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Puerto Rico Gov. Pierluisi seeks 'equality' in funding to tackle Covid, reconstruction

From multiple botched disaster responses to the territory's exclusion from antipoverty programs, there's a lot Congress and the administration can do.
Image: Pedro Pierluisi
Pedro Pierluisi in San Juan, Puerto Rico, on Nov. 4.Ramon "Tonito" Zayas / GDA via AP file

Puerto Rico's new governor, Pedro Pierluisi, was on a mission on his trip to Washington, D.C. — to ensure that the U.S. territory of 3 million people is top of mind for Congress and the new administration.

"In Puerto Rico's case, I believe that it's very important to attract attention for positive reasons, not negative ones, so that they do not forget us and we are present in Washington's agenda," Pierluisi said, speaking in his native Spanish about his first trip to the nation's capital as governor to attend President Joe Biden's inauguration.

Pierluisi, a Democrat who is the head of Puerto Rico's pro-statehood party, stepped into office Jan. 2 after winning the first gubernatorial election on the island since Gov. Ricardo Rosselló resigned in 2019 after a political scandal that led to historic protests.

Pierluisi inherited an island still rebuilding after the destruction left by a string of strong earthquakes last year and Hurricane Maria in 2017 — the deadliest U.S.-based natural disaster in 100 years. The island has been grappling with the largest municipal bankruptcy in U.S. history.

Image: Hurricane Maria flooding  in in San Juan, Puerto Rico
A vehicle drives through streets filled with floodwater past destroyed homes caused by Hurricane Maria in an aerial photograph taken above Barrio Obrero in San Juan, Puerto Rico, on Sept. 25, 2017.Alex Wroblewski / Bloomberg via Getty Images file

Pierluisi's immediate priority is to manage the health and economic consequences of the coronavirus pandemic, which has killed at least 1,447 people in Puerto Rico and infected over 82,500 others.

The island's coronavirus vaccine distribution process was off to a bumpy start at the end of last year, but Pierluisi said Puerto Rico is now "distinguishing itself by being one of the jurisdictions that most quickly administers the vaccines we're receiving." Of the 270,000 vaccine doses the island has received, at least 220,000 have already been given. "The rest are in the process of distribution or administration," he told NBC News.

Biden has already signed a series of executive orders to increase Covid-19 vaccinations, expand testing and reopen schools. Pierluisi said he expects that the island will have access to more vaccinations, "and that's going to be good for Puerto Rico."

Biden has also said he wants the majority of K-8 schools to reopen in his first 100 days, a goal Pierluisi shares with Biden and his nominee for education secretary, Miguel Cardona, who's also Puerto Rican.

"The education of public school students in Puerto Rico has been very limited over the last year, and the educational lag they face has to be enormous. That's a great concern for me," Pierluisi said. "Also, the American Academy of Pediatrics recommends that face-to-face education be resumed, partially because it's essential for the development of our children."

A path to recovery

Aside from managing the pandemic, Pierluisi outlined his priority to ensure that the island's government "becomes more agile" in using federal funds approved to rebuild after Maria, especially the $3.2 billion available through a federal grant program from the Department of Housing and Urban Development known as Community Development Block Grant Disaster Recovery. The funds have barely been used.

During the Trump administration, Housing Secretary Ben Carson awarded historic amounts of aid under the program for Puerto Rico to rebuild after Maria but then placed unique restrictions on the island, citing "alleged corruption" and "fiscal irregularities," as well as "Puerto Rico's capacity to manage these funds" as a first-time grantee. The efforts to limit Puerto Rico's access to the funds came after the longest government shutdown in U.S. history initially halted the disbursement process in 2019.

Texas and Florida faced similar issues after hurricanes Harvey and Irma. However, their funds were not held up after the natural disasters, and they faced no additional restrictions, according to audits last year by the inspector general's office of the Department of Housing and Urban Development.

In a conversation with Biden's team, Pierluisi urged the new administration to lift Trump-era requirements prohibiting the use of funds to help fix the island's electrical grid, even though Congress promised $2 billion to rebuild it. He also called on it to lift additional restrictions on the use of HUD funds, which Biden had promised to remove in his plan for Puerto Rico.

"I'm not looking for Puerto Rico to get better treatment than other states. I'm asking for equality. We want the same treatment," Pierluisi said.

Pushing for equal funding

Pierluisi is advocating for the island to have equal access to federal programs like Medicaid, Supplemental Security Income, the Supplemental Nutrition Assistance Program and the Earned Income Tax Credit. Forty-four percent of the island's population lives in poverty.

Even though the poverty rate in Puerto Rico is double that of Mississippi, the country's poorest state, the federal government covers 55 cents of every dollar Puerto Rico spends on Medicaid, compared to 76 cents in Mississippi. That is because, unlike the 50 states — where Medicaid funding is open-ended — Puerto Rico has a limited spending cap, essentially a block grant, and the island has to pick up the rest of the costs.

In the 2019 fiscal year, the island's Medicaid funding was capped at $367 million, while Medicaid expenditures totaled $2.7 billion, making it challenging to adjust to the population's needs during times of crisis. The Supplemental Nutrition Assistance Program, the federal program providing low-income families with financial assistance for food, operates under similar restrictions in Puerto Rico.

Puerto Rico is fully excluded from the Earned Income Tax Credit, which has become one of the federal government's largest antipoverty programs by providing tax credits for working families. It has also been excluded from Supplemental Security Income, a federal program that provides cash assistance to elderly, blind and disabled people with limited resources to meet basic living expenses.

Biden's plan for Puerto Rico calls for providing funding parity under the programs. Pierluisi said it's "my job now" — alongside Puerto Rico's nonvoting member of Congress, Resident Commissioner Jenniffer Gonzalez — "to make sure they keep their word." Gonzalez, a Republican, is also part of the island's pro-statehood party.

To boost economic development, Pierluisi proposes to improve the government's system of granting business permits.

He also plans to add pressure on Congress over statehood after 52 percent of Puerto Ricans voted "yes" in November in a nonbinding statehood referendum, which directly asked voters whether Puerto Rico should immediately be admitted into the union as a state. Forty-seven percent of Puerto Ricans voted against it. His hope is that Congress will eventually support a binding statehood referendum.

Rebuilding the troubling power grid and the debt

Hurricane Maria triggered the collapse of Puerto Rico's power grid, leading to the world's second-longest blackout. Even after post-hurricane repairs were made, Puerto Ricans have been paying nearly double compared to U.S. mainland customers for unreliable service that often causes blackouts across the island.

Against that backdrop, Pierluisi inherited from the previous administration a $1.4 billion contract between Puerto Rico's state-owned utility, PREPA, and the private company LUMA Energy to manage the island's electricity transmission and distribution system for the next 15 years.

Image: Workers repair power lines in San Juan
An employee of the Puerto Rico Electric Power Authority repairs power lines affected by Hurricane Maria on April 18, 2018, in San Juan, Puerto Rico.Jose Jimenez Tirado / Getty Images file

Pierluisi has established a committee to oversee the contract to avoid unnecessary energy price hikes, safeguard workers' rights and prevent conflicts of interest. Experts have warned that clauses in the LUMA contract could benefit certain interest groups at the expense of the population. With debt of $9 billion, PREPA is the government agency with the biggest share of Puerto Rico's $72 billion public debt.

A significant part of the hefty debt was built up after previous administrations borrowed money to finance previous deficits, which is "a debt that should've never been issued," Pierluisi said.

"We need to ask how we got here," he said, adding that he will provide more resources to the Comptroller's Office in Puerto Rico during the next fiscal year to help it audit the debt, "investigate how were public funds used, as well as point out any irregularities and poor administrative practices."

"I anticipate that we won't have to repay it fully," Pierluisi said. "But we also need to make sure this doesn't ever happen again."

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