Jeff Hurd: Gaps In Accountability Must Close To Properly Address Puerto Rico's Debt Crisis

Forbes Breaking News

During a House Natural Resources Committee hearing before the Congressional recess, Rep. Jeff Hurd (R-CO) asked Managing Director at the U.S. Government Accountability Office Michelle Sager about accountability issues in the Puerto Rican government.

Transcript

00:00Chair, I yield the remainder of my time to you for further questions.

00:03Thank you very much. Mr. Kennedy yields to me. Mr. Mujica, a few weeks ago, Governor Jennifer

00:09Gonzalez-Colon signed Puerto Rico's first balanced budget certified by the Financial

00:14Oversight Board since its creation under ProMESA nine years ago. As the board alluded to in both

00:19its certification and its media release, this was a responsible budget jointly developed between the

00:25Governor and her administration, the Legislative Assembly, and the board that prioritizes essential

00:30services for our fellow Americans in Puerto Rico. Can you briefly discuss the Oversight Board's

00:36working relationship with Governor Gonzalez-Colon and her administration, including the processing

00:42and collaboration that led to the signing of Puerto Rico's first certified balanced budget?

00:50Yes, Mr. Chairman. I just want to clarify the point. The certification was

00:55that the governor submitted a balanced budget to the legislature. That budget was substantially

01:00also then certified by the board as balanced as passed. In order to make the determination if

01:06it's balanced, we'd have to wait to the end of the fiscal year to make sure that it stays in balance.

01:11Understood. With that stipulation, we are collaborating very well with the governor.

01:15We have, the development of this budget is a new era in collaboration between the Oversight Board,

01:24who's been doing a lot of work internally, and then doing the budgets. We need to transfer that

01:30knowledge and transfer that work into the government, because you can't flip the switch one day, and then

01:35the government's now in charge of all of that. So what we've committed to, and the governor has committed

01:40to this too, is working on building the capacity internally. We're working together with the government,

01:47our teams meet with them, discuss with them every single day. In the beginning of Promesa, there was constant

01:53friction, constant fighting, constant challenging of the board's authority and Congress's authority

01:58through Promesa. That doesn't seem to be happening in this first six months of the governor's term.

02:05Will we disagree on things? Yes, and there still will be challenges. But in terms of budget

02:10development and working on, I think what you saw is a good example of how we can work together with the

02:14governor. Thanks, Mr. Mohica. If I could ask you a quick follow-up question on PREPA. We've heard

02:19that PREPA has withheld funds from Luma and Genera's operational accounts. Has that issue been raised

02:24with FOMB, and what, if any, actions have you taken? Yes, it has. We've brought the parties together,

02:33because there seems to be a disagreement as to these issues. But there are payments that are not

02:38being made, both to Luma and to Genera, in terms of their overall budget and what was agreed to before.

02:46The challenge is that the revenues just aren't there. So PREPA is just not taking in sufficient

02:54revenues to make all of the payments that Luma and Genera expect. Before 2017, PREPA hadn't done a

03:02rate case for 30 years, 28 to be exact. And then since 2017, they did one and now they're just starting

03:09one now. Hopefully that rate case will result in sufficient revenues so that they can actually make

03:16the payments that they need to make. Ms. Sager, quick question for you. Has the GAO identified

03:26any gaps in accountability, financial disclosure, or stakeholder engagement either for the FOMB

03:32or for the Puerto Rico government itself? We did not explicitly assess that as part of our review.

03:39Having said that, it also did not emerge as a challenge that we elicited during the course of our

03:44work. I would reiterate what we just heard, that the collaboration appears to demonstrate a culture

03:51change, which is what will be essential to the stability of that moving forward and institutionalizing

03:58the nature of transparency, accountability, and visibility into where the money is going.

04:03Understood. Thank you. Can you talk for a minute about OPAL, the Budget Office of the Legislative

04:08Assembly? Can you talk about the upsides and downsides of how it operates? We can. We talked about that in

04:14our most recent report and highlighted that in the testimony. So it essentially serves as a guardrail,

04:19roughly similar to what we know in the federal level as CBO. However, one of the constraints with it

04:27is that as it issues its work, it is not always heeded by the legislature. And so going forward, I think

04:35it's going to be important for that relationship to continue to evolve so that it does in fact serve

04:40as the guardrail that is it is intended to do so. Great. Your timing was perfect. The time that had

04:47been yielded me is now expired. So the gentleman's time has expired.

Category

Transcript

Be the first to comment

Recommended