First Impressions Matter

First Impressions Matter

Published on April 22, 2021 / Leer en español

Director, Washington D.C. Office

In Washington D.C., the symbolic deadline for a new President to make a lasting imprint on the nation is exactly 100 days. After all, first impressions matter. As the Administration and the new Congress near their 100-day mark respectively Puerto Rico has, for better or worse, not been lost in the mix of national priorities.

Late in February, early disappointment set in when the U.S. Department of Justice filed a reply brief in the Peña-Martínez v. the U.S. Department of Health and Human Services case before the First Circuit Court of Appeals. In its brief, the DOJ justifies the discriminatory exclusion of Puerto Rico’s residents from several federal programs, including Supplemental Security Income, Supplemental Nutrition Assistance Program, and Medicare Part D low-income subsidies.

Then came the American Rescue Plan and the mood shifted quickly. Along with the permanent expansion of the local earned-income tax credit (EITC) we long-advocated for, many Puerto Rican families benefitted from stimulus checks, the extension of pandemic electronic benefit transfers (P-EBT) for low-income students, a small increase in food benefits, and the permanent expansion of the Child Tax Credit to families with one or two children in Puerto Rico.

A considerable amount of funding was also set aside for the island through the State and Local Fiscal Recovery Fund to mitigate the damaging economic effects of COVID. Cash-strapped municipalities are finally getting long-due relief with nearly $1 billion in fiscal relief funds, and Puerto Rico’s central government is expected to receive another $2.5 billion. This money can be used to:

  1. Assist households, small businesses, and not-for-profit organizations, or support industries affected by the pandemic;
  2. Extend premium pay for essential workers;
  3. Provide government services that were forcibly reduced by the pandemic; or
  4. Make investments in water, sewer, or broadband infrastructure.

The funds cannot be used to capitalize pension funds or to offset reductions in tax revenues, and all funds must be spent by the end of December 2024. We still need to wait for guidance on the application process and use of funds, but as a general starting point, governments will need to submit to the U.S. Treasury a certificate of need that spells out the hardship in each jurisdiction and the need for relief.

On Monday, the Department on Housing and Urban Development (HUD) also announced the removal of onerous funding restrictions over Community Development Block Grant (CDBG) funds that were uniquely imposed on the island by the former HUD Secretary Ben Carson.  The combination of all of these funds should, in theory, allow Puerto Rico to benefit from a potential public investment boom. The difficulty lies in ensuring municipalities and the central government have the capacity to manage the large influx of funds and choose quality investments that create jobs, contribute to the well-being of residents and boost long-term economic growth.

A couple of miles down Pennsylvania Avenue, the new Congress has already held two hearings focused on Puerto Rico. In March, the House Energy and Commerce Subcommittee on Health held a hearing to examine the impact of the so-called “Medicaid cliff” on each of the U.S. territories. With Members of Congress representing each of the territories, and representation from both the Medicaid and CHIP Payment and Access Commission (MACPAC) and the Government Accountability Office (GAO), the hearing exposed the inadequacies of health care funding in the five inhabited territories – Puerto Rico, Guam, U.S. Virgin Islands, American Samoa, and the Commonwealth of the Northern Mariana Islands.

Last week, the House Natural Resources Committee held a legislative hearing to discuss H.R. 1522 and H.R. 2070, two bills designed to address Puerto Rico’s political status. H.R. 1522, authored by Rep. Darren Soto and co-sponsored by 60 members, seeks to ratify a petition that Puerto Rico be admitted as a U.S. State. While H.R. 2070, authored by Rep. Nydia Velázquez and co-sponsored by 73 members of Congress, calls for a status convention and establishes a mechanism for congressional consideration of such decision.

Finally, last week the White House’s Office of Intergovernmental Affairs announced the appointment of Gretchen Sierra-Zorita as Associate Director for Puerto Rico and the four other U.S. territories. Having Gretchen and a team of experts at the White House focused solely on the issues of the U.S. territories is undoubtedly good news. As it relates to Puerto Rico’s affairs, we hope the office observes our recommendations.

After decades of neglect from Washington, the increased attention and aid being delivered to the island is a good signal to Puerto Rican organizations like ours that have long asked the federal government to step up. It is likely discussions on the subjects set forth above, and others, will intensify in Washington in the coming months, especially as the island nears another Medicaid funding cliff, and as the U.S. Supreme Court gears up to issue its verdict on the Vaello Madero case. In the latter matter, the U.S. government still has time to withdraw its appeal. We’ll be closely monitoring and pushing for the island to remain a priority in this new governmental landscape.