• f f
Governing Board ANTONIO SANTIAGO VAZQUEZ Chairman of the Board and
Secretary of Public Works ANGEL M. MARTIN
J. RAYMOND WATSON Executive Director
Secretary of the Treasury LUIS RIVERA BRENES
Secretary of Agriculture
ENRIQUE SOLER CLOQUELL Chairman of the Puerto Rico Planning Board MAX SANCHEZ
Mayor of the Municipality of Juana Diaz Principal Officers J. RAYMOND WATSON Executive Director
ANGEL LUIS ALLENDE
Deputy Executive Director ANGEL R. CABAN
Special Assistant HUMBERTO CUEBAS
Assistant Executive Director—Finance JOSE AYALA Treasurer
ANGEL SANTIAGO MATOS
Assistant Executive Director for Design MANUEL FEBO ORTEGA
Assistant Executive Director for Construction ANGEL LUIS RODRIGUEZ
Assistant Executive Director for Administration SAMUEL CAMPOS LOPEZ Public Relations Officer JOSE E. ROSSY
Assistant Executive Director for Acquisition and Management Area
Consulting Staff Wilbur Smith and Associates, Traffic Engineers
Auditors
Peat, Marwick, Mitchell & Co.
ON THE COVER FR-I8 Las Americas Expresswav
a six-Umc cliridei! arterial highway ill metropolitan San Juan.
COMMONWEALTH OF PUERTO RICO
Puerto Rico
HIGHWAY AUTHORITY
Highway Authority The Puerto Rico Highway Authority, a body cor porate and politic constituting a public corporation
dustry was to spread throughout the Island, and not
and governmental instrumentahty of the Common wealth of Puerto Rico, was created by Act No. 74
harbor areas.
of the Legislature of Puerto Rico, approved June 23, 1965. Prior to this time, the construction of roads and
highways had been the responsibility of the Depart ment of Public Works. The highway program was, therefore, dependent on annual appropriations from the Legislature, and was only one of many functions carried out by this department.
be concentrated around the San Juan and Ponce
The Authority was created, therefore, to provide a separate public agency, whose sole responsibility was directed towards improving vehicular trans portation facilities. The Authority would have a specific, allocated source of revenues which could be pledged to secure bonds and as a result, financial and long range construction programs could be es tablished.
The Authority has broad powers under the Puerto
As the rate of economic development rose steadily in the decade 1956-1965, higher income levels re
sulted in a sharp increase in automobile ownership. The increase in economic activity and in the number
and dispersal of manufacturing plants required vastly improved transportation facilities, especially if in
Rico Highway Authority Act, including among other things: to have perpetual existence as a corporation; to have complete control and supervision of any traffic facilities owned, operated, constructed or ac quired by it; to have complete control and super vision over the character of and necessity for all of
Lolza Expressway — Interchange with Canipo Rico Avenue, a six-lane access controlled expressway in the San Juan metropolitan area. ^
....
its expenditures; to sue and be sued; to make con tracts and to execute all instruments necessary or incidental in the exercise of any of its powers; to
determine, fix, impose, alter and collect tolls or ferriage, rentals, assessments and other reasonable charges for the use of the trafiic facilities owned, operated, contracted, acquired or financed by the Authority or for the services rendered thereby; to borrow money for any of its corporate purposes, and to issue bonds, notes or other obligations of the Authority in evidence of such indebtedness and to secure payment thereon by pledge, or other lien on, all of its properties, revenues or other income and, subject to the provisions of Section 8 of Article VI of the Constitution of the Commonwealth, to pledge for the payment of said bonds and interest thereon,
the proceeds of any tax or other funds which may be made available to the Authority by the Common wealth; to issue bonds for the purpose of funding,
refunding, purchasing, paying or discharging any of its outstanding bonds or obligations; and to do all acts or things necessary or desirable to the carrying out of the powers granted to the Authority by the Act or by any other act of the Legislature of Puerto Rico; provided, however, that neither the Common
way System primary, secondary and municipal high ways and public housing development roads, and 2,350 miles of municipal system local city streets and vicinal roads. In the Commonwealth Highway Sys tem there are 525 miles of primary system highways comprising the more important routes in terms of inter-regional traffic, 1,196 miles of secondary sys tem highways serving the needs of intra-regional traf fic and 2,199 miles of municipal highways and public housing development roads serving localized traffic of an intra-regional nature. The Commonwealth Highway System, prior to the creation of the Authority, had been financed by an nual appropriations from the Commonwealth Gen eral Fund and by Commonwealth bond issues which included among various other purposes, funds for highways and streets. During the eleven-year period
1956-1966, approximately $291,800,000 had been appropriated from the General Fund for this pur pose, and at the end of 1966, out of total Com monwealth bonds outstanding, approximately $121,000,000 of these bonds had been issued for
highway and street improvements. These bonds con sist of a number of issues dating back to 1950, and constitute an obligation of the Commonwealth pay
wealth of Puerto Rico nor any political subdivision thereof shall be liable for the payment of the principal of or interest on any bonds issued by the Authority
able from General Fund revenues.
and such principal and interest shall be payable only
Importance of Commonwealth Highway System
from the funds of the Authority pledged for such
The Commonwealth Highway System is a vital factor to the well-being and economic progress of the Commonwealth. The highways provide for the inter city movement of persons and goods and function
payment under the Act. The Secretary of Public Works is authorized to enter into agreements with the Authority for the study, design, construction, repair, maintenance, ac quisition of properties and easements, and any other matters necessary to carry out the purposes of the Act. The Authority may also enter into agreements under which the Secretary of Public Works agrees
to pay, totally or partially, and with funds of the Commonwealth covered into the Public Treasury,
the repair, maintenance and operation costs of any traffic facilities financed under the provisions of the Act.
as main arteries over which the industrial, com
mercial and agricultural products of the Common wealth move to market. Most of the people in their
daily commuting, shopping and normal travel will use and benefit from an extended and improved highway system. An improved highway system is also impor tant to the movement of tourist traffic to the resort areas and beaches of the Island. It is therefore im
perative that the System keep pace with the economic growth of the Island and be sufficient not only to sus tain the normal growth but be adequate to induce a further expanded growth.
Existing Commonwealth Highway System The present Puerto Rico Highway System totals 6,270 miles fan increase of 470 miles since 1968), consisting of 3,920 miles of Commonwealth High
As a result of the growing awareness of the vital necessity of accelerating highway construction, the Authority was created and revenues were provided to implement the construction program.
San Juan — Ponce Toll Road — Ponce Juana Diaz Section under construction.
This four-lane divided highway will shorten by half, the travel time between the two largest metropolitan areas of Puerto Rico.
Resources Available to the Authority
Gasoline Tax. At the same time that the Authority was created, funds were provided for it under Act No. 75, passed by the Legislature and approved June 23, 1965, which increased the gasoline tax from 80 to 11 j# and allocated the revenues from 6/1 Iths of
way vehicles and (ii) any remaining portion of the total tax which may then be imposed on gasoline. It should be noted that both Act No. 75 of 1965 and Act No. 50 of 1968 are amendments to Section
83 of Act No. 2, approved January 20, 1956, known as the Excise Law of Puerto Rico, and therefor are
the net receipts from this tax to the Authority for highway construction or to finance construction.
part of the basic tax structure of the Commonwealth. Proposed increase in the allocation of gasoline and diesel oil taxes. At the request of the Authority, the
In 1968 further legislative action was taken to give additional security for monies borrowed by the Authority. Act No. 50 approved May 22, 1968, pro
of the Legislature providing that the present alloca tion of 60 per gallon of the existing gasoline tax to
vides that if the proceeds of the gasoline tax presently or in the future allocated to the Authority, are insufficient to pay the principal of and interest on the bonds of the Authority and the reserve fund of the
Governor has submitted a bill to the present session
the Authority be increased to the full 110 per gallon now being levied, 30 of such increased allocation to
Authority is applied to cover any such deficiency,
become effective by July 1, 1970 and the remaining 20 to become effective by July 1, 1971, increase the present 40 per gallon tax on gas oil and diesel oil to
the amounts used from such reserve fund shall be
80 per gallon, and to allocate four-eighths of the
reimbursed to the Authority, subject to the provi sions of Section 8 of Article VI of the Puerto Rican
revenue from this tax to the Authority as of July 1,
1970, with all receipts from the above tax allocations
Constitution, from the first amounts received by the Commonwealth in the next fiscal year or following
to be used in the construction and financing of the
years which originate from (i) any other taxes which may then be in effect on any other fuel or propellant
Right-of-way. In the past the Legislature has appropriated certain amounts annually for rightof-way acquisition and appropriation of additional
which is used, among other purposes, to propel high
program.
amounts for this purpose will be requested in the future, under the procedure outlined in the following paragraph. Such appropriations totaled $9.25 mil lion, $7.90 million, $6.0 million, $9.0 million, $11.0 million for the fiscal years 1965-66, 1966-67, 1967-68, 1968-69 and 1969-70, respectively. For fiscal year 1970-71 an appropriation of $9.1 million is included in the current Commonwealth
gram and the respective dates by which they wiU be needed, and (iv) the estimated costs of such right-ofway and the amount of general funds of the Com monwealth which the Legislature is requested to appropriate for such purpose. The Authority cov enants that it wiU, pursuant to Section 14 of the Puerto Rico Highway Authority Act, file a copy of such statement with the Legislature prior to its next
budget which is now under consideration by the Legislature. The Authority will continue to request each year that the full amount of funds required for purchases of right-of-way be included in the annual budget submitted to the Legislature, estimated at approximately $20 million for each of the years
regular session. Federal Aid. The Authority also benefits from
1971-72 to 1973-74.
must be matched equally by Puerto Rico. Apportion
In the Bond Resolution the Authority covenants that on or before October 1 of each year it will sub mit to the Planning Board, the Director of the Bureau of the Budget, the Secretary of the Treasury, the Fiscal Agent and the Traffic Engineers, a statement setting forth (i) a brief description of the program of traffic facilities to be carried out during the next fiscal year, (ii) its estimate of the total construction cost of such program, (iii) a description of the rightof-way which will be needed to carry out such pro
ments have averaged over $6,600,000 annually in recent years but will amount to $7,300,000 for 1970-71. It is estimated for projection purposes that such appropriations will amount to $6,600,000 in
Trujillo Alto Avenue, a four-lane divided arterial highway in metropolitan San Juan.
Federal Aid funds for highways on the Federal Aid primary, secondary and urban systems which are distributed to Puerto Rico on the same basis as these
funds are apportioned to the States. These funds
future years. Tolls. The Authority is authorized to levy tolls on facilities constructed by it, and it is expected
that it may do so from time to time as may be deemed to be appropriate, on divided, multi-lane, limited access highways as they are constructed, and
where existing toll-free roads are adequate to serve local traffic needs. The authority does not propose to enter into any covenants to maintain any toll charges, if imposed on traffic facilities financed under the Bond Resolution, for any particular period of time, or at any particular level of rates and it will retain the right to change or to eliminate any such tolls, if imposed, at its discretion, in the best interests of the economy of Puerto Rico. However, any such tolls as may be collected on traffic facilities in and under the Bond Resolution will be pledged to the payment of any bonds issued thereunder. At present two limited access, divided highways are under construction. In designing both highways
r/i
provision has been made for the imposition of tolls to provide supplemental revenues in order to ex pedite the Authority's program. The larger one, run
ning north to south across the Island, will extend from San Juan to Ponce, the two principal cities in Puerto Rico. The other one, running east to west
along the north coast, will connect San Juan and
Jf V
Arecibo, and will eventually be extended to Maya-
Cagitas — Humacao — Gitrabo highway links the
guez, located on the west coast.
South East with San Juan metropolitan area,
shortening distance and saving travel time.
Present Highway User Taxes and Fees In addition to the gasoline and diesel oil taxes, addi
tional highway user taxes are imposed, consisting of registration fees, operators' licenses, miscellaneous
Commonwealth Highway System —
motor vehicle fees (such as duplicate licenses, trans
Original Priority Program. In late 1967 the Au thority retained the firm of Wilbur Smith and Asso ciates. Consulting Engineers, to conduct a study o the highway needs of the Commonwealth System, to recommend a construction program and to estimate
fers, titling fees, etc.) and various excise taxes. All revenues from these latter fees and taxes are credited to the General Fund of the Commonwealth and are
not available to the Authority in any respect. Revenues from registration fees and related charges totaled $19,343,000 and operators' licenses $617,000 for 1968-69. Annual excise tax collections on motor
vehicles, parts and accessories have averaged about $32,000,000 for the five years ending June 30, 1969. Several bills have been introduced in the Legislature which propose substantial reductions in these excise taxes and registration fees.
As stated heretofore, the gasoline tax was in
Results, 1966-69
revenues available for its implementation.
In the report of the Engineers dated March, 1968, a five-year priority improvement program, estimate
to require an expenditure of $394,500,000, was recommended. This priority program, which was par
of an existing backlog of highway needs estima e a $707,800,000, included those projects believed y
the Engineers and the Authority to repiesent
creased in 1965 to 11^ from 8^?, the tax in effect
most critical needs and those required to
since 1947. The retail price of gasoline is subject
greatest economic benefit to highway users an the general economy of the Commonwealt .
to control by the Consumer Services Administra tion and is related to the current cost to the retail dealer. It presently averages 33^ per gallon, tax in
cluded, and the price of premium gasoline averages
38^ per gallon, tax also included.
The reasons for the need for highway nnprovements were identified by the Engineers as.
1. The population of Puerto Rico has increased substantially in the past and is expected to gio
rapidly in the future. In 1960 the population totaled 2.3 million and in 1967 was estimated at
2.7 million (1969—2.8 million), an increase of
over 17% (1969—18.2%), compared to an in crease of 11.7% for the United States. By 1986 the population is expected to total 4.1 million per sons, an increase of 51.9% over 1967 (47.7% over 1969). 2. The number of motor vehicles has been in
creasing at a relatively faster rate than population. In 1960, there were 172,000 registered motor vehicles and in 1967 403,000 (1969—538,000)
were registered, an increase of approximately 134% (1969—213%) since 1960. By 1986 it is estimated that there will be slightly over one mil lion registered motor vehicles, more than IV2 times the 1967 (2.0 times the 1969) total. Density of motor vehicle ownership, which changed from 38.7 persons per vehicle in 1950 to 6.7 persons in 1967 (5.3 in 1969), is expected to become 4.0 persons per vehicle by 1986.
3. Highway travel, which increased by 243% between 1950 and 1960, is expected to total 8.1 billion vehicle-miles by 1986, an increase of 94.3% over the 4.3 billion for 1967 (72.3% over the 4.7 billion for 1969).
These indicators of intensified highway use—pop ulation, number of vehicles, and travel—clearly demonstrate the present and future need for an ade quate Commonwealth Highway System. The original five-year priority program included: various projects selected from the primary, secondary and urban systems. In addition the total program costs included costs for the municipal system, for reconstruction, and for right-of-way acquisition. It was believed that this program represented an excellent approach toward satisfying the highway needs of Puerto Rico and would alleviate traflBc con
gestion, reduce the number and severity of accidents, reduce travel time, and, in general, benefit both the highway users and the general economy of the Commonwealth.
COMMONWEALTH HIGHWAY SYSTEM—PROGRAM, 1970-1974 Current Priority Program. As a result of the Authority's excellent progress in design and planning, and in actual
construction during 1968 and 1969, and recognizing the importance of providing an extended and improved road system as soon as possible to overcome the backlog of highway needs, the Authority now plans to carry out its con struction schedule at a much faster rate than was estimated when the original studies were made in 1967-1968. This revised priority construction program, which has been reviewed and approved by the Engineers, is predicated on construction and administrative expenditures over the next five years, starting with 1969-1970, of $615,000,000. The estimated annual costs, excluding debt service, and the required funds for its implementation are set forth below. Projected Expenditures. Fiscal Year 1969-70
1970-71
1971-72
1972-73
1973-74
Total
(thousands of dollars)
Design
$ 5,400 $ 6,300 $ 5,600 $ 4,600 $
2,200
$ 24,100
Right-of-way
16,300
19,500
19,500
19,400
19,200
93,900
Construction
43,900
80,200
94,400
79,500
77,100
375,100
Special Programs (1) Administration and operation
13,400 6,000
20,500 6,100
20,000 6,200
19,000 6,300
18,000 6,400
90,900 31,000
$85,000
$132,600
$145,700
$128,800
$122,900
9,100
20,000
20,000
20,000
69,100
7,300
6,600
6,600
6,600
33,700
$67,400 $116,200
$119,100
$102,200
$ 96,300
$501,200
Total
Less Appropriations of Commonwealth Funds for right-of-way Proposed Federal Aid
Net Funds Required, excluding debt service, from gasoline tax revenues, borrowings, and additional sources
11,000 6,600
$615,000(2)
11,000
(1) Includes Municipal roads (design, right-of-way and construction), reconstruction, safety and TOPICS (traffic operation program to i]TCT63SG cBpBcity 3ricl ssfcty)*
(2) Excluding debt service, which if added would increase this total program to around $690,000,000, depending upon time and cost of financing. 6
Historic and Projected Trends of Gasoline Tax Revenues
Set forth below are actual gasoline tax revenues and the amount allocated to the Authority for the past
eight years. Projected revenues and allocations have been reviewed and substantiated by the Traffic Engi neers.
Authority Allocation
From 6/llths Fiscal Years
Total Net
of Net
Ending
Gasoline
Gasoline
June 30
Tax Revenue
Tax Revenue
1962
.. $14,773,000-
1964...
17,811,000 TD 20,142,000
1965...
22,358,000 J
1963
the General Fund of the Commonwealth which are
covenants in the Bond Resolution that it will cause
36,428,000
19,908,000
40,125,000
21,887,000
an annual general evaluation to be made by the Traffic Engineers of the level of maintenance of such Traffic Facilities and that such evaluation will be
Projected
1973...
41,420,000 43,650,000 45,870,000 48,151,000
1974...
50,300,000
22,593,000 23,809,000 25,020,000 26,264,000 27,436,000
1975...
1976...
52,448,000 54,596,000
28,608,000 29,780,000
1977...
56,744,000
30,951,000
1978...
1982...
58,893,000 61,041,000 63,189,000 65,337,000 67,486,000
1983. . .
69,634,000
37,982,000
1984...
71,782,000
39,154,000
1985.. .
73,930,000
40,325,000
1986. ,.
76,078,000
41,497,000
1971... 1972...
1979... 1980.. . 1981.. .
Pursuant to that provision the Authority has entered into an agreement with the Secretary of Public Works by which he has agreed to pay the costs of maintaining, repairing and operating all traffic facilities which are constructed by the Authority and financed in whole or in part by the issuance of bonds of the Authority out of appropriations received from
18,822,000
1968.. .
1970...
the public treasury.
$17,388,000
31,861,000 (2) 34,500,000
1969...
from the Commonwealth General Fund covered into
made available for such purposes. To provide further assurance with respect to maintenance, the Authority
1967...
1966...
ments under which the Secretary of Pubhc Works agrees to pay, totally or partially, the cost of repairs, maintenance, and operation of any trafiic facilities financed under the provisions of that Act with funds
filed with the Secretary of Public Works and the Secretary of the Treasury. Moreover, the Authority covenants that if and to the extent that maintenance
of the highway system is not adequate as set forth
The most advanced safety features are incorporated in the design and construction of traffic facilities.
32,123,000 33,295,000 34,467,000 35,638,000 36,810,000
(1) Gasoline tax 8^ per gallon. (2) Gasoline tax increased to 11?, effective July 1, 1965.
The projections are based on the assumptions that the highway facilities contemplated by the Engineers are constructed substantially as recommended.
Maintenance
Maintenance of the Commonwealth Highway System is the responsibility of the Department of Public Works. The Puerto Rico Highway Authority Act
provides that the Authority may enter into agree
â– '
.:A
MOTOR VEHICLE REGISTRATIONS PERSONS PER VEHICLE PUERTO RICO
in the annual survey to be made by the Engineers, in accordance with the provisions of the Bond Reso lution, the Authority will provide such maintenance costs from unencumbered funds then on deposit in
1950-1969(PROJECTED TO 1985)
PERSONS PER VEHICLE
the Construction Fund or from the revenues there
after deposited to the credit of the Construction Fund.
The level of required maintenance expenditures over the next ten years is estimated to be approxi mately as foUows: 1969-7 0
$7,600,000
1974-75. . .
$10,200,000
1970-7 1
8,100,000
1975-76. . .
10,800,000
1971-7 2
8,700,000
1976-77. . .
11,600,000
1972-7 3
9,000,000
1977-78. . .
12,400,000
1973-7 4
9,600,000
1978-79. . .
13,200,000
â– VEHICLE REGISTRATIONS-
THE COMMONWEALTH OF PUERTO RICO General
Puerto Rico is the fourth largest of the islands in the Caribbean area. It is about 100 miles long and 35 miles wide, having an area of 3,423 square miles
Expansion of Jesus T. Pinero Avenue, San Juan metropolitan area. Constant increase in vehicular traffic demands new traffic facilities as well as expansion of existing ones.
trucks PNOTRftCW^...,^ 1
BUSES AND PUBLiCOS
1
1
<-
'
4
MOTOR VEHICLE TRAVEL AND
ANNUAL TRAVEL PER VEHICLE PUERTO RICO
-
1950-1969(PROJECTED TO 1986)
12
1
1
tionship with the Federal Government is defined through the medium of the compact entered into by Congress and the People of Puerto Rico, and is
1
TOT/s(L ANNILIAL TR AVEL (ALL VEHICLES) S
1
further described hereinafter.
8 1 1
!
Government History
Puerto Rico came under United States sovereignty
1
1
by the Treaty of Paris on December 10, 1898. The Congress of the United States provided for a civil government for the Island in 1900. It provided
1
A NNUAL TRAVE
j-8-6 91
(PER VE:hicle)
for a Governor, a Cabinet, a Senate and a Supreme
Court Judiciary, aU appointed by the President of the United States; only a House of Delegates was elected by the People of Puerto Rico.
Over succeeding years strong feeling developed 2â&#x2013;
for a more autonomous form of government and in
1
1
favor of United States citizenship. The original Act
1
was superseded in 1917 by the Orgamc Act or Jones Act, which granted United States citizenship to Puerto Ricans, as well as unrestricted suffrage for 1950
55
60
65
80
1990
local purposes. It also provided that members of both Senate and House were to be elected by the
people, but the Executive and Judicial branches re mained imder control of Washington through ap and a population of approximately 2,739,000. The
pointment by the President.
topography is characterized by a fertile coastal plain rising to interior mountains which run mostly â&#x20AC;&#x201D;1 from east to west. San Juan, Capital of Puerto Rico
No further change occurred until 1946 when the President for the first time appointed a Puerto Rican as Governor. In 1947 the Jones Act was amended
lies some 1,690 miles southeast of New York,
to permit Puerto Ricans to elect their own Governor, who in turn was empowered to appoint his cabinet
9-6-6 1
hours by jet plane, and 1,000 miles southeast of Miami, 2V4 hours by jet plane. V
Under its compact with the United States, the Commonwealth of Puerto Rico exercises virtually the same control over its internal affairs, and with
the same general procedures, as do the fifty federated States over theirs. It differs from the States primarily in its relationship to the Federal Government. In brief, residents of Puerto Rico do not vote in the
and members of the Supreme Court.
The next advance toward complete local govern
ment occurred in 1950 when, in accordance with t e
wishes of the People of Puerto Rico, the 81st Congress enacted Public Law 600, approved July , This law, which is "in the nature of a compac , became effective upon its acceptance by t e e ec torate of Puerto Rico. It provides that those sections
national elections and are represented in Congress only by a Resident Commissioner who has a voice but no vote in the House of Representatives. On the other hand. Federal taxes do not apply in Puerto Rico except by mutual consent, such as social security
of the Organic Act which define the pohtical, eco
taxes. No Federal income tax is collected from Puerto Rican residents on income earned in Puerto Rico and
Puerto Rico to draft and approve their own con
Federal excise taxes collected on exported Puerto Rican products, such as rum and tobacco, are re turned to the Commonwealth Treasury. This rela
nomic and fiscal relationship between Puerto and the United States shall remain in full
co
shall be thereafter known as the Puerto Rican Federal Relations Act. It also authorized the people of stitution. The Constitution was drafted by a freely elected constitutional convention, overwhelming y ap
proved in a special referendum, and approved by Congress and the President. It became effective upon 9
proclamation of the Governor of Puerto Rico on July 25, 1952.
The Commonwealth Government
appointed by the Governor subject to Senate ap proval. In addition, Puerto Rico has made substantial use of public corporations or agencies which are largely autonomous in their operations in providing specific services. Each is headed by an executive director or president who reports to a board of
The Constitution recognizes and assures a separa
directors which in turn is appointed by the Governor.
tion of powers among the executive, legislative, and judicial branches as in the Federal Constitution, and
State, whose Secretary becomes acting Governor or
as in those of the States. Both the Governor and the
bicameral legislature are subject to regular election
every four years. The Legislature operates under standard parliamentary and legislative rules. Writs of error and appeals from judgments of the District Court of the United States for Puerto Rico may be taken to the United States Court of Appeals for the First Circuit and to the Supreme Court of the United States and writs of error and appeals from judgments
of the Supreme Court of Puerto Rico may be taken to the Supreme Court of the United States, in the same manner and under the same terms and condi tions as writs of error and appeals may be taken from
Among the departments is the Department of succeeds to the governorship in the absence or death of the elected Governor. Other departments include those of Treasury, Justice, Education, Public Works, Public Health, Commerce, Labor, Agriculture and Social Services. All activities of the departments are financed out of the General Fund of the Common
wealth Treasury, in accordance with an annual
budget prepared under the direction of the Governor and approved by the Legislature. The staff agencies of the Office of the Governor comprise the Bureau of the Budget, the Planning Board and the Office of Personnel.
local political subdivisions and are comparable to
Among the public corporations are the Water Re sources Authority which provides essentially all elec tric power on the island, the Aqueduct and Sewer Authority which provides all water and sewage ser vices, the Ports Authority responsible for seaport and airport facilities and the Highway Authority which is charged with building all major road and
counties in scope. The only units of government with the right to levy ad valorem taxes are the
highway constructions, all of whose borrowings are secured by revenues produced by the entities, or by
other Federal and State courts.
Governmental responsibilities assumed by the Commonwealth are greater than those normally as
sumed by a State government. Municipalities which combine both rural and urban areas are the only
Commonwealth Government and the municipalities. There is, therefore, no other overlapping taxation or bonded indebtedness payable from taxes. The Commonwealth Government assumes responsibility for a number of important functions normally per
gasoline taxes in the case of the Highway Authority. The Government Development Bank and the Indus trial Development Company likewise are autonomous
agencies which, after receiving substantial capital contributions from the Treasury originally, have sub
formed by local governments in the Continental
sequently augmented their funds by borrowing on
United States. Among these are police and fire pro
their own credit.
tection, education, all major street construction, and
public health and welfare programs. In addition, the Commonwealth Government supervises municipal fiscal affairs to a very substantial extent.
Among other public corporations are the Renewal and Housing Corporation facUities Buildings Authority, which provide for persons of low and medium incomes
office
space for government departments and agencies, re Administration of Government
The operation of the executive branch of the gov ernment is similar to that in state governments in
general, with separate departments responsible for major activities, each headed by a secretary who as a group form the Governor's cabinet and who are 10
spectively. Bonds of each are guarantee ^ Commonwealth government but they are se supporting in the first instances through receipts o mortgage payments or rentals in the case of ow an middle income housing, and from lease payments from government departments or agencies in the latter case.
establishing the present Commonwealth political
Political Background
relationship. In 1938 a political party emerged in Puerto Rico which was to emphasize economic development to improve the welfare of the people. From 1940 until the elections in November, 1968, as the Popular Democratic Party, it was in control of the govern ment of Puerto Rico, and was instrumental in
Since 1948 there have been two major pohtical thrusts in political life in Puerto Rico towards close association with the United States and a minor and
almost negligible one in favor of independence. The trends are illustrated in the foUowing data on election results by parties in recent years.
Commonwealth
Popular Democratic Party Peoples Party
64.8% —
62.5% —
62.4%
12.9% — 3.3% 19.0% —
25.0% — — 12.5% —
34.3%
59.4%
41.8% 10.0%
Statehood
Statehood Republican Party New Progressive Party Socialist Party Independence Party Christian Action Party
34.6%
0.2% 45.0%
Munoz Rivera Expressway construction, San Juan skyline in background.
f
Heavy traffic on John F. Kennedy Avenue.
Governor Luis A. Ferre, a prominent and highly successful industrialist, as well as a leading philan
thropist, was the candidate in 1968 of the New Progressive Party which he organized in 1967 after leaving the Statehood Republican Party. He cam
paigned on the basis of a need for change and for more effective government through new leadership. Political status did not receive emphasis as an imme diate issue. He received 45.0% of the vote in the
recent election, compared with 41.8% of the vote
received by the candidate of the Popular Democratic Party. In the Legislature, the New Progressive Party
also gained control of the House of Representatives, although the Popular Democratic Party retained con trol of the Senate, thus definitely establishing a two party system of Government.
Three factors pertaining to elections m Puerto
Rico are worthy of mention. There is strong public interest in government affairs and a high degree of voter participation in elections. In the 1968 elections, 79.3% of those registered actually voted. Second, in order to reduce pressure from specia
interests, Puerto Rican law limits political contribu
tions from any one person or corporation to $300 in
any one election year and $100 annually in other years. Yet, recognizing the needs for funds to bring issues to the attention of, and to inform the voters, each recognized political party receives from the Commonwealth Treasury a contribution of funds to carry out its political campaign. This contribution is
according to a formula based primarily on the party's percentage of votes cast in the most recent election. And third, Puerto Rican law provides that if a
minority party receives a substantial vote, but fails to elect candidates to the Legislature, then, under certain circumstances that body is increased in size
by formula to assure minority representation. The Municipal Law (Act No. 142, approved July 21, 1960) also assures minority representation in the
Municipal Assemblies since at least three members of each of these bodies have to be elected from the minority parties. 1967 Plebiscite
In 1962 the Legislature of Puerto Rico petitioned
the Congress of the United States requesting a pleb-
iscite by the voters of Puerto Rico through which an
sults of the plebiscite is shown below:
expression of preference could be demonstrated for either a continuation of the existing commonwealth relationship with the United States, or the attainment of Federal Statehood in the United States, or the
425,132 (60.4%) 274,312 (39.0%)
4,248 ( 0.6%)
Commonwealth Statehood
Independent
establishment of Puerto Rico as an independent country.
In response to the petition, the Congress approved a bill in 1964 providing for the establishment of a
Expansion and Diversification of the Economy of Puerto Rico
United States-Puerto Rico Commission to study all the factors involved. The membership of this Com mission consisted of three persons appointed by the
Economic growth in Puerto Rico since 1950 has been very rapid. Gross product of the Common
President of the United States, two each selected by the Senate and the House of Representatives, and six appointed by the Governor of Puerto Rico. The Commission concluded that the people of Puerto Rico should be consulted with regard to the status they preferred and, in December, 1966, the Puerto Rican Legislature passed an act providing for the holding of the prebiscite. This plebiscite, held July 23, 1967, strongly re affirmed the overwhelming desire of the Puerto Rican people to maintain permanent and close ties with the
level and has more than doubled during the past ten
United States. Of the over 700,000 ballots cast (66.3
vious year. Per capita net income is now $1,234 com pared to $279 in 1950. The Commonwealth Government's program of in dustrialization has aided the economy to shift from
percent of all registered votes) 99.4 percent were for either Commonwealth or Statehood and only 0.6 per cent for Independence. A tabulation of the actual re
wealth has increased more than 5 times over its 1950
years ($4,093 million in 1968 vs $1,681 million in
1960). In the year ended June 30, 1969 gross product totalled an estimated $4,093 million, repre senting an increase of 10.6% over the prior year. Net income of the economy has increased from a level of $614 million in 1950 to $3,403 million in 1969. Income, measured in current prices, has shown an average increase during the last five years of about 10.3% compounded annually and in the year ended
June 30, 1969 it increased by 10.5% over the pre
New San Juan Center in Hato Rey with its high-rise commercial and residential buildings will generate heavy traffic in the near future.
one principally agricultural to one much better diver sified between industry and agriculture. Concurrently with the expansion in net agricultural income from $149 million in 1949-50 to about $175 million in
1968-69, manufacturing income increased from $89
million to $908 million in 1968-69, substantially sur passing agriculture as a source of income.
Puerto Rican manufacturing has been increasingly diversified during the last two decades. In 1939-40 the manufacture of sugar products accounted for 35% of manufacturing income. By 1966-67 about 4.5% of manufacturing income resulted from this
industry. Manufacturing income is now generally derived from the production of new types of manu factured products, principally for shipment to the
United States. Such shipments amounted to only $33 million in 1949-50. By 1968-69 they had reached a total of about $1,160 million.
These new products cover a wide range such as apparel, petroleum derivatives and electronic prod ucts. Large heavily capitalized manufacturing oper ations have shown a significant increase in recent
years (specially during the last two fiscal years) as
Modern highway adjacent to El Tuque Beach, Ponce, on the south coast of Puerto Rico.
compared to labor intensive operations which were promoted during the early part of the industrializa tion program. Some of the more important of the larger operations promoted during last year alone include the Union Carbide Corporation, which is in
diversification of primary and secondary products that includes gasoline, naphtha and a wide spectrum of aromatic products and olefins. Expansion in this
the process of making expansion totaling approxi mately $225,000,000, PPG Industries with a poten
sector is continuing with the incoming of Sun Oil Company which has announced its intention to invest
tial investment of $65,000,000, Fibers International
up to $120,000,000 through 1971, the expansion of the operations of Union Carbide Caribe up to $225,000,000 in investment, the entrance of PPG Industries with three plants to produce caustic soda, ethylene glycols and vinyl chloride with an expected investment of $65,000,000 and further expansion by Commonwealth Oil Refining Co. Inc., and Phillips Puerto Rico Core. It is expected that the next few years will see an expansion in this sector that will bring the total investment up to $1,058 millions, thus making this sector the largest part of the industrial ization program of the island. To date no major difficulties have been encountered with respect to import quotas for the crude oil and other feedstocks needed by this industry on the island. Should tariffs replace such quotas as proposed by the Cabinet Task
with a planned expansion of $41,000,000 for the
production of nylon fibers, which will serve as raw material in the attraction of new textile and apparel industries; Air Products & Chemicals, $9,000,000;
AIRCO Ponce, Inc., $18,000,000; and other large operations, such as: Bristol Alpha Corporation, Squibb Beech-Nut, Inc., Southern Screw Company, Shulte & Diekoff (a German concern), Hercor
Chemical Corporation, Pennyrich International and
many others that form part of the 493 projects pro moted during last fiscal year.
The petrochemical industry is steadily becoming the most important industrial sector. Its increasing
importance to the economy of the Commonwealth is signaled by its recent developments and its rapid growth. From an investment of $96,328,000 in 1960
rapidly developed in the recent years with a growing
Force on oil import control, no material adverse ef
with two refineries (Commonwealth Oil Refining Co.
fect is expected, at least so long as the proposed pref
Inc., and Caribbean Gulf Refinery) the industry has
erence is granted for Venezuela crude.
Food, pharmaceutical and textile and apparel in dustries have also been of significant importance in industrial development. Three rice mills and large flour and feed mills supply an important share of Puerto Rico requirements in their field. Four large tuna canneries are now in operation and with an additional one under construction the island has be
come one of the leading suppliers of canned fish in the United States market.
Dodge, Sun Oil Company, Daystrom, Carborundum, Sprague Electric Co., Van Camp Sea Food, General Foods Corporation, Van Raalte, Hooker Chemical Corporation, PPG Industries Inc., B.V.D., BristolMyers Co., International Shoe, R.C.A. Corp., West-
inghouse Electric Corp., Merck, Abbott Laboratories, Lilly (Eli) & Co., Squibb Beech-Nut, Inc., Libby McNeil & Libby, Del Monte Corp. and many others. Underlying Puerto Rico's growing and changing economy there has been a steady expansion in in vestment. Average gross fixed domestic investment
In the pharmaceutical and chemical industry sec tor Puerto Rico is rapidly becoming a manufacturing center. Bristol Alpha Corporation, Merck & Com pany, Pharmaseal Laboratories, Squibb Beech-Nut, Inc., Abbott Laboratories, Lilly (Eli) & Co., Parke, Davis & Co., and others manufacture pharmaceutical products in Puerto Rico principally for export to
in 1969. Inflowing long-term U. S. capital rose from $31 million in postwar 1947 to an estimated $630
outside markets.
million in 1968.
The textile and apparel industry has continued to expand and is expected to continue to grow with the expansion of Fibers International, Inc., which is a
The Puerto Rican people have benefitted greatly from the economic expansion achieved since 1950.
source of raw material in the form of nylon 66 fibers and nylon carpet yarns.
Many of the plants encouraged by the Economic Development Administration are branches or subsid iaries set up by such parent firms as General Electric Co., American Can Co., Consolidated Cigar, Phelps
during the last five consecutive fiscal years, 1965-69, ran at a rate of 26% of gross product. It has in creased from $112 million in 1950 to $1,090 million
Life expectancy has increased from 61 years to 70 years and the death rate has declined from 10.5 per thousand to 6.1 per thousand at present, which is now about the same as the U. S. average. The birth rate has declined from 39.6 per thousand in 1950 to
24.8 per thousand in 1969. The people are better educated, with literacy increased from 75% to about
The longest bridge in Puerto Rico is located on Route PR-2, Arecibo.
86% in 1967. Institutions of higher learning have also expanded rapidly. University and coUege enroll ment which was only 13,000 in 1950, now has
The Commonwealth Government will continue to
provide a climate inducive to further economic devel opment and growth. Thus it is expected that in the years ahead a sustained rate of economic growth can be maintained. Present projections indicate that gross
48,000 students.
It is significant that the Commonwealth Govern ment has in the last three years directed approxi mately 47% of its expenditures to education and
product in terms of current prices should reach $7,460 million in 1975. This will mean a personal income per capita of approximately $1,855.
health.
STATISTICAL DATA CONCERNING THE ECONOMY OF THE COMMONWEALTH OF PUERTO RICO Fiscal Years Ending June 30
1950
1955
I960
Population Gross product—$ millions. .
2,218,000
2,240,000 1,142
1965
Net income—$ millions ...
614
960
2,350,000 1,681 1,353
Exports—$ millions Exports by new factoriesf—
235
353
622
755
$ millions Bank debits—$ millions ... Bank loans—$ millions ...
1966
2,626,000 2,686,000 2,748 3,050 2,314 2,538 1,155 974
1967
1968
1969
2,713,000 3,358 2,779 1,321
2,735,200 3,740 3,076 1,449
2,777,000 4,093 3,403 1,496
33
132
380
640
804
926
319
418
835
128
217
450
1,661 1,010
1,893 1,210
1,841 1,220
1,012 1,715 1,362
1,092 2,123 1,670
270
323
562
1,207
1,349
1,556
1,830
2,616
51
77
152
298
304
346
407
486
28
32
63
127
141
162
186
220
14
21
32
40
44
48
49
53
Bank deposits (including governmental) —$ millions
Private savings accounts— $ millions Income tax collections—
$ millions
Property tax collection^— $ millions Assessed valuation* (real & personal property)— $ millions Average family income—$.
459
982
1,500 61,000
2,194 105,000
1,643 2,836 180,000
2,503 4,143 319,000
2,828 4,486 380,000
3,150 4,679 421,000
3,448 5,178 470,000
3,556 5,391 538,000
431,000
529,000
627,000
699,000
708,000
738,000
750,000
770,000*
36
55
132
226
240
228
262
Hydro
199
253
200
163
238
194
127
258
Thermal
340
710
1,822
3,656
4,192
4,847
5,644
6,397
Motor vehicles—number ..
Enrollment in public day schools
Estimated value of building permits issued—$ millions Electricity generated§—mil
268
lions of kilowatt-hours
* As of January 1 of preceding fiscal year. Preliminary.
t Promoted by the Economic Development Administration. Does not include exports of other new factories, t Commonwealth and Municipal.
§ Includes purchased power.
Note: Figures shown above are subject to revision from year to year. Source: Puerto Rico Planning Board. Data for 1965-69 subject to revision.
16
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CONSTRUCTION
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UNDER CONSTRUCTION AND FY. 1969-1970
SAN
F.Y.
1970-1971
FY.
1971-1972
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1972-1973 1973-1974
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131 1 Ponce de l.eon Avenue. San Juan, Puerto Rico ()090S / 45 Wall Street. New York, N.Y. 10005