Puerto Rico: Highlights of the Build Back Better Bill
Published on October 30, 2021
There is a lot of activity going on in Washington, D.C. these days. Back in August, the Senate approved a $1 trillion bipartisan infrastructure (“BIF”) bill. That bill, however, has been on hold in the House, as Democrats negotiated amongst themselves the contents of the Build Back Better (“BBB”) bill.The original intent was to approve a massive social policy bill with an estimated cost of $3.5 trillion. Policy disagreements, though, between moderate and progressive Democrats have slowed consideration of the BBB and significantly reduced its scope (and cost) as well. Democrats finally released a 1,700-page draft text of the BBB on October 28. The plan is for the House to vote on both the BBB and the BIF on the same day in the near future. We are still combing through the text, but to keep you informed, we wanted to share some of the key points in the BBB bill regarding Puerto Rico as of today:
- A Possessions Economic Activity Credit equal to 20% of qualified wages, which are defined as worker compensation up to $50,000 per employee, so the maximum allowable credit per worker is $10,000.
- The Credit for Small Qualified Businesses applies to Puerto Rico. To qualify, businesses must have between 5 and 30 employees and gross revenues of less than $50,000,000. The credit is equal to 50% of qualified small business wages, which are defined as up to $142,800 per employee, so maximum credit is $71,400 per employee.
- Increases the federal percentage share of Puerto Rico Medicaid costs to 76% for FY 22 and 83% for FY 23 and beyond. Interestingly, the bill also increases the absolute funding cap on the federal share of Puerto Rico Medicaid costs to $3.6 billion for FY22 and starting on FY23 by the percentage increase in overall Medicaid spending during the prior year. This notwithstanding the provision in the September 2021 Continuing Resolution which required GAO to study the issue and produce a report no later than November 15.
- Includes Puerto Rico in the First Generation Downpayment Fund and certain new home loan programs.
- Includes Puerto Rico in new child care and universal pre-k programs.
- Applies SSI in full to Puerto Rico and other territories. We are not sure this provision would survive a Byrd Rule challenge. The Byrd Rule prohibits the inclusion of “extraneous” matters into budget reconciliation bills (which is what the BBB bill is). Among the matters considered “extraneous” are changes to social security. The Senate Parliamentarian would have to rule whether “social security” includes SSI for purposes of the Byrd Rule. If she finds that social security includes SSI, then the section would have to be stricken from the bill for reconciliation rules to apply.