Municipal Fiscal Crisis in the United States: Lessons and Policy Recommendations for Puerto Rico

Puerto Rico is facing a severe fiscal crisis. Central government expenditures consistently exceed income and the Commonwealth has been forced to borrow from the Government Development Bank (GDB) $250 million, $233 million and $550 million to balance each of the last three central government budgets.

For fiscal year 2006 the Commonwealth’s current structural imbalance is estimated at $1.222 billion. This amount represents the difference between estimated expenditures of $9.683 billion, plus $384 million related to a portion of debt service for general obligation bonds due during fiscal year 2006 which was paid with funds from a GDB line of credit, for a total of $10.067 billion in expenses, less recurring revenues of $8.845 billion.

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Channeling People Into the Economic Mainstream: Financial Access in Puerto Rico

A significant segment of the Puerto Rican population, 36%, is unbanked. These households tend to be extremely poor, with an average income of $8,472, and headed by older single unemployed females with a less than average education. Close to 50% of all unbanked households are located in the greater San Juan area.

This lack of financial access precludes unbanked households from enjoying benefits associated with asset accumulation which exist in addition to the benefits conferred by the ability to defer consumption and creates a major obstacle for the implementation of asset-based policies to reduce poverty in Puerto Rico.
 
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Silicon Reef: Puerto Rico’s Path Towards the Digital Economy

When we began our project to grow Puerto Rico’s digital economy in 1999, we named it Sili- con Reef for two reasons: first, because a reef is an environment where things grow and are nurtured; and secondly, as a nod to the “Silicons” of the world but with a tropical twist.

Now, four years later, we have discovered two other similarities that we had not previously identified: 1) as with natural ocean reefs, growing Puerto Rico’s digital economy is a long and slow process; and 2) just as the corals that make up marine reefs are built from the skeletal remains of living coral, so it is with our efforts, many of which are built upon the skeletal re- mains of efforts past.

Numerous efforts have been commenced and countless strategies have been outlined yet, the question remains: have we accomplished any tangible results or moved forward with regards to strengthening and expanding Puerto Rico’s high technology sector?
 
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