times. I know what it is to yearn for our people to be acknowledged and prove themselves as the spearhead of our patria before the power of the U.S. government. I have passionately embraced the struggle to ensure that the power and relevance of our diaspora is recognized in U.S. politics. Hence my concern that my compatriots could be used as political pawns. The crisis in Puerto Rico is going from bad to worse by the minute. It’s no longer just an economic one. It’s political: a crisis of a collapsed colonial

status and a colony’s relationship with the metropolis. The so-called Commonwealth of Puerto Rico – el Estado Libre Asociado de Puerto Rico – is imploding. But to acknowledge the political nature of the crisis would necessitate an admission that it’s time for radical political change, and this is simply not a matter the U.S. Congress has any interest in taking on. It’s not a priority for federal, city or state leaders because they belong to U.S. political parties that have long benefited from the American colonial mentality. Here in Puerto Rico, leaders of the PPD and the PNP, while publicly blaming each other for the crisis, work cit yandstateny.com

Internal Revenue Code in the 1990s. (The reversal of Section 936 is widely acknowledged as responsible for most of Puerto Rico’s present financial woes. Not government corruption, fiscal mismanagement or the collapse of the colonial status. Section 936. It was a wonderful assistance and when the U.S. took it back, we got hit hard.) But as Sergio Marxuach, one of Puerto Rico’s top economists, pointed

to negotiate international treaties, no access to emergency financing from multilateral institutions, no monetary policy instruments, limited fiscal policy tools, nominal representation in Congress, and the U.S. Supreme Court has determined it is constitutionally permissible for Congress to discriminate against Puerto Rico in the application of federal programs as long as there exists a rational basis

Watch out! This is a campaign to “fix” the colony as a colony. It will put Puerto Rico in a position to ask for more charity, not rights. out recently, none of the items on the current wish list addresses “the question of whether Puerto Rico has reached the limits of what it can do to improve the quality of life of its people within the constraints imposed by its subordinate political status. Neither a sovereign country nor a state of the union, Puerto Rico has no authority

for doing so.” Let me put this bluntly: The state of permanent limbo is what the two political parties in Puerto Rico want our compatriots in the diaspora to stand behind. Those who choose not to support this list of demands to the American government, the leaders of the PPD and PNP will argue, are

turning their backs on a Puerto Rico in distress. The dilemma is obvious. There is no escaping the mutually conflicting conditions of this predicament. Either you support new assistances for the colony, or a resolution to our political status. To do the former will be portrayed as help from our brothers and sisters in the mainland. To do the latter will be portrayed as an intrusion in local politics from Puerto Ricans who are not directly and on a daily basis affected by them. I am in no position to demand a choice or a standoff from leaders of the Somos conference. Among you, there is a broad spectrum of opinions regarding Puerto Rico’s political situation. Nothing that I write will change that. What I ask is that you at least acknowledge the stumbling block we’re facing. History will not be satisfied with a “yo no sabía” there was a catch. There is a catch. Now you can’t say you didn’t know. Wilda Rodríguez is a journalist. She lived and worked in New York City as news director of WADO Radio, columnist of El Diario/La Prensa and political consultant of 1199-SEIU in the ’80s and the ’90s.

MICHAEL GARETH JOHNSON

city & state — November 4, 2015

together toward a common goal: el Estado Libre Asociado mejorado, an enhanced colonial status. And now they are setting an even more ambitious agenda: to make the diaspora work for the ELA mejorado. They are rallying Puerto Ricans in Florida and New York to ask the U.S. government for parity and equality for Puerto Rico. That is a very convincing plea to people yearning to help their beloved homeland in a time of great distress. But watch out! This is a campaign to “fix” the colony as a colony. It will put Puerto Rico in a position to ask for more charity, not rights. Since 1898, as a non-incorporated territory, Puerto Rico has not had the right to demand anything from the U.S. government. Rather, Puerto Rico has had to rely on goodwill and indulgences from Washington, D.C., to a subordinate nation. Here comes the Catch-22 situation. Puerto Rico is in desperate need of financial assistance. Most Puerto Ricans would take whatever the U.S. government gives, regardless of whether it’s considered a handout. But, as many of our abuelas have wisely warned us, one must be careful what one wishes for. And beware – the wish list currently before Congress and President Barack Obama is just another bid for a permanent state of subordination for Puerto Rico. Here is the wish list for the ELA mejorado: • Equal treatment under federal health programs, such as Medicare, Medicaid and the Affordable Care Act. • Extension of the federal earned income tax credit program to Puerto Ricans living on the island. • Approval of legislation to allow distressed agencies and municipalities in Puerto Rico to file for bankruptcy under Chapter 9 of the U.S. bankruptcy code. • Exemption of Puerto Rico from the Jones Act (coastwise shipping laws which require the use of the most expensive U.S. vessels for trade). • Addition of a new Section 933A to permit U.S.-owned businesses in Puerto Rico to elect to be treated as U.S. domestic corporations. • Enactment of an economic activity tax credit for U.S. investment in Puerto Rico. The benefits of these agenda items are clear. If Congress delivers on any of these, we will be better off for a couple of decades or until U.S. interests decide to reverse any of the assistances as they did with former Section 936 of the

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CARL HEASTIE

city & state — November 4, 2015

The state Assembly’s Democratic majority has a long-standing commitment to improving families’ quality of life and this year we were proud to renew that commitment by taking a firm stand in putting the needs of working families first. That means making sure everyone – regardless of background – has the opportunity to achieve the social and economic success they deserve. Unfortunately, too many families here and in Puerto Rico – a territory our state relies on – are still struggling to make ends meet. Throughout history, Puerto Ricans have defended our nation’s freedom and are proven leaders in the fight to end discrimination against Latinos. Our vibrant and growing Puerto Rican and Hispanic communities deserve a strong and influential voice in the Legislature, and we’ve been working to ensure their concerns are addressed. With nearly 1 in 10 New York City residents claiming roots on the island, it is also important to recognize the symbiotic relationship between our state and Puerto Rico itself – when its residents succeed, we succeed. Earlier this year, I traveled to Puerto Rico as part of a delegation put together by Gov. Andrew Cuomo to examine ways New York can help the Puerto Rican government deal with

its ongoing health care and economic crises. We’ve made significant progress in fighting for New York’s families and building a brighter future for our state, but now the island and its residents need our help more than ever. More than 3.5 million American citizens are in danger of sinking into a sea of fiscal uncertainty if the federal government does not act immediately. President Barack Obama’s recent proposal to help Puerto Rico address its debt crisis is a welcome step forward, and the state Assembly majority stands ready to help in whatever way necessary. Nearly 68 percent of the residents of Puerto Rico receive health care benefits through Medicare, Medicare Advantage or Medicaid. However, while Puerto Rican citizens pay the same Social Security and Medicare

taxes as the rest of us, federal funding for their Medicare program is significantly lower than for the 50 states. This situation is completely unacceptable, and it’s time for the federal government to take serious action to ensure every American citizen living in Puerto Rico receives affordable, high-quality health care. Sadly, the health care crisis is only one facet of the larger economic decline facing Puerto Rico. Despite measures taken by Gov. Alejandro García Padilla and his advisers to prevent further crises, the island is drowning in a $72 billion debt. Since Puerto Rico – like many other American territories – is not incorporated into the United States, only Congress can authorize the remedies needed by the residents of the island. We’re thankful now that

President Obama is redoubling efforts to find a way forward for the people of Puerto Rico. As speaker, I assure you that we will continue the fight for our families. I am proud that New York has stepped up to the plate to help government officials address economic and health care issues through some much-needed initiatives, but there’s still more to be done. Helping the people of Puerto Rico and urging federal involvement will remain top priorities for the people’s house of the Legislature. By working together and celebrating our state’s rich diversity, we can all help to build a brighter future for New York state and Puerto Rico. Carl Heastie is the speaker of the state Assembly.

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city & state — October 26, 2015

The Must-Read Morning Roundup of New York Politics and Government

MELISSA MARK-VIVERITO

This week, lawmakers, advocates and New Yorkers from across the state will gather in San Juan for Somos El Futuro 2015. This year’s conference coincides with a critical juncture in our nation’s history, as candidates for the highest office in the country outline their solutions for the most pressing issues of our time. It is more important than ever that New Yorkers harness Somos as an opportunity to set a forward-thinking, substantive agenda that is heard in the

national conversation – and Latino voices are leading the charge. Our stories, perspectives and experiences can and will play a pivotal role in setting our country’s course. From immigration reform to health care access to solving the crisis in Puerto Rico, we must rise to the challenge and make our voices heard. The severity of Puerto Rico’s $72 billion debt crisis cannot be overstated, and its implications are dire for millions of Puerto Ricans both on the island and

here in the United States. Shortsighted and irresponsible lending, unfair trade practices, and the systemic stifling of the Puerto Rican economy have resulted in an unsustainable fiscal situation now verging on the brink of collapse. Already we have seen progress; last week, President Barack Obama announced a proposal to help Puerto Rico restructure its debt. However, Congress must work with the administration and act swiftly to ensure much-needed economic protections

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WILLIAM ALATRISTE FOR THE NEW YORK CITY COUNCIL

IT’S TIME FOR LATINO VOICES TO LEAD THE CONVERSATION

and support for Puerto Rico. The United States has a duty and responsibility to support its citizens on the island and allow Puerto Rico to declare bankruptcy and rebuild. New York is home to one of the highest populations of Puerto Ricans in the United States, and we have an opportunity at Somos to let our federal government (and presidential candidates) know that the Puerto Rican debt crisis is a priority. Puerto Ricans are United States citizens and deserve to be treated equally and fairly. Yet for thousands, these rights have proven elusive. Puerto Ricans buy into our federal health care system and pay the same Medicare taxes, but the island receives less health care funding than any of the 50 states. That means 3.5 million Puerto Ricans – 3.5 million U.S. citizens – are receiving second-class support. It’s time for that to change. It’s time for Washington to provide equal health care funding for Puerto Rican families. Election Day 2016 is more than a year away, but presidential campaign season is in full swing. Already we

have seen Republican candidates employ dangerous, discriminatory rhetoric meant to divide the American people and malign hardworking immigrants who contribute so much to our communities and our country. The ease with which GOP candidates weave hate and untruths into their already backward platforms indicates their lack of respect for the beautiful diversity of the United States. Somos is a crucial reminder of that diversity, a snapshot of the many different colors, languages and stories that make New York home. It is a reminder that we cannot tolerate language that degrades and dehumanizes millions of immigrant Americans. Somos is a testament to coalition building, to cooperation, to the power inherent in the communities we represent to make meaningful change. It is time for Latinos to make our voices heard. Somos El Futuro – this year, those words have never been truer. Melissa Mark-Viverito is the New York City Council speaker.

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city & state — November 4, 2015

Brett Morash Services for the UnderServed

DECADES OF DEBT THE ROOTS OF PUERTO RICO’S FISCAL CRISIS By CATE LONG

U.S. NATIONAL ARCHIVES

city & state — November 4, 2015

Shanties crowd along the Martín Peña Canal in San Juan in 1973. Though Puerto Rico’s debt has been climbing for decades, it began to skyrocket in 2006. The drama surrounding Puerto Rico this year has been centered on the debt crisis, with politicians on the island and in the mainland United States calling for immediate action. While concern has escalated quickly, the fundamental problems that provoked the crisis have been unaddressed for decades – from the exodus of the diaspora and overspending by Puerto Rican officials to the island’s troubles with tax collection. These factors have led to the standoff the island finds itself in now, in which some of the debt has become untenable and action, in some form, by the U.S. government appears inevitable. With the debate ramping up, it’s important

to understand how Puerto Rico got to this place. The problems for Puerto Rico, a semi- autonomous territory of the United States, began accelerating in 2006. A fiscal crisis hit the island when a preferential tax credit allowed by Congress for mainland U.S. corporations that manufactured on the island expired. Since 2006 the island has massively ramped up debt issuance in the municipal bond market to make up for low tax collections and has done little to reduce government spending. Puerto Rico politicians of both parties have put off the hard choices of matching spending to revenues, and now the island is bankrupt.

Adding to the fiscal crisis has been a substantial out-migration to the mainland. The island had seen enormous population growth since it was acquired by the U.S. in 1898, but since 2005, many Puerto Ricans, who are full U.S. citizens and can relocate to the mainland without restrictions, have chosen to move to the U.S. This out-migration has hurt the Puerto Rico’s tax revenue, furthering the debt crisis. ®®® PUERTO RICO’S CENTRAL GOVERNMENT The U.S. Congress approved Puerto Rico’s Constitution in 1952 and created a central government with three branches: the executive branch

led by an elected governor, a bicameral legislature and the judiciary. In doing this, it also gave Puerto Rico broad power over its own affairs, which would later allow the debt crisis to intensify unchecked. Unlike mainland states, Puerto Rico’s central government is responsible for almost all social services, including primary and secondary education, police services, corrections and the island’s electric and water utilities. The island currently receives substantial funds from the federal government. This includes over $7 billion in direct grants to the island’s central government and municipalities cit yandstateny.com

Puerto Rico has historically had a significant problem with tax compliance ... the government collects about 56 percent of taxes due on average. and $17 billion in transfer payments to individuals via Medicare, Social Security and other federal programs. Federal funds account for approximately 24 percent ($24 billion) of the island’s gross domestic product. While the U.S. Congress is responsible for oversight of the funds, it has not been active in earmarking spending outside of specific federal programs. Puerto Rico’s central government has a consolidated budget of $27 billion, funded through general revenue from tax collections, federal funds and public enterprise revenue (water and electricity fees). ®®® PUERTO RICO TAX COLLECTIONS Like mainland states, Puerto Rico has authority to levy and collect taxes. Unlike mainland states, Puerto Rico

residents and businesses are exempt from paying federal income taxes on income earned on the island, but citizens do pay Social Security and Medicare taxes. Puerto Rico has substantially lower tax rates and collects fewer taxes than any Organization for Economic Cooperation and Development countries, according to a report from KPMG commissioned by the Puerto Rico Treasury. In addition to lower tax rates, Puerto Rico has historically had a significant problem with tax compliance. KPMG estimated that the government collects about 56 percent of taxes due on average, and recommended making an effort to collect 75 percent of taxes due, more in line with other taxing authorities.

This persistent shortfall in tax compliance has substantially contributed to Puerto Rico’s fiscal problems as it continuously issued debt over several decades rather than increasing tax collections. U.S. Sen. Orrin Hatch from Utah has raised the issue of the island being a tax haven for U.S. citizens to shelter their personal and corporate income through Puerto Rico’s Acts 20 and 22. It’s likely that Congress will examine this issue more closely as it devises a framework to assist Puerto Rico. The largest source of central government revenue is the individual income tax followed by Act 154 revenues, which U.S. companies operating in Puerto Rico pay to the central government. Act 154 taxes, paid mostly by 28 U.S. corporations, are credited by the U.S. Treasury when these corporations pay federal taxes. Act 154 taxes are considered a form of backdoor bailout by the federal government for Puerto Rico, because these corporate income taxes should be paid to the U.S. Treasury rather than the Puerto Rico Treasury. ®®® CENTRAL GOVERNMENT SPENDING Puerto Rico’s central government

general fund allocates money to education, health care, pensions, police, corrections, debt service and subsidies to the University of Puerto Rico. Many of these spending categories also receive federal funds. Puerto Rico has made some reductions in central government spending in the last fiscal year but has not materially reduced the number of employees working for the government, the major cost in the central government budget. This drives up the island’s deficit. Public school enrollment, for example, dropped 8 percent this year but the Department of Education has not reduced its number of teachers and recently announced that it would be moving 800 employees from the central education office into schools rather than downsizing. At an average 12.9 students per classroom, Puerto Rico has the lowest student-to-teacher ratio in America, versus a national average of 16. Unfortunately, test scores in Puerto Rico rank far below the worst mainland state. Several Puerto Rican legislators recently proposed early retirement for 5,000 teachers but it is unclear how this would be funded, as the island’s pension systems have few assets.

TAXES AS A PERCENT OF GDP: PUERTO RICO AND OECD COUNTRIES (2011) Puerto Rico United States United Kingdom Turkey Switzerland Sweden Spain Slovenia Slovak Republic Portugal Poland Norway New Zealand Netherlands Mexico Luxembourg Korea Japan Italy Israel Ireland Iceland Hungary Greece Germany France Finland Estonia Denmark Czech Republic Chile Canada Belgium Austria Australia

Corporate income Social Security contributions Payroll/workforce Property

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*Source: KPMG 2014 report for Puerto Rico Treasury

city & state — November 4, 2015

Personal income

PUERTO RICO GENERAL FUND REVENUES BY SOURCE (FISCAL YEAR 2015)

DOLLARS IN MILLIONS

$ 2,400

$ 1,800

$ 1,200

$ 600

Individual income

Act 154

Corporate income

Nonresident withholdings

Sales and use taxes

Non-tax revenues

Motor vehicles

Alcohol taxes

External source revenues

Tobacco products

Other taxes/fees

Tax on dividends

*Source: Hacienda

Puerto Rico Justice Department has requested the U.S. Supreme Court hear the case to reverse the Appeals Court decision. Whether the Supreme Court will take the case will be known in the next two months. Puerto Rico’s debt was issued in the U.S. municipal market and is governed by rules established by the Securities and Exchange Commission and the Municipal Securities Rulemaking

lowest prices in the debt structure. The largest part of the appropriated debt was issued by the Puerto Rico Government Development Bank. The GDB is the fiscal agent (or bank) for the Puerto Rico government and has been insolvent for several years. The GDB gave loans to other parts of the Puerto Rico government, some of which cannot be repaid, which means the GDB cannot repay the money it borrowed and is bankrupt. Recent Puerto Rico news reports suggest that the island’s advisers are negotiating a 15 percent haircut on GDB debt and extending principal and interest payments for five years. This action alone would free up substantial cash for the government and provide sufficient liquidity to repay most other classes of legally secure debt (COFINA and general obligation) on schedule. Recent negotiations between the GDB and some hedge funds broke down recently. Defaulting on GDB and other appropriated debt would leave cash available to pay more legally secure debt, including constitutionally guaranteed general obligation and sales tax (COFINA) bonds which have substantial legal protections. A restructuring of GDB debt would solve the most pressing and immediate liquidity problems for Puerto Rico. ®®® THE FEDERAL GOVERNMENT AND PUERTO RICO The U.S. Treasury has been providing the Puerto Rico government

PUERTO RICO CENTRAL GOVERNMENT DEBT $40,000

DOLLARS IN MILLIONS

city & state — November 4, 2015

®® ® PUERTO RICO’S DEBT Puerto Rico has 17 types of debt with varying sources of repayment and legal security. There is currently $72 billion of debt outstanding, or approximately 70 percent of the GDP, which is generally considered sustainable. The Puerto Rico government nevertheless has a problem servicing the debt because it refuses to downsize the government or collect more tax revenue. Puerto Rico debt that is repaid by the central government (excluding the electric utility PREPA and water utility PRASA) has exploded since 2000. Puerto Rico’s constitution limits how much debt can be issued, so other types of debt were developed to circumvent those limitations. These debt types are classified as sales tax debt (COFINA), non- tax-supported debt, and appropriated debt, which requires the Puerto Rico Legislature to specifically allocate funds for debt repayment from the general fund. Meanwhile, Puerto Rico has no legal framework to force bondholders to take reduced repayment for debt (known as haircuts). Last summer the Legislature passed legislation to create a framework for restructuring its public enterprise debt but this was quickly and successfully overturned by bondholders in federal court. The government appealed this decision and was struck down again. Now the

Board. All bond documents are in English. This is a cause for concern, since the majority of Puerto Ricans speak only Spanish, so even if they wanted to learn more about the island’s debt they would have to have the documents translated. ®®® GOVERNMENT LIQUIDITY AND ABILITY TO REPAY Through its advisers, the Puerto Rico government has made conflicting statements about its cash liquidity and ability to make debt payments this fiscal year. Sales tax revenues have been increasing and the Legislature created numerous reserves that can be allocated to service debt if necessary. Large debt payments due on Dec. 1 and Jan. 1 will likely be challenging for the government. This liquidity squeeze will likely be used to attempt to force losses on bondholders. Appropriated debt has the weakest security of the debt types and bondholders essentially have no recourse to force repayment. The Legislature did not appropriate funds for Public Finance Corporation debt in the fiscal year 2016 budget and the government defaulted on this debt on Aug. 1. All other 16 classes of Puerto Rico debt has been repaid on time to this point. Puerto Rico debt service for fiscal year 2016 includes $1.6 billion of appropriated debt that should be defaulted on if Puerto Rico runs out of cash. The legal security on appropriated debt is weak and the bonds trade at the

$30,000

$20,000

$10,000

$0 1975 APPROPRIATED DEBT

1985 NON-TAX-SUPPORTED DEBT

1995 COFINA (SALES TAX DEBT)

2005

2015

CONSTITUTIONAL DEBT

*Source: Puerto Rico Clearinghouse

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city & state — June 15, 2015

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board. Bondholders generally think this would not be effective in correcting revenue and spending problems. Members of the local board would be appointed by the governor. • The issuance of a “super bond” by Puerto Rico to aggregate many debt types into one series of bonds. The U.S. Treasury would be responsible for collecting revenue to pay bondholders. (This proposal has been leaked to the media but no public official has endorsed it on the record yet.)

Puerto Rico’s citizens are poor by mainland standards but by Caribbean standards rank only behind the Bahamas in per-capita income ...

PUERTO RICO DEBT SERVICE (FISCAL YEAR 2016)

$654 DOLLARS IN MILLIONS

“technical assistance” for over a year. This assistance includes lobbying Congress for the extension of Chapter 9 of the federal bankruptcy code to Puerto Rico, help procuring federal grants and the assignment of two former Lazard Ltd. investment bankers to assist with debt restructuring. The U.S. Congress, led by Sen. Orrin Hatch and Rep. Fred Upton, has been questioning problems of substantial fraud in Puerto Rico’s use of Medicare funds since October 2014.

$1,602 $1,127 Appropriated

$1,536

Revenue Constitutional COFINA

*Source: Puerto Rico Clearinghouse

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• A federal loan guarantee. (Puerto Rico Resident Commissioner Pedro Pierluisi’s legislation H.R. 3725 is currently unlikely to gain traction.) • The extension of Chapter 9 bankruptcy protection to Puerto Rico via H.R. 870, which has substantial support from Democrats but almost none from the Republicans who control Congress. • The repeal or amendment of the Jones Act, which restricts shipping to Puerto Rico to U.S.-flagged and -crewed vessels (which appears to have some support among Republicans in Congress). • The codification of Act 154 tax credibility by the U.S. Treasury or Congress. (A Puerto Rico official has

claimed that the U.S. Treasury will be extending this tax credibility, but the Treasury has not confirmed.) • Increased funds (parity) for Medicare and Medicaid. (This issue is a wild card, currently with minimal congressional support.) ®®® PUERTO RICO’S CHALLENGES Congressional action can only do so much to help Puerto Rico pull itself out of the debt crisis because the island faces many challenges that make it less appealing for the types of privatesector investment needed to bolster the economy. Puerto Rico competes with other Caribbean islands for foreign direct investment and is outranked by Costa Rica and Panama as prime destinations for investors. It’s likely that Puerto Rico will continue to lag as Cuba attracts new investment and the island’s fiscal and political issues drag on. Puerto Rico’s citizens are poor by mainland standards but by Caribbean standards rank only behind the Bahamas in per-capita income, according to the World Bank, making the island unattractive to many businesses looking to locate in the region. Puerto Rico has exceptionally high crime rates due in large part to illegal drug transport through the island from Central and South American countries. As Mexico cracks down on illegal drug transport, much of that traffic has shifted to Puerto Rico. This drug trafficking also inflates the underground, untaxed economy.

The Puerto Rico public school system has the lowest test scores in America and is not preparing students for the global competition they will face. Puerto Rico Senate President Eduardo Bhatia is spearheading education reform as a critical component of the push to reform public services. Bhatia’s efforts are a critical element of Puerto Rico’s longterm recovery. In 2016, Puerto Rico will hold its general election and the winners will face the historic challenge of rebuilding government institutions that have been operating in outdated and inefficient ways. With its low property prices, beautiful beaches and excellent year- round weather, Puerto Rico could be a very attractive destination for U.S. and Spanish retirees. But the government must be made stable and efficient at providing services to attract new residents. The U.S. Congress has given Puerto Rico wide latitude to conduct its affairs and the island was unable to avoid a crisis. The next several years will determine whether Puerto Rico is able to stabilize its finances and government. And in turn, Congress will need to rethink how Puerto Rico is administered and whether it needs more oversight from the federal government. Cate Long is a principal of Puerto Rico Clearinghouse, a research service for Puerto Rico bondholders, and a former reporter for Reuters.

city & state — November 4, 2015

Congress has recently held several hearings on Puerto Rico but members have stated that Puerto Rico has not been forthcoming about its financial condition, so Congress is currently unwilling to act. Puerto Rico has not filed audited financials since June 30, 2013. Current proposals for Puerto Rico include: • The establishment of a federal control board to oversee Puerto Rico government spending and revenues. (No federal legislation has been filed.) • The establishment of a local control board to oversee spending. This proposal may have constitutional issues since Puerto Rico’s legislative powers cannot be given over to an appointed

PUERTO RICO’S OTHER THREAT

ADVOCATES SAY GOVERNMENT HAS IGNORED THE DANGERS POSED BY CLIMATE CHANGE By JOSÉ E. MALDONADO

city & state — November 4, 2015

As a small island in the middle of the Caribbean, Puerto Rico is one of the most vulnerable places in the world to the negative impacts of climate change, and is already experiencing coastal erosion, coral bleaching, record high temperatures and intense cycles of rain and drought. Despite years of warnings from scientists and experts that this would happen, the Puerto Rican government has been slow to act and hasn’t been proactive in preparing for these challenges. Now, in the middle of a historic financial crisis and under the burden of $72 billion in public debt, Puerto Rico must find ways to protect its resources and infrastructure from rising and warming seas and stronger hurricanes and storms. “I am extremely concerned about Puerto Rico’s lack of preparedness for dealing with climate change,” said Judith Enck, director of the Environmental Protection Agency’s Region 2, which includes the island territory. “We’re going to see more violent weather than we’ve seen in the past because of climate change, and like many states and cities around the country, Puerto Rico’s just not ready.” Communities in coastal towns and in low-lying areas are particularly vulnerable to severe weather and a rising sea level that threatens the water supply, the ecosystems and existing infrastructure, Enck explained. Climate change is likely to affect tourism, agriculture and fishing activities, which many Puerto Ricans depend on to make a living. “We have rainfall coming down in larger quantities in shorter periods of time, and although Puerto Rico is going through a serious drought right now, there are rain situations that are overwhelming the sewer system in San Juan and other communities,

so the island has a long way to go on the general issue of resiliency,” said Enck, adding the island also needs to reduce carbon pollution from fossil fuel emissions from power plants and the transportation system. The most recent studies suggest Puerto Rico will go through a desertification process in the coming years, meaning there will be less rainfall and modifications in the strength and location of rain events. This will require modification in terms of agriculture and affect ecosystems and wildlife. “Some of our most important and beloved natural resources, from the coquí frog to our bioluminescent lagoons, could be dramatically affected by this situation,” said meteorologist Ada Monzón. Climate projections for extreme

events for Puerto Rico show a probable increase in extreme heat days, while cold events are expected to become exceedingly rare, she added. In terms of storms and hurricanes, Monzón said there are no studies that suggest they will be more frequent, “but those that do come our way will be much more intense and we need to prepare accordingly.” The most recent data and studies on the impact of climate change in Puerto Rico and the Caribbean will be presented Nov. 17-18 during an event organized by the EPA and other federal agencies at the Interamerican University Law School in San Juan. ®®® A LACK OF INTEREST Despite its year-round sunny weather, ideal for solar power generation, the island still relies

heavily on fossil fuels to generate more than half of its electricity, and the inability of the Puerto Rico Electric Power Authority to make the shift to renewable sources is just one example of how the government has failed to react to the most serious challenge of our time. According to a bill that would create the Puerto Rico Climate Change Commission, an agency that would oversee the public policy related to this issue, ignoring the effects of climate change would cost the island $2.5 billion a year by 2050 and $5 billion a year by 2100 in hurricane damages and tourism and infrastructure losses. Because of the central government’s lack of interest in addressing this topic, in 2007 a group of researchers, planners, architects, agency representatives and communications cit yandstateny.com

Some of our most important and beloved natural resources, from the coquí frog to our bioluminescent lagoons, could be dramatically affected by this situation. - Ada Monzón, meteorologist

and based on their socioeconomic reality we have made short- and longterm recommendations that can be implemented to minimize the impact of climate change,” Díaz said. “Our goal is that every municipality can perform this same exercise so that we can accelerate the adequate response on a national level.” “Our position is that the effects of climate change are already affecting us and there are situations that need to

be addressed promptly,” Díaz added. “The permits process and the way our public corporations are investing in infrastructure are not taking into account the scientific knowledge we possess. We are planning for the future using information and methods from the past, and that is unacceptable.” José E. Maldonado is editor of Mi Puerto Rico Verde, which covers green and sustainable issues in Puerto Rico.

experts came together to work on said Sen. María de Lourdes Santiago of what would become the Puerto Rico the Puerto Rican Independence Party. Climate Change Council in 2010. Ernesto Díaz, director of the Currently composed of 180 experts, council, explained that the Puerto the council has worked to ensure a Rico Department of Natural and coordinated effort in assessing the Environmental Resources, through risks and effects of coastal hazards and its coastal management program, climate changes and in recommending has already completed its assessment adaptation strategies. of the island’s coastal zones and has “Inexplicably, the Puerto Rican developed specific climate change government has largely ignored the adaptation plans for three high-risk work done by the Puerto Rico Climate municipalities – Culebra, Dorado and Change Council, despite the detailed Rincón – that will serve as the model information the group has generated for the rest of the island’s 75 other about what needs to be done in terms municipalities. of public infrastructure and general “We have evaluated the risks for preparedness for situations that we each Somos City & State 11-2-15 revised 2 PM.pdf 1 11/2/2015 2:44:15of PM these communities in terms know are going to affect us greatly,” of their assets and infrastructure,

CMY

INdustry City: Where jobs and community meet IIndustry City is proud to support Somos el Futuro Industrycity.com cit yandstateny.com

city & state — November 4, 2015

A HELPING HAND

NEW YORK TO ASSIST PUERTO RICO WITH MEDICAID WAIVER REQUEST

city & state — November 4, 2015

JOSÉ E. MALDONADO

By JOSÉ E. MALDONADO

From left, New York Health Commissioner Howard Zucker, Lt. Gov. Kathy Hochul, and state Medicaid Director Jason Helgerson during their trip to Puerto Rico.

In an unprecedented partnership for Puerto Rico, New York will assist in submitting a request to the Centers for Medicare & Medicaid Services for a waiver that would allow the island territory to implement changes that could alleviate its dire financial situation. Officials expect to submit the waiver before the year’s end, an ambitious goal considering it took New York two years to make a similar request as part of its Medicare reform. “We’re going to put together a winning proposal that we can take to Washington to let them see that Puerto Rico should be entitled to get a Medicare waiver, which is how New York was able to get away from the burden it was under,” New York Lt. Gov. Kathy Hochul said. “We can do this, but it’s going to take a creative approach and expertise to get it done, and that’s why we’re here.” The development came as Hochul led a dream team of New York health officials to Puerto Rico last month, and the announcement of the joint effort marked the first time any state or agency has been so involved with

Puerto Rican health authorities to address the issue of Medicare and health in general. During the visit, the New York delegation met with government and legislative officials and toured various medical and health facilities to see firsthand the critical challenges facing the island’s public health care system. “We engaged on a three-day factfinding mission to understand more about the barriers and challenges affecting the system and the community,” Hochul said. “This team helped New York when it faced a similar crisis, and that’s why we come with a sense of optimism, because although the crisis in Puerto Rico is worse than we imagined, we were in that same scenario in our own state not so long ago.” Although Puerto Ricans are U.S. citizens and pay the same amount in Medicare and Social Security taxes, residents of the island receive half the benefits of citizens in the mainland. “This alliance with New York is very important for us, in order to achieve parity for Puerto Rico,” said

Ricardo A. Rivera, executive director of the Puerto Rico Health Insurance Administration. “We need to make Congress see that this disparity has to stop.” The New York delegation, which included state Health Commissioner Howard Zucker, state Medicaid Director Jason Helgerson and Assembly Health Committee Chairman Richard Gottfried, visited four institutions that are representative of the Puerto Rican health system. They started with a tour of a Medicare office in the town of Río Piedras and then headed to the Puerto Rican Medical Center, the largest government-owned medical center on the island. They also visited Med Caribe, a primary care medical group, and APS, a mental health clinic, and met with local legislators. The delegation did not travel outside the metro area, but strengthening facilities in other regions to alleviate the heavy burden on the personnel at the Puerto Rican Medical Center was discussed during the visit. Zucker said he met with medical staff and resident students to learn

about the challenges they’re facing at the Puerto Rico Medical Center, including the exodus of medical staff to the U.S. in search of better work conditions and pay. “We have to find creative ways to keep the doctors here on the island because it’s critically important if we want to move forward on health care for the people of Puerto Rico,” Zucker said. He added that the system needs to move toward a model of preventive medicine and not only responding when a patient is already ill. The challenges Puerto Rico is facing with Medicaid are greater than those in any other U.S. jurisdiction, said Helgerson, who heads New York’s Medicaid program. “That’s not meant as an overstatement, it’s based on my experience as Medicaid director for two different states for more than a decade,” he said. “We need to make smarter investments in the facilities and infrastructure which will produce savings in the long run in terms of energy costs, better work environments and better patient outcomes.” cit yandstateny.com

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city & state â&#x20AC;&#x201D; October 26, 2015

A CHRONIC ISSUE PUERTO RICO’S HEALTH CARE QUANDARY

Puerto Rico Health Insurance Administration Executive Director Ricardo Rivera-Cardona, left, and Health Department Secretary Ana Rius.

city & state — November 4, 2015

In the 1970s, the life expectancy of an average citizen in Puerto Rico was 72 years – making the island 14th worldwide in that category – and its health care system was recognized as a global model. Today, the island ranks 36th in terms of life expectancy, and despite the billions of dollars invested by the federal and local governments, its health system is on the brink of collapse. Back in the ’70s, the government spent approximately $550 million annually on its health care system, which combined primary care facilities in each of the island’s 78 municipalities with a medical center, hospitals and specialists for patients in need of urgent or long-term care. Now, the yearly cost of public and private health care in Puerto Rico is a whopping $12.5 billion, and the system is based on a curative, not preventive, model that relies on insurance companies to manage services. “The health system in Puerto Rico that served as a model for many other places worldwide took various decades to plan and was based on two pillars of public health: first, the primary preventive medicine offered in the diagnostic and treatment

centers located in each municipality, and secondly, the curative component offered in the hospitals and the medical center,” explained Dr. Ibrahim Pérez, an expert on the local health care system. That all changed in 1993, when under then-Gov. Pedro Rosselló, the government sold all of its health facilities – many at ridiculously low prices – and started a health overhaul which was commonly known as “Mi Salud” (My Health) or “la tarjetita” (the little card), which shifted away from prevention and gave the helm to insurance companies, which are now in charge of managing the system. “At this moment, Puerto Rico doesn’t have a health care system, per se,” said Puerto Rico Health Department Secretary Dr. Ana Rius. “What we have is a system that provides health care services, where we give the money to the insurance companies and they are the ones in charge of paying the providers of these services. “It’s the way it is because years ago, the functional and good system we had in place, which served as a model for the rest of the world, was substituted, based mostly on political considerations, for the one we have now,” she added. The Puerto Rican health care system is similar to the one in the U.S., but whereas in the States approximately 50 percent of patients are covered by employer-based insurance, in Puerto Rico more than 40 percent depend on the Mi Salud program, which is financed mainly with Medicaid funds. Mi Salud costs $2.8 billion per year and serves 1.6 million people, making Puerto Rico the 14th jurisdiction nationally in terms of number of patients insured and the first in terms of Medicaid population served, at 48 percent. And while the cost of the current model continues to grow, so does the prevalence of chronic illness on the island – from hypertension and cardiovascular disease to

cit yandstateny.com

JOSÉ E. MALDONADO

By JOSÉ E. MALDONADO

cit yandstateny.com

Rico Healthcare Crisis Coalition. The coalition plans to hold a march Thursday on the island and in various U.S. cities to call attention to the critical condition of Puerto Rico’s health care system and demand Medicaid and Medicare funding parity. The coalition says that since Puerto Ricans on the island pay the same Social Security and Medicare taxes as residents of the U.S., they should receive the same benefits. “The government of Puerto Rico has a serious liquidity problem and doesn’t even have the ability to match federal funds, and as a result, the government’s health program for the indigent population is in debt to the tune of $200 million to $300 million with the providers – doctors, hospitals and contractors – and that’s before the proposed cuts, which would affect everybody,” Rivera said. The coalition has listed priorities that Congress and the Obama administration would have to address in order to alleviate the situation. In terms of legislation, the group is calling for the elimination of the disparities in traditional Medicare, offering parity for Medicare beneficiaries, protecting Medicare Advantage beneficiaries and increasing payments for hospitals on the island. As for the administration, the coalition is asking for the island to be excluded from the health insurance tax and for the adjustment of various payment calculations to make them more in tune with the realities of the territories. But even if the island is able to achieve the parity in funding, the government needs to implement dramatic changes in the system to provide better and more efficient services to the population. “We have to go back to putting the focus on preventive medicine and we need to repair the damages some insurance companies have inflicted on patients and providers,” Pérez said. This transformation, he added, should be based on the triple objectives of the Affordable Care Act: improving the patient experience, focusing on prevention and reducing costs. “We have to center on the wellbeing of the patients and we also have to start paying our health care professionals justly so they won’t continue to abandon the island,” he said.

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city & state — November 4, 2015

diabetes and cancer – creating an unsustainable situation in a time of economic crisis. “Our health care system could be a lot better if we had the necessary funds to invest in it,” said Ricardo Rivera-Cardona, executive director of the Puerto Rico Health Insurance Administration (ASES, by its Spanish acronym), which oversees Mi Salud. “We have a system that is not paying providers correctly, that doesn’t have the range of benefits the citizens need, that doesn’t have the proper structure and systems in place to monitor and coordinate efforts against fraud, and that doesn’t help chronic patients enough and is not preventing illnesses.” The root of all these problems, according to Rivera-Cardona, is that Puerto Rico has never had “fair treatment” in terms of funding from the Medicaid and Medicare programs, which has made it impossible to invest as much as the system needs. If Puerto Rico is unable to achieve parity in Medicaid funds or obtain a waiver from Medicaid to implement a series of measures it is working on with health officials and experts from New York before the Affordable Care Act funds run out, Rivera-Cardona says Puerto Rico would only have three options, all of which could be chaotic. “We would have to take a million patients out of the plan, period, which would cover the portion of the federal funding we wouldn’t receive but would leave one-third of our population uninsured,” he said. “The second alternative would be to reduce services significantly, which would basically cut Puerto Rico out of the Medicaid program and affect the most chronic patients. And the third alternative, which nobody likes, especially the working professionals, would be to raise taxes significantly.” None of these solutions would be optimal, he added, “which is why we’re fighting with teeth and nails for funding parity, because we know it’s a life-or-death situation for our health system here.” At this moment, the federal government is saying it will withdraw $3 billion annually from its Medicaid funding to Puerto Rico. “This would have a disastrous effect and would cause the collapse of the island’s health care system,” said Dennis Rivera, who leads the Puerto

Educate, Advocate & Influence NY’s Public Officials with:

PERSPECTIVES ON A CRISIS CONVERSATIONS WITH CARMEN YULÍN CRUZ, KENNETH MCCLINTOCK AND EDUARDO BHATIA By GERSON BORRERO and MICHAEL GARETH JOHNSON

Former Puerto Rico Secretary of State Kenneth McClintock speaks in the Puerto Rico Capitol rotunda.

city & state — November 4, 2015

KENNETH MCCLINTOCK Former Puerto Rico Secretary of State Kenneth McClintock had harsh criticism for Gov. Alejandro García Padilla when it came to the debt crisis. Speaking to Editor-at-Large Gerson Borrero in the rotunda of the Puerto Rico Capitol, McClintock said the current governor made a mistake when he said Puerto Rico was not in a

position to repay its debts. McClintock said that scared away investors that are needed to help the government pull itself out of the financial crisis. McClintock, a member of the New Progressive Party, said he was optimistic about the future of the island because he is confident that voters will oust García Padilla, a member of the rival Popular Democratic Party, in next year’s elections.

“I think it is obvious to absolutely everyone in Puerto Rico that there is going to be a change in government in Puerto Rico,” he said. “The current governor’s approval rating was 19 percent last March and has probably gone down since.” “So there is going to be a change in philosophy, and my impression is that any new government that comes in will give that new governor an opportunity

to instill a sense of trust and confidence that does not exist today among the investment community in New York and on Wall Street, in regards to Puerto Rico,” McClintock added. In the wide-ranging interview, McClintock also spoke about Washington, D.C.’s failure to resolve the question of the political status of the island. The head of Hillary Clinton’s 2008 primary campaign in Puerto Rico, McClintock is a supporter of statehood for the island, as is the Democratic presidential candidate. But he said elected officials in D.C., including Clinton, have been complicit in the failure to resolve the issue, either toward independence or statehood. “If Puerto Rico was a state or independent we would not be in the fiscal state we are in now,” McClintock said, claiming that since Puerto Rico is a colony it has had to spend significantly more on bonds than a state does because it is not eligible for as much federal support on those bonds. He also singled out U.S. Reps. Nydia Velázquez of New York and Luis Gutiérrez of Chicago for not doing more to resolve the issue, suggesting the two would prefer the island remain a colony. “The leaders of the diaspora are not united, and they are actually working against the will of the people of Puerto Rico,” McClintock said. “Luis Gutiérrez is not trying to end the colony. He is in bed with all the special interests in Puerto Rico that want tax benefits for all the multinational cit yandstateny.com

MICHAEL GARETH JOHNSON

The debt crisis in Puerto Rico is an issue that has gripped headlines both on the island and in the mainland U.S. Ahead of the Somos el Futuro Fall Conference, City & State traveled to San Juan to speak with prominent politicians and get their takes on the issue. We got a wide range of responses – from concern, to optimism, to harsh criticism of Wall Street.

corporations. And then you have Nydia Velázquez that puts her interests ahead of the people of Puerto Rico.” McClintock went on to argue that the two prominent House members have too much influence on issues relating to Puerto Rico, and suggested that lawmakers should instead be listening to Pedro Pierluisi – a member of the New Progressive Party like McClintock – since he is the island’s elected representative to the House and better represents residents’ views, even though he doesn’t have a vote in the chamber. During the interview, McClintock also commented on the upcoming Somos El Futuro conference in San Juan. He said in the past the conference has made the mistake of only speaking with the party that is power at the time. He said the conference should invite members of both major political parties so that elected officials in New York receive diverse views on the important issues facing Puerto Rico. Puerto Rico Senate President Eduardo Bhatia sits down with City & State Editor-at-Large Gerson Borrero. ®®®

“You cannot come out of a crisis by praying every day to the gods of the complaint,” San Juan Mayor Carmen Yulín Cruz told City & State Editor-atLarge Gerson Borrero. “As a country we complain a lot.” “When the economy is bad, you don’t take money out of people’s pockets,” the outspoken, hands-on leader added when asked about the island’s crippling debt crisis. In Yulín’s opinion, the $72 billion debt – which García Padilla has said Puerto Rico is unable to repay – poses a challenge to the island’s leaders that will require new and creative

®®®

approaches. Among the key things Yulín believes need to happen? Increasing municipal investment. She cited Franklin Delano Roosevelt’s New Deal as an example of what can be done, and shared a little bit about her own version of a “new deal” in San Juan. Yulín lauded the participatory budgeting process that she says is working well in at least 14 communities in San Juan. She is also proud of the collective bargaining by the municipal workforce – an effort she encouraged. She also thanked neoyorquinos for their outpouring of support after two New York City taxi drivers refused to drive her to the Bronx in May.

San Juan Mayor Carmen Yulín Cruz in an exclusive interview with City & State. cit yandstateny.com

EDUARDO BHATIA Back in 2014, City & State sat down with the president of the Senate of Puerto Rico, and he railed against Wall Street for creating a bond crisis that was driving up the island’s debt. When we caught up with him once again on the island a few weeks ago he continued to attack the financial services sector while also condemning past administrations that ignored the financial problems that have led to the island’s current debt crisis. “We are in the middle of a deep, deep, deep crisis – and a big chunk of the crisis was generated by Wall Street,” Eduardo Bhatia told City & State. Bhatia – who is one of the leading voices on the island’s political affairs – said he’s convinced that “Puerto Rico’s problems are not Puerto Ricogenerated problems. Many of these problems were generated by a number of people on Wall Street who wanted to lend money, and force Puerto Rico, and entice Puerto Rico, to borrow money in a way sort of supported by the federal government.” However, Bhatia didn’t absolve Puerto Rico’s political leaders from the past 15 years, many of whom he admitted ignored the island’s problems. The Senate leader does believe that there is a solution to the

fiscal crisis. However, Bhatia said that “kicking the can never, ever, ever solves the problem.” “Puerto Rico over-borrowed,” Bhatia argued. He believes that the debt has to be restructured. The Senate president made it clear that “Puerto Rico doesn’t want a bailout.” And he said that what Puerto Rico needs is oxygen and to not be “choked” by being treated like a foreign country by leaders in Washington. Bhatia wants President Barack Obama to get “personally involved” in finding a solution for the island’s debt crisis. “This is no longer just an issue for Puerto Ricans,” he declared, while going as far as calling it a shared responsibility. Addressing the dire state of Puerto Rico’s public education system, Bhatia went on to enumerate the multitude of problems that plague an island that hasn’t bought new books for its students in 15 years. In response to a question about Gov. Andrew Cuomo’s recent visit to Puerto Rico, Bhatia praised Cuomo’s efforts to put Puerto Rico on his radar. Bhatia went on to boast about the San Juan health rally scheduled to take place on Thursday, and highlighted the fact that several 2015 Somos Fall Conference leaders and attendees, including Cuomo, plan to participate.

city & state — November 4, 2015

CARMEN YULÍN CRUZ

CONFERENCE SCHEDULE

See map on Page 38

WEDNESDAY, NOV. 4

10 a.m. - 5 p.m.



CONFERENCE REGISTRATION

CARIBE HILTON HOTEL

Flamingo Foyer (2nd floor)

5 p.m. - 8 p.m.



MEET & GREET RECEPTION

CARIBE HILTON HOTEL

Flamingo Foyer (2nd floor)

5 p.m.



DISCUSSION ON NATIONAL PUERTO RICO AGENDA

THURSDAY, NOV. 5 7:30 a.m. - 9 a.m.

CITY & STATE TV INTERVIEWS

CARIBE HILTON HOTEL

Flamingo Foyer (2nd floor)



CONFERENCE REGISTRATION

CARIBE HILTON HOTEL

Flamingo Foyer (2nd floor)

9 a.m. - 11 a.m.



BREAKFAST PLENARY: Topic: Ensuring Quality and Affordable Health Care For Puerto Ricans

CARIBE HILTON HOTEL

Las Olas/Terrace

11 a.m. - 1 p.m.



OFF-SITE WORKSHOP: Addressing Social Needs of Puerto Ricans

SAN JUAN

1 p.m. - 4 p.m.



HEALTH CARE RALLY: Ensuring Quality, Affordable Health Care for Puerto Ricans

COLISEO DE PUERTO RICO

5:30 p.m. - 7 p.m.



CHAIRMAN’S VIP RECEPTION

CARIBE HILTON HOTEL

7 p.m. - 9 p.m.



“LA BIENVENIDA” WELCOME RECEPTION

CARIBE HILTON HOTEL

Atlantic Gardens

KICK-OFF RECEPTION (Keynote address by Mayor Carmen Yulín Cruz)

CONDADO HILTON

Royal Room

CITY & STATE TV INTERVIEWS

CARIBE HILTON HOTEL

Flamingo Foyer (2nd floor) Flamingo Foyer (2nd floor)

9 a.m. - 5 p.m.

8 p.m. - 11 p.m.

city & state — November 4, 2015

(invite only)

FRIDAY, NOV. 6 7:30 a.m. - 9 a.m. 8 a.m. - 5 p.m.



CONFERENCE REGISTRATION

CARIBE HILTON HOTEL

8 a.m. - 10 a.m.



BREAKFAST

CARIBE HILTON HOTEL

cit yandstateny.com

8:45 a.m. - 10:45 a.m.



ECONOMIC DEVELOPMENT SEMINAR: Economic development discussions in partnership with the New York City Hispanic Chamber of Commerce

INTERCONTINENTAL HOTEL

Alfredo 2

10:30 a.m. - 12:30 p.m. 

WORKSHOPS: a: Understanding and Responding to Puerto Rico’s Economic Crisis CARIBE HILTON HOTEL b: Hispanics and the Media forum c: The Role of the Boricua Diaspora in New York and Puerto Rico

Flamingo Meeting Rooms

1 p.m. - 2:45 p.m.

“ENTRE NOSOTRAS”

CARIBE HILTON HOTEL

Palmeras

3 p.m. - 5 p.m.

PODCAST LAUNCH RECEPTION

CARIBE HILTON HOTEL

3 p.m. - 9 p.m.



FIELD TRIP: Tour of Hacienda La Esperanza MANATÍ (ticketed event); Topic: Global Warming's Impact on Puerto Rico’s Coastal Communities

6 p.m. - 9 p.m.



NYC HISPANIC CHAMBER OF COMMERCE WELCOME RECEPTION

INTERCONTINENTAL HOTEL

CITY & STATE TV INTERVIEWS

CARIBE HILTON HOTEL

Flamingo Foyer (2nd floor)



(ticketed event)

SATURDAY, NOV. 7

8 a.m. - 10 a.m.



LABOR BREAKFAST

CARIBE HILTON HOTEL

San Cristobal Ballroom

10:15 a.m. - 11:15 a.m.



LABOR ROUNDTABLE

CARIBE HILTON HOTEL

San Cristobal Ballroom

10:30 a.m. - 12:30 p.m. 

WORKSHOPS: a: The Growth of Latino Political Power: The Florida Experience b: Latinos and Higher Education c: Judicial Roundtable d: Workers’ Compensation

CARIBE HILTON HOTEL

Flamingo Meeting Rooms

11 a.m. - 1 p.m.

& HITN VIP RECEPTION

DREAMCATCHER GUEST HOUSE

NETOWRKING LUNCHEON

CARIBE HILTON HOTEL

& CATHOLIC CHARITIES VIP RECEPTION

DREAMCATCHER GUEST HOUSE

DINNER & CULTURAL SHOW

CARIBE HILTON HOTEL

San Geronimo Ballroom

FAREWELL BRUNCH & PANEL DISCUSSION: Topic: Building a New York State

CARIBE HILTON HOTEL

Las Olas/Terrace

FAREWELL CONCERT

INTERCONTINENTAL HOTEL

1 p.m. - 2:30 p.m.



3 p.m. - 5 p.m. 8 p.m. - 11 p.m.



Gazebo

SUNDAY, NOV. 8 10:30 a.m. - 12:30 p.m.  1 p.m. - 3 p.m. cit yandstateny.com



Latino Agenda for 2016

city & state — November 4, 2015

7:30 a.m. - 9 a.m.

GETTING AROUND THE CONFERENCE

M O S

CARIBE HILTON

CONDADO PLAZA HILTON DREAMCATCHER GUEST HOUSE

INTERCONTINENTAL

AIRPORT

city & state — November 4, 2015

DREAMCATCHER GUEST HOUSE

CARIBE HILTON

2009 Calle Espana, San Juan

1 San Geronimo St., San Juan

GETTING TO THE DREAMCATCHER GUEST HOUSE

CONDADO PLAZA HILTON

(aka City & State HQ):

999 Ashford Ave., San Juan

On Thursday and Friday, you can only access the Ocean Beach neighborhood where the villa is located by entering through the security gate on Calle Santa Ana.

INTERCONTINENTAL HOTEL

5961 Ave. Isla Verde, San Juan

cit yandstateny.com

www.gnylecet.org • @gnylecet • facebook.com/nylecet • 212.452.9300

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Edison Severino

Michael Prohaska

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Mike Hellstrom

Patrick J. Purcell Executive Director

Local 108 Business Manager

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