Government of Puerto Rico: Difference between revisions
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{{seealso|2006 Puerto Rico budget crisis}} |
{{seealso|2006 Puerto Rico budget crisis}} |
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On November 15, 2006, the government |
On November 15, 2006, the government allowed puerto ricans to SUCKY SUCKY on PORK FRIED RICE(taxes on cigarettes, liquor, and cars are still in effect) and substituted it for a 5.5% islandwide [[Sales tax|Sales and Use Tax]], plus a municipal sales tax of 1.5%, for a total of 7%, in what has been known as the [[Puerto Rico Tax Reform]].<ref>{{cite news |author= Miguel Díaz Román |title= Incierto el impacto del nuevo tributo|url=http://www.endi.com/noticia/portada/noticias/incierto_el_impacto_del_nuevo_tributo/110378 |work= |publisher=[[El Nuevo Día]] |date=2006-11-15 |accessdate=2006-11-15|language= Spanish}}</ref> This change was partly due to the government’s growing expenditures and fiscal deficits which remained unchecked and uncorrected for several years, until several [[credit agency|credit agencies]] warned public officials that all general-obligation [[Bond (finance)|bonds]] issued by the government were to be downgraded if the problem was not corrected. The situation reached a turning point when the executive branch of the government was partially shutdown, the events now known as the [[2006 Puerto Rico budget crisis]]. 33 agencies were closed and 95,762 employees were sent home without pay. Following public bickering between the two main political parties, the new sales tax was approved in favor of the excise tax on imports on May 10, 2006, ending the budget crisis.<ref>{{cite news|first=Magdalys|last=Rodríguez|url=http://www.endi.com/2006/05/01/index/412858.asp?category=Ultima+hora&title=No+hubo+acuerdo+y+el+gobierno+amanecio+cerrado&artdate=2006/05/01|title=No hubo acuerdo y el gobierno amaneció cerrado|publisher=[[El Nuevo Día]]|accessdate=2006-05-01}}{{es icon}}</ref> Analysts and forecasts predict that the new sales tax will generate more revenue than the former 6.6% import excise tax, which has led government leaders to consider decreasing individual income tax rates and/or increase government worker wages.{{Fact|date=February 2007}} |
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===Central government expenditures=== |
===Central government expenditures=== |
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Revision as of 14:02, 18 November 2008
Article III of the Puerto Rico Constitution grants all legislative powers of the national government to the Legislative Assembly of Puerto Rico, which is divided into two chambers: a 27 member Senate and a 51 member House of Representatives. The chambers are presided over by the Senate President and the Speaker of the House, respectively. Both positions are occupied by an active member of each body, elected by a majority of both chambers. The current heads are Senator Kenneth D. McClintock and Representative Jose Aponte, respectively.
Members are elected to both chambers in general elections held every four years, along with the elections for the Governor and the 78 municipal mayor (Alcalde in Spanish) positions. Each member represents an electoral district, with the exception of a number of Senators who are considered “at-large” (Por Acumulación in Spanish) and represent the island as a whole. Members representing specific districts are elected by the citizens residing within the district, while “at-large” Senators are elected by accumulation of all island votes for a specific political party.
Unicameralism
In recent years, various organizations have pushed for changing the legislative assembly from the current 2 chamber system (House and Senate) to 1 chamber (unicameralism). The reasons for this proposed change is based on the growing public opinion that members of the assembly are overpaid, and that a smaller assembly may achieve the same work results as the current one with less public expenditures.
In a referendum held on July 10, 2005, Puerto Rican voters approved the change to a unicameral legislature by 456,267 votes in favor, versus 88,720 against.[1] (Voter turnout was 22.6% of the electorate.)[2] However, the proposed change has met strong opposition within both chambers by the legislators themselves, and sources state that the necessary legislative measures to begin the unicameral process have been “shelved” until after the 2008 general elections[citation needed]
Executive branch
Executive branch is responsible for administering public resources, as well as providing all necessary public services to the Puerto Rican general public. It is by far the largest branch in the government as well as the largest employer in Puerto Rico with more than 300,000 workers.
Governor
The head of government is the Governor of Puerto Rico, who is elected every four years by general elections. The position is similar in nature, responsibility, and power as those of a governor of a U.S. State. The position of Governor has the overall responsibility of the state of the commonwealth, equivalent to the state of the union in the U.S. The official residence of the governor is La Fortaleza.
The Governor has the authority to nominate appellate and supreme court judges and directors of public corporations, although these must be confirmed by the legislative assembly. Similar to a U.S. State, the Governor has authority over the local chapter of the U.S. National Guard.
Although Puerto Rico does not have the position of a Vice-Governor or Lt. Governor, sections 7 and 8 of the Constitution empowers the Secretary of the Puerto Rico State Department to act as Governor, should the governor become temporarily disabled or unable to discharge his/her duties.
Executive Departments
The day-to-day enforcement and administration of national laws is delegated by the Governor to 16 executive departments created by the legislative assembly to deal with specific areas of national and international affairs. The heads of the departments, chosen by the governor and approved by the Senate, form a council of advisers generally known as the Governor's Cabinet.
The Constitution provides for the creation of at least 8 departments: Departments of State, Justice, Education, Health, Treasury, Labor, Agriculture, Commerce, and Public Works. However, due to the increase in population, economy, and public needs over the years, the Puerto Rico government has expanded the executive branch by establishing additional executive departments not specified in the Constitution. These additional departments are established by public law, as approved by the legislative assembly.
The title of Secretary is given to the heads of the executive departments, whose position is also created by statute. Cabinet member is another title primarily given by the media and the public, though it is considered unofficial. All cabinet-level Secretaries are first nominated by the Governor and are confirmed by the legislative assembly.
Each department has different divisions, agencies,bureaus, offices, and services, each with specific duties, in order to provide the necessary services to the general public across the island.
Public corporations
The Commonwealth has also established several public corporations in order to provide basic and public services to its citizens, including electricity, water, transportation, and education, among others. These are separate legal entities from the Commonwealth, but the government owns virtually all of these corporations’s stock. Each corporation is headed by an Executive Director who is appointed by the corporations’ Board of Directors. The directors are nominated by the Governor and confirmed by the state legislative assembly.
Although public corporations are separate from the commonwealth government, who generate their income and expenses independently, several of those have faced financial troubles, and have constantly relied on so called “bail-outs” from the commonwealth to offset recurring losses and deficits. The most famous of these cases was the Puerto Rico Aqueduct and Sewer Authority (PRASA), which faced annual recurring losses in the ranges of hundreds of millions of dollars and required several bail-outs to avoid bankruptcy. While some have mistakenly referred to these bail-outs as loans, they are in fact transfers of equity because the commonwealth does not expect repayment in the future.
Public corporations have the advantage of issuing separate securities, such as bonds, in the trading market to obtain capital. This is done so that the corporations may finance public works and improvements without having to rely on the commonwealth’s credit. However, as in the case of PRASA, some public corporations have had serious financial difficulties which excluded them from the bond market, and have had to resort to commonwealth bonds to make capital additions and improvements.
Municipalities
Puerto Rico is divided into 78 divisions called municipalities each headed by an Alcalde (Spanish), which is similar to a mayor of a city or town. The municipalities also have a municipal assembly, which is in charge of overseeing the Alcalde’s operations, hold public meetings, and enact municipal resolutions and bylaws. Both the Alcalde and the municipal assemblymen are elected by the municipality’s citizens in general elections held every four years. Unlike most towns and cities in the U.S., Puerto Rico does not have local or state sheriffs. Instead, they are appointed by the Governor (Superintendent) or the mayor, respectively.
Judicial branch
The Supreme Court of Puerto Rico is the highest court of the Commonwealth of Puerto Rico, having the ultimate judicial authority within Puerto Rico to interpret and decide questions of local commonwealth law. It holds its sessions in the city of San Juan.
Revenues and expenditures
Puerto Rico’s central government, which includes all three branches of government but excludes public corporations and municipalities, has an annual general budget that currently ranges from $8.5 billion to $9 billion in revenues and expenditures.[3] The government also receives more than $4.2 billion dollars annually in subsidies and federal aid from the United States.[4] A substantial portion of this amount is earmarked for public welfare, including funding educational programs (such as Head Start), subsidized housing programs (such as (Section 8 and public housing projects), and a food stamp system called the Nutrition Assistance for Puerto Rico program.
Public corporations generate approximately $6.3 billion in general revenues by charging citizens for the services they provide. The largest public corporation, the Puerto Rico Electric Power Authority (PREPA), generates almost half of those revenues alone ($3 billion). However, public corporations generate about $10.6 billion in expenses when combined, requiring substantial subsidies by the central government. In 2005, the central government provided more than $2.6 billion in subsidies, while the remaining expenditures were funded through interest and investment earnings.[5]
When considering all three branches of government, including all public corporations and municipalities, the government of Puerto Rico’s annual expenditures can reach to more than $28 billion,[6] making it one of the largest non-federal government entities within the United States.[citation needed]
Central government revenues
The central government’s main source of revenue is income tax imposed on individual citizens and private companies, which can amount to approximately $5.5 billion.[3] Other significant sources of revenue include excise taxes on imports, cigarettes, liquor, hotel rooms, cement, and vehicles ($2 billion);[3] and lotteries ($870 million).[7]
Sales and Use Tax
On November 15, 2006, the government allowed puerto ricans to SUCKY SUCKY on PORK FRIED RICE(taxes on cigarettes, liquor, and cars are still in effect) and substituted it for a 5.5% islandwide Sales and Use Tax, plus a municipal sales tax of 1.5%, for a total of 7%, in what has been known as the Puerto Rico Tax Reform.[8] This change was partly due to the government’s growing expenditures and fiscal deficits which remained unchecked and uncorrected for several years, until several credit agencies warned public officials that all general-obligation bonds issued by the government were to be downgraded if the problem was not corrected. The situation reached a turning point when the executive branch of the government was partially shutdown, the events now known as the 2006 Puerto Rico budget crisis. 33 agencies were closed and 95,762 employees were sent home without pay. Following public bickering between the two main political parties, the new sales tax was approved in favor of the excise tax on imports on May 10, 2006, ending the budget crisis.[9] Analysts and forecasts predict that the new sales tax will generate more revenue than the former 6.6% import excise tax, which has led government leaders to consider decreasing individual income tax rates and/or increase government worker wages.[citation needed]
Central government expenditures
The largest types of expenditures made by the government are those related to education. In 2005 alone, the government expended more than $5 billion in public education and education-related programs, representing approx. 28% of total government expenditures (excluding public corporations).[10] Other significant expenditures include public housing and welfare ($3.4 billion or 19%), public safety ($2.5 billion or 14%) and public health ($2.3 billion or 13%).[10] Recently, several political analysts and commentators have pointed to the fact that the government of Puerto Rico is subject to an unreasonable amount of legal claims and court judgments, including some from political harassment allegations and accusations and others from health reform disputes. In 2005, these claims amounted to $11.7 billion,[11] leading some to believe that if current trends continue, such claims may be too much to pay if they are found against the government.
In May 2007, local economists expressed serious concerns when it was revealed that the Puerto Rico public debt equaled 76% of its gross national product (GNP), making it one of the most indebted countries by percentage in the world, even more than the United States.[12] Economists have criticized the government's fiscal policy, whose level of expenditures and indebtness has increase significantly within the past decade while the economy was grown at a much slower pace. Between 2000 and 2006 alone, Puerto Rico's GNP rose 5.37%, while its public debt's relation to GNP rose 18%.[12] By comparison, many other Latin American countries have seen reductions in their GNP-public debt percentages during that same time period.[12]
References
- ^ María Vera. "Trabajan borrador unicameralidad". El Vocero. Retrieved 2006-10-02.
- ^ "La Participación Ciudadana en los Procesos Electorales en Puerto Rico" (PDF). Oficina de Asuntos Legales. Comisión Estatal de Elecciones de Puerto Rico (CEEPUR) / State Electoral Commission. Retrieved 2006-10-02. (via http://www.ceepur.org/sobreCee/leyElectoral/)
- ^ a b c Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report for the fiscal year ended on June 30, 2005; pg. 30; Statement of Revenues and Expenditures - Budget and Actual – Budget Basis – General Fund
- ^ Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report for the fiscal year ended on June 30, 2005; pg. 24; Statement of Activities; Operating and Capital Grants and Contributions (columns)
- ^ Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report for the fiscal year ended on June 30, 2005; pg. 38; Combining Statement of Activities: Major Component Units
- ^ Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report for the fiscal year ended on June 30, 2005; pg. 24; Statement of Activities; Primary Government and Component Units Expenditures (column)
- ^ Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report for the fiscal year ended on June 30, 2005; pg. 32; Statement of Revenues, Expenses, and Changes in Net Assets-Proprietary Funds
- ^ Miguel Díaz Román (2006-11-15). "Incierto el impacto del nuevo tributo" (in Spanish). El Nuevo Día. Retrieved 2006-11-15.
- ^ Rodríguez, Magdalys. "No hubo acuerdo y el gobierno amaneció cerrado". El Nuevo Día. Retrieved 2006-05-01.Template:Es icon
- ^ a b Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report for the fiscal year ended on June 30, 2005; pg. 24; Statement of Activities; Expenditures (line items)
- ^ Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report for the fiscal year ended on June 30, 2005; Notes to the Financial Statements; Note 18: Commitments and Contingencies: Primary Government; pgs. 134-135, par. 2
- ^ a b c Debe Puerto Rico 76 centavos de cada dólar by Joanisabel González, El Nuevo Día, May 5, 2007, accessed May 5, 2007 (Spanish)
See also
External links
- gobierno.pr - Government of Puerto Rico's Executive Branch official site, in Spanish.
- Organizational chart of the Government of Puerto Rico's Executive Branch (Spanish)
- oslpr.org - Legislative Assembly of Puerto Rico official site, accessible in Spanish and English.
- tribunalpr.org - Supreme Court of Puerto Rico official site, in Spanish.