Press Releases

Congresswoman Stacey Plaskett issued the following statement today during a Natural Resources Subcommittee on Indian, Insular and Alaska Native Affairs hearing on “The Need for the Establishment of a Puerto Rico Financial Stability and Economic Growth Authority:"

Thank you Chairman Young and Ranking Member Ruiz for holding this hearing to discuss the need for the establishment of a Puerto Rico Financial Stability and Economic Growth Authority.  I would like to submit my statement for record.

Like the Members of this Subcommittee and many of my colleagues in the House and Senate and President Obama, I am concerned about Puerto Rico’s economic crisis and the future of its residents.  I support Congressional action to address this pressing matter.  However, I firmly believe and urge Congress to not only consider addressing bankruptcy but also finding a fix to the social and economic programs that have long-term implications to not just for Puerto Rico but the smaller insular territories as well.

The Virgin Islands, known then as the Danish West Indies, became an unincorporated territory of the United States after they were purchased from Denmark in 1917.  Our Islands officially became the Virgin Islands of the United States after a Transfer ceremony on March 31^st of that same year.  In the years since, the Virgin Islands has made considerable economic progress.  We transformed a centuries-old agrarian economy, primarily based on sugar cane production to a manufacturing-based economy, exporting large quantities of refined petroleum and distilled spirits to the U.S. mainland and elsewhere.

In 2012, however, the prospects of our economic growth, already slowed by the 2008 recession, was upended by the closure of the Hovensa oil refinery. In its 46 years of operation, the Hovensa oil refinery grew to become one of the largest single employers in the territory, employing more than two thousand people. When the refinery shut down operations in 2012, much of those jobs were lost, sending the Virgin Islands economy into a downward spiral; especially the island of St. Croix. Additionally, many small businesses, which supported the refinery and catered to its employees, eventually closed their doors as well.  The loss of these jobs and businesses ultimately translated to a decrease in tax revenues, which only exacerbated the economic downturn and increased the public debt.

The Virgin Islands is currently $2.4 billion in debt.  However, when counting the retirement pension liability, the territory’s debt balloons to $3.8 billion. The unfunded liability of the Virgin Islands public pension plan, the Government Employees Retirement System (GERS), is a major component of Virgin Islands debt. As mentioned, the Virgin Islands can only account for 50.0% of its public pension liability.  It is important to note that on its present trajectory, GERS funds will be depleted in 2023.

Another eminent crisis for the U.S. Virgin Islands is the federal funding “cliff” that each Territory will reach by late 2019 when the Affordable Care Act funding expires. Congress can address this issue through increased federal Medicaid funding for the Territories by removing the annual cap and by increasing the federal match.  These measures would provide much need fiscal relief for the Territories. 

Allowing Puerto Rico to declare bankruptcy and allowing a control board to oversee bonding may be solution to the problem, but it does not address the issue at the core.  Many communities of color, like Puerto Rico and the other insular areas have experienced decades of a systemic lack of investment, support and adequate funding, which exacerbates public debt and forces them to mortgage their children’s futures in bonds to make ends meet.

In the White House “Roadmap for Congressional Action,” the Administration proposed economic growth for Puerto Rico through incentives such as access to Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).  These incentives can also help promote the economic stability of the U.S. Virgin Islands and Guam with slight changes to account for the differences in their tax systems.  If Congress considers these incentives for Puerto Rico, it should include the smaller territories.

As conversations regarding a debt relief package for Puerto Rico have intensified over the recent weeks and months, I have reached out to my colleagues to ensure that the U.S. Virgin Islands and other small territories are not excluded from any legislation that might be considered.  While Puerto Rico does have a larger population than the other U.S. territories and possesses significant political muscle here in the mainland, I believe it to be absolutely critical that the Congress ensures the Virgin Islands and the other smaller territories achieve meaningful relief in any debt relief package for Puerto Rico.

In closing, many of the issues facing the Puerto Rico government and its people are analogous to what we face in the U.S. Virgin Islands- structural deficits, population loss, a heavy debt burden, disparate health and medical reimbursement, growing liabilities in our pension system, narrow revenue streams, crumbling infrastructure and a federal government that continues to treat our people in a manner inconsistent with those of us residing on the U.S. mainland.  Addressing these issues for all the U.S. territories would  prevent them from being in a similar, if not the same, economic crisis in the future. 

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