i 5 () 0. ^5
Highway Authority Commonwealth of Puerto Rico
Government Development Bank for Puerto Rico San Juan,Puerto Rico
¥■
DATE DUE
625.7 Banco Gub. de Fom. para P.R. B213s 1970
A special report on Puertc Rico Highway Authority.
C.i^ATE
ISSUED TO
Governor Luis A. Ferre
625.7 B213S
1970
J. Raymond Watson Executive Director
Banco Gub. de Fom. para.-P.R. A special report on Puerto Rico Highway Authority.
C.2
Principal Officers ZQUEZ Secretary of Public Works
J. RAYMOND WATSON Executive Director ANGEL LUIS ALLENDE
Deputy Executive Director ANGEL R. CABAN
Special Assistant ILL
3 Planning Board f Juana Diaz
HUMBERTO CUEBAS
Assistant Executive Director-Finance FELIX L. GONZALEZ Controller JOSE R. AYALA Treasurer ANGEL SANTIAGO MATOS
Assistant Executive Director-Planning GERMAN LANDRAU
Assistant Executive Director for Design MANUEL FEBO ORTEGA
Assistant Executive Director for Construction ANGEL LUIS RODRIGUEZ
Assistant Executive Director for Administration JOSE E. ROSSY
Assistant Executive Director for Right of Way Acquisition and Management HOMERO RIVERA PEREZ Internal Auditor
SOFIA HEYN
Legal Advisor SAMUEL CAMPOS LOPEZ Public Relations Officer DANIEL SOSA BERRIOS
Safety Officer
Consulting Staff ON THE COVER
The Mayaguez-Po)ice Expressway links Puerto Rico's second and third largest cities and helps to open jor development the entire south coast of the island. Shown here is the GuayanillaTallaboa Section.
Wilbur Smith and Associates, Traffic Engineers
Auditors Peat, Marwick, Mitchell & Co.
COMMONWEALTH OF PUERTO RICO
Puerto Rico
Highway Authority The Puerto Rico Highway Authority, a body cor porate and politic constituting a public corporation and governmental instrumentality of the Common wealth of Puerto Rico, was created by Act No. 74 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.
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 dustry was to spread throughout the Island, and not
HIGHWAY AUTHORITY The Authority was created, therefore, to provide a separate public agency, whose sole responsibility was directed towards improving vehicular transpor tation 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 established.
The Authority has broad powers under the Puerto 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 acquired by it; to have complete control and super vision over the character of and necessity for all of 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
be concentrated around the San Juan and Ponce
determine, fix, impose, alter and collect tolls or fer riage, rentals, assessments and other reasonable charges for the use of the traffic facilities owned,
harbor areas.
operated, constructed, acquired or financed by the
Triijillo Alto Avenue is a four-fane, divided arterial highway in Metropolitan San Juan.
k
subject to the provisions of Section 8 of Article VI
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 annual appropriations from the Commonwealth Gen eral Fund and by Commonwealth bond issues which included among various other purposes, funds for
of the Constitution of the Commonwealth, to pledge
highways and streets. During the eleven-year period
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,
for the payment of said bonds and interest thereon,
the proceeds of any tax or other funds which may be
1956-1966, approximately $291,800,000 had been
appropriated from the General Fund for this purpose,
made available to the Authority by the Common
and at the end of 1966, out of total Commonwealth
wealth; to issue bonds for the purpose of funding,
bonds outstanding, approximately $121,000,000 of these bonds had been issued for highway and street
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
improvements. These bonds consist of a number of issues dating back to 1950, and constitute an obli
gation of the Commonwealth payable from General Fund revenues.
wealth of Puerto Rico nor any political subdivision thereof shall be liable for the payment of the prin
Importance of Commonwealth Highway System
cipal of or interest on any bonds issued by the Authority and such principal and interest shall be payable only from the funds of the Authority pledged
The Commonwealth Highway System is a vital fac tor to the well-being and economic progress of the Commonwealth. The highways provide for the inter
for such payment under the Act.
city movement of persons and goods and function as
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
main arteries over which the industrial, commercial
and agricultural products of the Commonwealth 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 sys tem. An improved highway system is also important to the movement of tourist traffic to the resort areas
to pay, totally or partially, and with funds of the
and beaches of the Island. It is therefore imperative
Commonwealth covered into the Public Treasury,
that the System keep pace with the economic growth
the repair, maintenance and operation costs of any
of the Island and be sufficient not only to sustain the
traffic facilities financed under the provisions of the
normal growth but be adequate to induce a further expanded growth.
Act.
As a result of the growing awareness of the vital
Existing Commonwealth Highway System
The present Puerto Rico Highway System totals 6,315 miles, consisting of 3,965 miles of Common wealth Highway System primary, secondary and municipal highways and public housing development roads, and 2,350 miles of municipal system local
city streets and vicinal roads. In the Commonwealth Highway System there are 527 miles of primary system highways comprising the more important routes in terms of inter-regional traffic, 1,200 miles
of secondary system highways serving the needs of intra-regional traffic and 2,238 miles of municipal
necessity of accelerating highway construction, the Authority was created and revenues were provided to implement the construction program. Resources Available to the Authority Gasoline Tax. At the same time that the Author
ity 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 8(f to 11^^ and allocated the revenues from 6/llths of the net receipts from this tax to the Authority for highway construction or to finance construction. Ad-
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Gradinu for a municipal road in Sabana Grande, in the southwestern part of the island east of San German.
ditional funds were provided to the Authority by Act
No. 24 approved June 20, 1970. This Act allocated to the Authority the full ll(i of the gasoline tax per gallon now being levied. Of this increase the alloca tion of Id became effective July 1, 1970 and the re maining 3(? allocation will become effective July 1,
of right-of-way be included in the annual budget sub mitted to the Legislature, estimated at approximately $20,000,000 for each of the years 1971-72 to 1974-75.
In the Bond Resolution the Authority covenants
1971.
Gas OH and Diesel Oil Tax. Act No. 24 approved June 20, 1970 increased the present Atj; per gallon tax on gas oil or diesel oil to per gallon effective July 1, 1970, and allocated to the Authority the revenues received from A<j: of the tax.
Right-of-way. In the past the Legislature has appropriated certain amounts annually for right-ofway acquisitions and appropriations of additional amounts for this purpose will be requested in the future, under the procedure outlined in the follow
ing paragraph. Such appropriations were as follows: 1965-66
The Authority will continue to request each year that the full amount of funds required for purchases
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 Fis cal Agent and the Traffic Engineers, a statement set
ting 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 right-ofway which will be needed to carry out such program
and the respective dates by which they will be needed, and (iv) the estimated costs of such rightof-way and the amount of general funds of the Com monwealth which the Legislature is requested to appropriate for such purpose. The Authority cove
1967-68
i 9,250,000 7,900,000 6.000,000
1968-69
9,000,000
nants that it will, pursuant to Section 14 of the Puerto Rico Highway Authority Act, file a copy of
1969-70
11,000,000
such statement with the Legislature prior to its next
1970-71
7,100,000
1966-67
regular session.
Federal Aid. The Authority also benefits from 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 must be matched equally by Puerto Rico. Apportion ments have averaged over $6,600,000 annually in
recent years but will amount to $15,900,000 for 1970-71. It is estimated for projection purposes that
such appropriations will amount to $8,400,000 in future years. Toils. 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 exist
At present two limited access, divided highways are under construction. In designing both highways provision has been made for the imposition of tolls to provide supplemental revenues in order to expe dite 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 Arecibo, and will eventually be extended to Mayaguez, located on the west coast. It is presently esti mated that approximately 20 miles of limited access roads will be completed by Deeember 31, 1971. Toll collection facilities will be installed, tolls will
be imposed and the initially constructed facilities will be used for training personnel in the operations
ing 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 im posed on traffic facilities financed under the Bond Resolution, for any particular period of time, or at
of toll collections. Additional sections will be com
any particular level of rates and it will retain the right to change or to eliminate any such tolls, if
In addition to the gasoline and diesel oil taxes, additional highway user taxes are imposed, consist ing of registration fees, operators' licenses, miscel laneous motor vehicle fees (such as duplicate
imposed, at its discretion, in the best interests of the
economy of Puerto Rico. However, any such tolls as
pleted during 1972. Present Highway User Taxes and Fees
may be collected on traffic facilities in and under the Bond Resolution will be pledged to the payment of
licenses, transfers, titling fees, etc.) and various
any bonds issued thereunder.
taxes are credited to the General Fund of the Com-
The Loiza Expressway, pictured here at the Iiiterchange with Ca/npo Rico Avenue, is a six-lane, controlled access highway in
Metropolitan San Juan.
excise taxes. All revenues from these latter fees and
monwealth and are not available to the Authority in any respect. Revenues from
registration fees and
related
charges totaled $14,251,000 and operators' licenses $431,000 for 1969-70. Annual excise tax collections
on motor vehicles, parts and accessories have aver
aged about $35,000,000 for the five years ending June 30, 1970. Excise taxes on motor vehicles and
registration fees were substantially reduced by Legis lative Acts No. 1 of May 1970 and No. 4 of June 1970.
As stated heretofore, the gasoline tax was in creased in 1965 to llf' from 8(i per gallon, the tax in effect since 1947. The retail price of gasoline is subject to control by the Consumer Services Admin istration and is related to the current cost to the
retail dealer. It presently averages 33(i per gallon, tax included, and the price of premium gasoline averages 38^ per gallon, tax also included.
Commonwealth Highway System— Results, 1966-1970
III
Original Priority Program. In July 1966 the Authority retained the firm of Wilbur Smith and Associates, Consulting Engineers, hereinafter re
ferred to as the "Traffic Engineers" or "Engineers", to conduct a study of the highway needs of the Commonwealth System, to recommend a construc tion program and to estimate revenues available for its implementation.
In the report of the Engineers dated March, 1968,
1 he first section of the new ^cin Jiicin-rcnce 1 oil
Road, from Ponce to Jtiana Diaz, is Hearing completion. This expressway, the first toll road on the island, will link the two largest commercial centers.
States. By 1986 the population is expected to total 4.1 million persons, an increase of 51.9% over 1967 (47.7% over 1970)
a five-year priority improvement program, estimated
2. The number of motor vehicles has been
to require an expenditure of $394,500,000, was
increasing at a relatively faster rate than popu lation. In 1960, there were 172,000 registered
recommended. This priority program, which was
part of an existing backlog of highway needs esti mated at $707,800,000, included those projects
motor vehicles and in 1967 403,000 (1970
believed by the Engineers and the Authority to rep
614,000) were registered, an increase of approx imately 134% (1970—257%) since 1960. By
resent the most critical needs and those required to bring the greatest economic benefit to highway users and to the general economy of the Commonwealth.
over one million registered motor vehicles, more
The reasons for the need for highway improve ments were then identified by the Engineers as:
1 - The population of Puerto Rico has in
creased substantially in the past and is expected to grow rapidly in the future. In 1960 the popu
1986 it is estimated that there will be slightly
than 21/2 times the 1967 (1.7 times the 1970)
total. Density of motor vehicle ownership, which changed from 38.7 persons per vehicle in 1950 to 6.7 persons in 1967 (4.4 in 1970), is expected to become 4.0 persons per vehicle by 1986.
3. Highway travel, which increased by 243%
lation totaled 2.3 million and in 1967 was esti mated at 2.7 million (1970—2.8 million), an increase of over 17% (1970—21.7%), com
billion vehicle-miles by 1986, an increase of 88.4% over the 4.3 billion for 1967 (58.8%
pared to an increase of 11.7% for the United
over the 5.1 billion for 1970).
between 1950 and 1960, is expected to total 8.1
These indicators of intensified highway use— population, 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, second ary and urban systems. In addition the total pro
for reconstruction, and for right-of-way acquisition. It was believed that this program represented an
gram costs included costs for the municipal system,
the Commonwealth.
excellent approach toward satisfying the highway needs of Puerto Rico and would alleviate traffic
congestion, reduce the number and severity of acci dents, reduce travel time, and, in general, benefit both the highway users and the general economy of
COMMONWEALTH HIGHWAY SYSTEM—PROGRAM, 1971-1975 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 in 1969 prepared a revised five year priority program which called for a construction schedule at a much faster rate than was estimated when the original studies were made in 1967-68. Actual expenditures for the first year, 1969-70, of this revised five year priority program exceeded estimates by approximately $7,300,000. In accordance with the requirements of the Bond Resolution which calls for an updating each year of the Traffic Facilities to be constructed by the Authority
in the ensuing five year period, a revised current Priority Program has been prepared by the Authority. 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 1970-71, of $618,300,000. The estimated annual costs, excluding debt service, and the required funds for its implementation are set forth below. Projected Expenditures Fiscal Year 1970-71
1971-72
1972-73
1973-74
1974-75
Total
(thousands of dollars)
Design Right-of-Way
$ 6,000 19,500
$ 5,500 $ 4,600 $ 2,000 $ 2,000 $ 20,100 20,000 20,000 20,000 20,000 99,500
Construction
76,100
92,200
78,900
75,900
62,400
385,500
Special Programs(l)
17,500
14,000
12,000
12,000
12,000
67,500
8,300
8,800
9,200
9,500
9,900
45,700
$127,400
$140,500
$124,700
$119,400
$106,300
7,100(3)
20,000
20,000
20,000
20,000
87,100
15,900(4)
8,400
8,400
8,400
8,400
49,500
Administration and Operation Total
Less Appropriations of Commonwealth
Funds for Right-of-Way
Federal Aid
$618,300(2)
Net Funds Required, excluding debt serv ice from sasoline tax revenues, bor
rowings and additional sources
$104,400
$112,100 $ 96,300 $ 91,000 $ 77,900 $481,700
(1) Includes Municipal Roads (design, right-of-way and construction) reconstruction, safety, urban mass transportation and TOPICS (Traffic Operation Program to Increase Capacity and Safety).
(2) Excluding debt service, which if added would increase this total program to around $740,000,000, depending upon time and cost of financing.
(3) Appropriated.
(4) Includes $7,000,000 special appropriation. 6
Historic and Projected Trends of Gasoline Tax Revenues
Set forth below are actual gasoline tax revenues for the past nine years and the amount allocated to the Authority since its creation. Projected revenues and allocations have been reviewed and concurred in by the Traffic Engineers.
Pursuant to that provision the Authority has en tered into an agreement with the Secretary of Pubhc Works by which he has agreed to pay the costs of maintaining, repairing and operating all traffic facili
ties 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 the General Fund of the Commonwealth which are
Fiscal Years
Total Net
Ending
Gasoline
June 30
Tax Revenue
1962
.
1963 1964 1965 1966
1967 1968 1969 1970
Authority
made available for such purposes. To provide fur
Allocation of Net Gasoline Tax Revenue
ther assurance with respect to maintenance, the Authority covenants in the Bond Resolution that it will cause an annual general evaluation to be made by the Traffic Engineers of the level of maintenance
$14,773,0001
17,811,000 1 20,142,000 ( (1) 22,358,000J 31,861,000 (2) 34,500,000 36,428,000 40,125,000 43,339,000
of such Traffic Facilities and that such evaluation $17,388,000 18,822,000 19,908,000 21,887,000 23,710,000
Projected
will be filed with the Secretary of Public Works and the Secretary of the Treasury. Moreover, the Au thority covenants that if and to the extent that main tenance of the highway system is not adequate as set forth in the annual survey to be made by the Engi neers, in accordance with the provisions of the Bond Resolution, the Authority will provide such main tenance costs from unencumbered funds then on
1981
45,650,000 47,870,000 50,151,000 52,300,000 54,448,000 56,596,000 58,744,000 60,893,000 63,041,000 65,189,000 67,337,000
1982
69.486.000
1983
71,634,000 73,782,000 75,930,000 78,078,000
1971 1972 1973 1974
1975 1976
1977 1978 1979 1980
1984 1985
1986
33,200,000 47,870,000 50,151,000 52,300,000 54,448,000 56,596,000 58,744,000 60,893,000 63,041,000 65,189,000 67,337,000 69,486,000 71,634,000 73,782,000 75,930,000 78,078,000
deposit in the Construction Fund or from the reve nues thereafter deposited to the credit of the Con struction Fund.
The Consulting Engineers have informed the Au thority that although, in general, maintenance may
have been adequate overall, those projects which The proliferation of shopping centers in the San Juan area underscores the continuing need for
improved access roads and expressway connections.
( 1 ) Gasoline tax 8c" per gallon. (2) Gasoline tax increased to lie?, effective July 1, 1965. Maintenance
Maintenance of the Commonwealth Highway Sys tem is the responsibility of the Department of Public
Works. The Puerto Rico Highway Authority Act provides that the Authority may enter into agree ments under which the Secretary of Public Works agrees to pay, totally or partially, the cost of repairs,
maintenance, and operation of any traffic facilities financed under the provisions of that Act with funds from the Commonwealth General Fund covered into
the public treasury.
mm ^
John F. Kennedy A venue in Metropolitan San Juan carries a heavy flow of commuter
traffic. Six lanes in width, the two center lanes are used for inbound traffic in the morning and for outbound traffic in late afternoon.
presently require maintenance should receive early attention in order to inhibit deterioration which can
be expected to accelerate in the absence of correc tive action.
The level of required maintenance expenditures over the next ten years is estimated to be approxi mately as follows: 1970-71 1971-72 1972-73 1973-74 1974-75
$ 8,100,000 8,700,000 9,000,000 9,600,000 10,200,000
1975-76 1976-77 1977-78 1978-79 1979-80
$10,800,000 11,600,000 12,400,000 13,200,000 14,000,000
agency, including the Highway Authority, as of Oetober 13, 1970, has been served with any notice that any such suit has been filed against them. Exceptionally heavy rainfall occurred over all of the Puerto Rico area for most of the week of Octo
ber 5th and press reports indicate that flooding has caused substantial damage. Preliminary estimates of the amount of damage to roads and bridges under the responsibility of the Highway Authority have been assessed at approximately $4,300,000. COMMONWEALTH OF PUERTO RICO General Information
Flood Damage and Potential Litigation
According to a statement published recently in the local press, a group of residents of San Juan have filed suit against the Commonwealth government, the Municipality of San Juan, several private firms and various Commonwealth agencies, claiming $10,000,000 for damages allegedly arising from
flooding conditions in various low-lying areas in Metropolitan San Juan during two days of heavy rain in June. According to the Department of Justice of the Commonwealth, no Government
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 and a population of 2,688,289 according to 1970 preliminary census. The topography is characterized by a fertile coastal plain rising to interior mountains which run mostly from east to west. San Juan, Cap ital of Puerto Rico, lies some 1,690 miles southeast
of New York, VA hours by jet plane, and 1,000 miles southeast of Miami, 21A hours by jet plane. Under its compact with the United States, the
Commonwealth of Puerto Rico exercises virtually
gress enacted Public Law 600, approved July 3,
the same control over its internal affairs, and with the same general procedure as do the fifty federated
pact," became effective upon its acceptance by the
1950. This law, which is "in the nature of a com
States over theirs. It differs from the States pri
electorate of Puerto Rico. It provides that those
marily in its relationship to the Federal Government. In brief, residents of Puerto Rico do not vote in the
sections of the Organic Act which define the politi cal, economic and fiscal relationship between Puerto
national elections and are represented in Congress
Rico and the United States shall remain in full force and shall be thereafter known as the Puerto Rican
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 secu rity taxes. No Federal income tax is collected from Puerto Rican residents on income earned in Puerto
Rico and Federal excise taxes collected on exported Puerto Rican products, such as rum and tobacco, are returned to the Commonwealth Treasury. This rela
Federal Relations Act. It also authorized the People of Puerto Rico to draft and approve their own con stitution. The Constitution was drafted by a freely elected constitutional convention, overwhelmingly approved in a special referendum, and approved by Congress and the President. It became effective on July 25, 1952.
tionship with the Federal Government is defined
through the medium of a compact entered into by
The Commonwealth Government
Congress and the People of Puerto Rico, and is fur
The Constitution recognizes and assures a separa tion of powers as in the Federal Constitution, and
ther described hereinafter.
those of the States. Both the Governor and the
bicameral legislature are subject to regular election Government History
Puerto Rico came under United States sovereignty 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 for a Governor, a Cabinet, a Senate and a Supreme Court Judiciary, all 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 for a more autonomous form of government and in
favor of United States citizenship. The original Act was superseded in 1917 by the Organic Act or Jones
Act, which granted United States citizenship to Puerto Ricans, as well as unrestricted suffrage for local purposes. It also provided that members of
both Senate and House were to be elected by th: people, but the Executive and Judicial branches re
mained under control of Washington through ap pointment by the President.
In 1946 the President for the first time appointed a Puerto Rican as Governor. In 1947 the Jones Act was amended to permit Puerto Ricans to elect their
Governor, who was empowered to appoint his Cab inet and members of the Supreme Court.
The next advance toward complete local govern ment occurred in 1950 when, in accordance with the
wishes of the People of Ptierto Rico, the 81st Con
The Juncos By-Pass, representing the final tract oj the Caguas-Hinnacao Expressway, will be in service within a year.
Political Background
every four years. The Legislature operates under standard parliamentary and legislative rules. Governmental responsibilities assumed by the
In 1938 a political party emerged in Puerto Rico which was to emphasize economic development. From 1940 until the elections in November, 1968,
Commonwealth are greater than those normally
assumed by a State. Municipalities which combine both rural and urban areas are the only local politi cal subdivisions and are comparable to counties. The only units of government with the right to levy
as the Popular Democratic Party, it was in control of the government and was instrumental in estab
lishing the present Commonwealth political rela tionship.
ad valorem taxes are the Commonwealth Govern
Since 1948 there have been two major thrusts in
ment and the municipalities. There is, therefore, no other overlapping taxation or bonded indebtedness payable from taxes. The Commonwealth Govern ment assumes responsibility for a number of impor tant functions performed by local governments in the Continental United States. Among these are police and fire protection, education, major road
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 following data on election results by parties in recent years. Governor Luis A. Ferre, a prominent and highly successful industrialist, and a leading philanthro
and highway construction, and public health and welfare programs. In addition, the Commonwealth Government supervises municipal fiscal affairs.
pist, was the candidate in 1968 of the New Pro
gressive 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. He re ceived 45.0% of the vote compared with 41.8% by the candidate of the Popular Democratic Party.
Administration of Government
In the Legislature, the New Progressive Party gained
The operation of the executive branch of the gov ernment is similar to that in state governments, with separate departments responsible for major activi
control of the House of Representatives, although the Popular Democratic Party retained control of
the Senate, thus definitely establishing a two party
ties, each headed by a secretary who as a group
system.
form the Governor's cabinet and who are appointed
by the Governor subject to Senate approval. Puerto
1967 Plebiscite
Rico has also made substantial use of public cor porations or agencies which are largely autonomous
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 expression of preference could be demonstrated
in providing specific services. Each is headed by an executive director or president who reports to a board of directors appointed by the Governor.
1952
1956
1960
1964
1968
64.8%
62.5%
62.4%
59.4%
41.8%
—
—
—
—
10.0%
12.9%
25.0%
34.3%
34.6%
0.2%
—
—
—
—
3.3%
—
—
—
19.0%
12.5%
—
—
Commonwealth
Popular Democratic Party Peoples Party Statehood
Statehood Republican Party New Progressive Party
Socialist Party
Independence Party Christian Action Party 10
3.3%
2.7%
—
3.3%
45.0%
—
3.0%
for either a continuation of the existing common wealth relationship with the United States, or the attainment of Federated Statehood in the United
affirmed the overwhelming desire of the Puerto Rican people to maintain permanent and close ties with the United States. Of the over 700,000 ballots cast
States, or the establishment of Puerto Rico as an
(66.3 percent of all registered voters) 99.4 percent
independent country. In response. Congress approved a bill in 1964 providing for the establishment of a United StatesPuerto Rico Commission to study all factors. It con sisted of three persons appointed by the 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 Legis lature passed an act providing for the plebiscite. This plebiscite, held July 23, 1967, strongly re
were for either Commonwealth or Statehood and
only 0.6 percent for Independence. A tabulation of the actual results is shown below:
425,132 (60.4%)
Commonwealth
274,312 (39.0%)
Statehood
4,248( 0.6%)
Independence
Thus, only a declining minority has favored in dependence. Both major parties hold maintenance of permanent ties with the United States as a basic principle, and differ only as to the form which that future political relationship should take.
The Minloz Rivera Expressway in Metropolitan San Juan will ease East-West traffic congestion, relieving the rush hoar overload.
. -A
*-â&#x2013;
^h^m intervals along the new San Juan-Ponce Toll Road, viewed here near Ponce.
Expansion and Diversification of the Economy of Puerto Rico Economic growth in Puerto Rico has been very
rapid. Gross product has increased more than 5 times over its 1950 level and has more than doubled
during the past nine years ($4,093 million in 1969 vs $1,681 million in 1960). In the year ended June 30, 1969 gross product totalled an estimated $4,093 million, representing an increase of 10.6% over the prior year. Net income has increased from $1,355 million in 1960 to $3,759 million in 1970. Income, meas
ured in current prices, has shown an average in
crease during the last five years of about 10.7% compounded annually. Per capita net income is now $1,340 compared to $577 in 1960. The Commonwealth Government's program of industrialization has aided the economy to shift from
principally agricultural to diversification between industry and agriculture. Concurrently, with the expansion in net agricultural income from $149 million in
1949-50 to about $187 million in
1969-70, manufacturing income increased from $89 million to $965 million in 1969-70, substantially surpassing agriculture. Puerto Rican manufacturing has been increasingly
diversified during the last two decades. In 1939-40
/ between Juncos and Las Piedras, is helping to open southeastern Puerto Rico for the developnxent of both tourism and industry.
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 1969-70 they had reached a total of about $1,216 million.
These new products cover a wide range such as
apparel, petroleum derivatives and electronic prod ucts. Large, heavily capitalized manufacturing operations have shown a significant increase in re cent years (especially during the last two fiscal
years). Some of the more important of the larger operations promoted during last year alone include the Union Carbide Corporation, Fibers International 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 recent developments and rapid growth. From an investment of $96,328,000 in 1960 with
two refineries (Commonwealth Oil Refining Co. Inc., and Caribbean Gulf Refinery) the industry has rapidly developed in recent years with a growing diversification of primary and secondary products that include gasoline, naphtha and a wide spectrum of aromatic products and olefins. Expansion in this sector is continuing with the incoming of Sun Oil Company which has announced its intention to in vest up to $120,000,000 through 1971, expansion
This secondary Cagiias-Cidra road will help promote agricultural development in the area.
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 Phil lips Puerto Rico Core Inc. 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 million, thus making this sector the largest part of the industrialization 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.
^NIsEf'
*C Z-'/'.-K,.
Heavy equipment is used to grade a new expressway segment under construction in San Juan.
Should tariffs replace such quotas as proposed by the Cabinet Task Force On Oil Import Control no material adverse effect is expected, at least so long as the proposed preference is granted for Venezuela
The textile and apparel industry has continued to expand and is expected to continue to grow with the expansion of Fibers International, Inc., which
crude.
is a source of raw material in the form of nylon 66 fibers and nylon carpet yarns.
Food, pharmaceutical, textile and apparel indus tries have also been of significant importance in
Development Administration are branches or sub
industrial development. Three rice mills and large
sidiaries set up by such parent firms as General
Many of the plants encouraged by the Economic
flour and feed mills supply an important share of
Electric Co., American Can Co., Consolidated Cigar,
Puerto Rico's requirements in their field. Four large tuna canneries are now in operation and with an additional one under construction, the island has
Phelps Dodge, Sun Oil Company, Daystrom, Car borundum, Sprague Electric Co., Van Camp Sea Food, General Foods Corporation, Van Raalte, Hooker Chemical Corporation, PPG Industries Inc., B.V.D., Bristol-Myers Co., International Shoe, R.C.A. Corp., Westinghouse Electric Corp., Merck, Abbott Laboratories, Eli Lilly & Co., Squibb Beech-
become one of the leading suppliers of canned fish in the United States market.
In the pharmaceutical and chemical industry sec tor Puerto Rico is rapidly becoming a manufactur ing center. Bristol Alpha Corporation, Merck & Company, Pharmaseal Laboratories, Squibb BeechNut, Inc., Abbott Laboratories, Eli Lilly & Co., Parke, Davis & Co., and others manufacture phar maceutical products in Puerto Rico principally for export to outside markets.
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
during the last five consecutive fiscal years, 1965-69,
ran at a rate of 26% of gross product. It has in
also expanded rapidly. University and college en
creased from $112 million in 1950 to $1,090 million
rollment which was only 13,000 in 1950 now is more than 56,000 students.
in 1969. Inflowing long-term U.S. capital rose from $31 million in postwar 1947 to an estimated $630 million in 1969.
The Puerto Rican people have benefited greatly from the economic expansion achieved since 1950. Life expectancy has increased from 61 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 86% in 1967. Institutions of higher learning have The new De Diego Expressway, shown here
in ihe early stages of construction through an industrial area, will help to case traffic congestion in the northweste. n part of the island.
It is significant that the Commonwealth Govern ment has in the last three years directed approxi mately 47% of its expenditures to education and health.
The Government will continue to provide a cli mate inducive to further economic development and
growth. Thus it is expected that in the years ahead a sustained rate of economic growth can be main tained. Present projections indicate that gross prod uct in terms of current prices should reach $7,460 million in 1975. This will mean a personal income per capita of approximately $1,855.
STATISTICAL DATA CONCERNING THE ECONOMY OF THE COMMONWEALTH OF PUERTO RICO Fiscal Years Ending June 30
Population
1950
1955
1960
1965
1966
1967
1968
1969
1970
2,218,000 2,240,000 2,350,000 2,626,000 2,686,000 2,713,000 2,735,200 2,777,000 2,688,289**
Gross product—$ millions
755
1,142
1,681
2,748
3,050
3,358
3,740
4,093
Net income—$ millions ..
614
960
1,353
2,314
2,538
2,779
3,076
3,403
3,759
Exports—$ miUions Exports by new factoriest
235
353
622
974
1,155
1,321
1,449
1,496
1,736
—$ millions
Bank debits—$ miUions .. Bank loans—$ millions ....
N.A.
33
132
380
640
804
926
1,012
1,092
1,216
319 128
418 217
835 450
1,661 1,010
1,893 1,210
1,841 1,220
1,715 1,362
2,123 1,670
2,548 2,041
270
323
562
1,207
1,349
1,556
1,830
2,216
2,561
51
77
152
298
304
346
407
486
553
28
32
63
127
141
162
186
220
250
14
21
32
40
44
48
49
53
58
Bank deposits (including
governmental)—$ lions
mil
Private savings accounts—
$ mUlions Income tax collections—$ millions
Property tax collectionst —$ millions Assessed valuation* (real & personal property)— $ millions
459
982
1,643
2,503
2,828
3,150
3,448
3,851
Average family income—$ Motor vehicles—number..
1,500 61,000
2,194 105,000
2,836 180,000
4,143 319,000
4,486 380,000
4,679 421,000
5,178 470,000
5,391 538,000
N.A. N.A.
431,000
529,000
567,000
618,000
631,000
652,000
659,000
669,000
672,000
36
55
132
226
240
228
262
268
4,066
Enrollment in public day
schools Estimated value of build
ing permits issued — $ millions
N.A.
Electricity generated§ — millions
of
kilowatt-
hours
Hydro
199
253
200
163
238
194
127
258
220
Thermal
340
710
1,822
3,656
4,192
4,847
5,644
6,397
7,320
* 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.
N.A. Figures will not be available until the end of 1970. Note: Figures shown above are subject to revision from year to year. Source: Puerto Rico Planning Board. Data for 1965-70 subject to revision.
16
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1311 Ponce de Leon Avenue, San Juan, Puerto Rico 00908 / 45 Wall Street, New York. N.Y. 10005