July 30, 2019
Good Morning! In this morning’s eBlog, we consider the ongoing fiscal challenges to one of the nation’s oldest cities, Petersburg, Virginia, before veering south to assess the growing governance challenge of filling the Gubernatorial vacancy in Puerto Rico.
The Steep Road of Fiscal Recovery. Petersburg, Virginia, one of the nation’s older municipalities—and one which neared insolvency—has found the fiscal path to recovery uneasy. Last Saturday afternoon, Del. Lashrecse Aird (D-Petersburg) was asked, pointedly, about its current fiscal situation: “What is the state’s opinion about Petersburg’s finances?” Before she answered, Delegate Aird laughed and said, “I like a blunt questioner.” Then she responded: “The state is still very concerned about the progress the city is making.” But In Virginia, she added, state government does not just automatically step in and take over a local ledger; instead, the locality has to make a formal request for assistance from the state Auditor of Public Accounts, and Delegate Aird said even though the state has offered, the official request from Petersburg has not come in, to her knowledge. The fiscal dilemma is complex, because the Commonwealth does not specifically authorize municipal entities to file for chapter 9 municipal bankruptcy, albeit, in certain situations, the Commonwealth law allows for the appointment of a receiver with respect to revenue bonds. Nevertheless, there is no question but that the municipality is in some dire, ongoing, fiscal straits: according to the APA’s web site, Petersburg has not submitted an annual comprehensive financial (CAFR) report to the state since 2017. (These reports are due on Nov. 30 of each year.) Nevertheless, as Delegate Aird noted: “I believe fully that the state is paying close attention,” with her statement coming at the first of several “listening sessions” she has scheduled for the 63rd House District.
About 35 people turned out for Saturday’s session, and Del. Aird’s prediction about what to expect rang mostly true. In addition to the question with regard to Petersburg’s fiscal stress and state perception, she also fielded a question with regard to a rumor that the Robert Bobb Group, which temporarily took over management of municipal operations in 2016 in an effort to turn Petersburg’s finances around, might be coming back: she responded she had not heard anything about a possible return. Another question raised during Saturday’s session involved low-income families’ accessibility to school textbooks—a query in which the citizen told Delegate Aird that children were not being allowed to bring textbooks home with them, and many of those families could not afford internet access, which is driving so many educational initiatives. Del Aird responded: “That has not been brought to my attention.”
Petersburg is a municipality of over 32,000, with nearly 80 percent black of African American. The median income for a household in the city was $33,927, and the median income for a family was $40,300; males had a median income of $30,295 versus $23,246 for females: the per capita income is just under $19,000—with nearly a quarter of the population below the federal poverty level, including 27.1% of those under age 18 and 15.8% of those age 65 or over.
The Exceptional Challenge of Political and Fiscal Recovery from Virtual Municipal Bankruptcy. Far south of Petersburg, in Puerto Rico, the U.S. territory is mired in fiscal and governance turmoil, clearly making more challenging efforts to proceed with a permanent, long-term restructuring of Puerto Rico’s debt while the Commonwealth government is in turmoil and island-wide protests continue. The situation is, if anything, further complicated by the welter of fiscal overseers, some with serious conflicts of interest. The Governor has submitted his resignation, there are serious legal challenges pending with regard to the governance legitimacy and authority of the Congressionally imposed PROMESA oversight Board: absent an elected Governor in place, long-term debt or operational restructurings could be seen as lacking the consent of the Puerto Rican people and may face heightened political and popular disfavor in the years to come.
And, it appears, no one is eager to fill the empty governance post at the top: the woman in line to become Governor of Puerto Rico said Sunday that she does not want the position; she hopes disgraced Gov. Ricardo Rosselló appoints a Secretary of State who would then serve as his successor upon the effective date of his resignation. The slot for the Secretary of State has been vacant since Luis Rivera Marín, also involved in the controversy, quit days before the Governor did. That left Justice Secretary Wanda Vázquez next in line; however, she tweeted her apprehensions: “I reiterate, I have no interest in occupying the position of Governor: I hope that the Governor identifies and submits a candidate for the position of Secretary of State before August 2 and I have told him so.” It appears her apprehensions are well grounded: she has been investigated for claims of favoring family members in a possibly criminal dispute, although officials found insufficient evidence to go forward. She has also has been accused of dragging her feet on investigations such as questionable licensing of medical marijuana clinics; however, the greatest questions have been with regard to governmental corruption with regard to recovery from Hurricane Maria after it slammed the island two years ago—and from which, recovery remains spotty: many in Puerto Rico to know what happened to the relief funds, accusing Secretary Vázquez of showing little interest in finding out.
So Who’s up to Bat? The seeming disinterest of Secretary Vázquez appears to reflect growing divisions within Gov. Rosselló’s powerful, pro-statehood New Progressive Party. With Gov. Rosselló having recently resigned and delegating the reins to Senate President Thomas Rivera Schatz to serve in an acting capacity, some believe that the Senate President is interested in the Governor’s position. If no Secretary of State is named, the next in line would be Treasury Secretary Francisco Parés; however, because the Secretary is only 31, he is too young to be eligible. Next in the governance line of succession would be Secretary Eligio Hernández, who rose to that post in April, when his predecessor was forced to resign amid corruption charges. The next few days are likely to see a power struggle play out within the party, according to Victor Suarez, who was Puerto Rico’s the 24th Secretary of State, as well as the current Executive Director of the Puerto Rico Convention Center District Authority—and who, prior to his current position, served in various roles in public service, including as executive director of the Puerto Rico Port Authority, as Secretary of Consumer Affairs—and as Deputy Mayor of Carolina, and as the territory’s Chief of Staff. Mr. Suárez noted: “I think there are negotiations going on and they are regrouping: She was supposed to be part of a smooth transition, but this make me wonder if the Governor was outmaneuvered.”