By Peter Schroeder - 12/10/15 09:18 AM EST
Puerto Rico could receive up to $3 billion in federal assistance under a bill unveiled by Senate Republicans Wednesday.
The legislation is aimed at providing some fiscal relief to the debt-laden island but stops short of granting Puerto Rico bankruptcy protection, which had been the top request from territory officials.
“Puerto Rico’s fiscal problems are the result of too much government spending and mismanagement,” said Sen. Chuck GrassleyChuck GrassleyTop Dem Senate hopefuls to skip convention Election to shape Supreme Court Why one senator sees Gingrich as Trump's best VP choice MORE (R-Iowa), one of the three lead sponsors on the bill. “This comprehensive bill should help ease the current liquidity crisis while creating a path that can lead Puerto Rico back to long-term fiscal responsibility.”
The legislation was offered by Grassley, who chairs the Senate Judiciary Committee, as well as Senate Finance Committee Chairman Orrin HatchOrrin HatchBacteria found ahead of Olympics underscores need for congressional action for new antibiotics Burr pledges to retire after one more Senate term Leaders appoint allies, adversaries to Puerto Rico growth task force MORE (R-Utah) and Natural Resources Committee Chairman Lisa MurkowskiLisa MurkowskiBig Oil makes a push for risky and reckless Arctic drilling GOP divided over 0M for climate fund Overnight Energy: House passes first Interior, EPA spending bill in seven years MORE (R-Alaska).
For months, Puerto Rico has been pushing for Congress to provide assistance, after officials determined the island’s lagging economy would not provide enough revenue to pay back the over $70 billion in debt the territory has borrowed.
Under current law, territories like Puerto Rico do not have access to the same sections of the bankruptcy code as states, and island officials had pushed hard to be granted that power. Senate Democrats, as well as the Obama administration, have backed that initiative, but Republicans leading both chambers of Congress have been more skeptical.
Instead, GOP lawmakers argued that Puerto Rico needs to do more to address its fiscal troubles and also provide more information to Congress detailing the situation.
The bill offered up in the Senate would not offer bankruptcy powers but instead would make available up to $3 billion in federal funds, offset by rescinding unused ObamaCare dollars.
Puerto Ricans would also see their payroll taxes cut in half for the next five years in an effort to free up dollars on the island to boost its economy.
The bill also calls for a host of studies into Puerto Rico’s finances and creates a new “Financial Responsibility and Management Assistance Authority” to oversee its books. The authority would review financial plans and budgets for Puerto Rican agencies, and a chief financial officer for the island would be created.
The authority would also have the power to borrow on behalf of Puerto Rico, but lawmakers specifically pointed out that that borrowing would not be backed by the United States government, lest it be considered a “bailout” of the island.