SAN JUAN, Feb 10 (Reuters) - U.S. Senator Orrin Hatch on Wednesday demanded detailed financial disclosure about the island’s economic crisis in a letter to Puerto Rico’s governor, and questioned U.S. Treasury Secretary Jack Lew about debt restructuring proposals for the island during a Senate Finance Committee hearing.
Hatch, a Utah Republican and chair of the Senate committee with oversight on Puerto Rico’s fiscal crisis, in December co-sponsored a bill to bring the island’s finances under a federal control board.
But his exchange with Lew on Wednesday, coupled with his 4,000-word letter to Puerto Rico Governor Alejandro Garcia Padilla, may be stronger signs that Republican leaders are serious about addressing Puerto Rico’s economic crisis.
The U.S. commonwealth faces $70 billion in bond debt, a 45 percent poverty rate and a shrinking tax base as locals increasingly flock to the mainland United States. Federal legislators, mostly on the Republican side, have demanded more transparency from the island, whose fiscal year 2014 financials are months behind schedule.
Hatch’s letter to Garcia Padilla is one of the first acknowledgements by U.S. lawmakers of the strain on Puerto Rico’s pensions, which are underfunded by some $43.5 billion and projected to run out of money within about three years.
“Public pension funding requirements place demands on the commonwealth’s general fund, since the commonwealth ... is obligated to make contributions,” Hatch said in the letter, asking for specifics on the projected date of depletion for the funds.
Separately, at a Finance Committee hearing on President Barack Obama’s proposed Internal Revenue Service budget for fiscal year 2017, Hatch questioned Lew about Puerto Rico.
The Obama administration has supported giving Puerto Rico access to a debt-restructuring mechanism more broad than traditional bankruptcy laws enjoyed by U.S. municipalities.
Hatch pointed out that no one in congress has introduced legislation for such a regime, telling Lew “it seems your broad restructuring authority has not received broad public support,” according to a transcript of the exchange.
Lew said the idea had broad support among Puerto Rican leaders, and that he’s spoken with “probably 50 members of the House and Senate ... and there’s a broad understanding that something needs to be done.”
Congress has been divided on how to address Puerto Rico’s dilemma. The Obama administration and most Congressional Democrats support some form of debt restructuring, though may differ on its scope. Republicans have been slower to support it, preferring to bring the island’s debts under federal oversight. (Reporting by Nick Brown; Editing by Bernard Orr)