WASHINGTON (AP) — Congress and the Obama administration have agreed on legislation that would help rescue Puerto Rico from its $70 billion debt. Some of the provisions in the bill:
CONTROL BOARD: A seven-member board appointed by Congress and the president would help Puerto Rico get its finances in order, similar to a board that helped guide the District of Columbia through a fiscal crisis two decades ago. The territory's government would have to create a fiscal plan and submit budgets to the board. In some cases, the board could override the territorial government.
FISCAL PLANS: The board and the territorial government would develop detailed fiscal plans intended to achieve fiscal responsibility and eventual access to markets. The plan would direct the territory to fund public services and improve accountability. Through the fiscal plans, the board would have to figure out how to maintain the legal rights of creditors and also shore up pension shortfalls. The island has underfunded public pension obligations by more than $40 billion.
DEBT RESTRUCTURING: Like all U.S. states and territories, Puerto Rico cannot declare bankruptcy under federal law. But mainland municipalities and their utilities can, while municipalities and utilities in Puerto Rico cannot. The bill does not allow the island full bankruptcy authority, but gives the control board oversight authority over negotiations with creditors and the courts over reducing some debt.
MINIMUM WAGE: Puerto Rico would be allowed to temporarily lower federal minimum wage requirements for some younger workers, but that authority would expire with the termination of the oversight board.