The United States government authorized Puerto Rico to draft its own constitution by Pub. L.81–600, 64 Stat.319, enacted July 3, 1950. On June 4, 1951, the Puerto Ricans voted to hold a constitutional convention in a referendum, and elected delegates on August 27, 1951.[4][5] The convention adopted a constitution on 6 February 1952 and was ratified by Puerto Rico's electorate in a referendum on March 3, 1952.[6]
The United States government approved an amended version by Pub. L.82–447, 66 Stat.327, enacted July 3, 1952, and on July 10, 1952, the Constitutional Convention of Puerto Rico reconvened and approved the conditions established by Pub. L.82–447. On July 25, 1952, Governor Luis Muñoz Marín proclaimed that the Constitution of Puerto Rico was in effect.
The 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 150,000 workers.
The head of government is the Governor of Puerto Rico, who is elected every four years in a general election. 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 oldest executive mansion in continuous use in the Western Hemisphere.
The Governor has the authority to nominate agency heads, trial and appellate judges, as well as Supreme Court justices and directors of public corporations, although these must be confirmed by the Senate and, in a handful of cases, the House, as well. Similar to a U.S. State, the Governor has authority over the Puerto Rico National Guard.
Although Puerto Rico does not have the position of Lieutenant Governor, sections 7 and 8 of the Constitution empower the Secretary of the Puerto Rico State Department to act as Acting Governor, should the governor be absent from Puerto Rico, become temporarily disabled or unable to discharge his/her duties, and as Governor for the remainder of the term should a permanent vacancy occur.
Article IV of the Constitution of Puerto Rico establishes that the Governor shall be assisted by Secretaries who shall collectively constitute the Governor's advisory council and be designated as the Council of Secretaries although it's mostly referred to as the Cabinet.
The Cabinet is composed by the Constitutional Cabinet, composed by the Secretaries established by the Constitution, and the Operational Cabinet, composed by the Secretaries established by extraconstitutional Puerto Rican law or appointed by the Governor. These Cabinets do not exist as agencies, but are referred as such in transcripts, records, official documents, and conversations for brevity and easiness.
All Cabinet members are nominated by the Governor and then presented to the Senate for advice and consent by a simple majority. If they are approved, they are sworn in and then begin their duties. All members receive the title of Secretary.
Members of the Cabinet serve at the pleasure of the Governor, who may dismiss them or reappoint them (to other posts) at will.
The day-to-day enforcement and administration of laws is delegated by the Governor to 16 executive departments created by the Constitution or by statute to deal with specific areas of government. The heads of the departments, chosen by the governor and approved by the Senate (with the exception of the Secretary of State, who requires Senate and House confirmation), 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 or so-called "reorganization plans", 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.
Puerto Rico has also established several government-owned 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' 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 government-owned 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, and have been unable to legally declare bankruptcy.
Members are elected to both chambers in general elections held every four years, along with the elections for the Governor and the 78 municipal mayors. Each member of the Legislative Assembly represents an electoral district, with the exception of a number of legislators who are considered at-large and represent the island as a whole. Members representing specific districts are elected by the citizens residing within the district, while at-large legislators are elected by accumulation of all island votes.
Constitutional changes
In recent years, two referendums have been held to propose constitutional changes to substantially modify the composition of the Legislative Assembly.
Various organizations pushed for changing the legislative assembly from the current two-chamber system (House and Senate) prevalent in 49 of the 50 states of the nation to one-chamber (unicameralism). The reasons for this proposed change was based on the growing public opinion that members of the assembly are overpaid, and that a smaller assembly might achieve the same work results as the bicameral one with less public expenditures. However, an official report of 1995 indicates that this argument should not be considered the primary objective because the savings are not significant. The legislative spending in Puerto Rico, compared with the consolidated government budget is less than 1% of total government spending.[7]
Lacking the two-thirds majority necessary in both houses of the Legislature to submit constitutional amendments to the electorate, in 2004 the Popular Democratic Party's then-majority approved legislation to hold a referendum, not on a particular constitutional amendment as such, but on the general concept of switching from a bicameral to a unicameral system which was held on July 10, 2005. Attended by less than 25% of the islands' electorate, Puerto Rican voters approved the change to a unicameral legislature by 456,267 votes in favor, versus 88,720 against.[8] (Voter turnout was 22.6% of the electorate.)[9] Almost four years later, incoming Governor Luis Fortuño (from the New Progressive Party or New Party of Progress (NPP)) discarded the alternative of unicameralism claiming that the NPP's platform, rather than advocating unicameralism, supported submitting to the people a constitutional amendment proposing a substantial reduction in seats in the existing bicameral legislature.[10][11]
In 2012, Governor Fortuño proposed, and by a two thirds majority in both houses, the Legislature approved submitting to the people a constitutional amendment reducing the size of the House from 51 to 39 seats and the Senate from 27 to 17 seats, essentially a 30% reduction in size. However, in an August 18, 2012 referendum, the constitutional proposition failed by a 54% to 46% margin.
Puerto Rico is divided into 78 municipalities, each headed by a mayor. The municipalities also have a municipal legislature, which is in charge of overseeing the mayor's operations, holding public meetings, and enacting municipal resolutions and ordinances. Both the mayor and the municipal legislators are elected at-large by the municipality's citizens in general elections held every four years. Unlike most towns, cities and states in the United States, Puerto Rico does not have local or state sheriffs; sheriff duties are instead performed by the Puerto Rico Commonwealth Marshal's Office. Many municipalities have established municipal police departments, although most law enforcement activity is carried out by the Puerto Rico Police (PPR).
This section's factual accuracy may be compromised due to out-of-date information. Please help update this article to reflect recent events or newly available information.(November 2012)
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.[12] The government also receives more than $4.2 billion annually in subsidies and federal aid from the United States.[13] 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.
Government-owned corporations generate approximately $6.3 billion in general revenues by charging citizens for the services they provide. The largest government-owned corporation, the Puerto Rico Electric Power Authority (PREPA), generates almost half of those revenues alone ($3 billion). However, government-owned 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.[14]
When considering all three branches of government, including all government-owned corporations and municipalities, the government of Puerto Rico's annual expenditures can reach to more than $28 billion.[15]
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.[12] Other significant sources of revenue include excise taxes on imports, cigarettes, liquor, hotel rooms, cement, and vehicles ($2 billion);[12] and lotteries ($870 million).[16]
On November 15, 2006, the government eliminated the excise tax of 6.6% on imports (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.[17] 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.[18]
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. Thirty-three (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.[18]
Central government expenditures
This section needs to be updated. Please help update this article to reflect recent events or newly available information.(November 2012)
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).[19] 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%).[19]
In May 2007, local economists expressed serious concerns when it was revealed that the Puerto Rico public debt equaled to 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.[20][needs update] Economists have criticized the government's fiscal policy, whose level of expenditures and indebtedness has increased 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%.[20] By comparison, many other Latin American countries have seen reductions in their GNP-public debt percentages during that same time period.[20]
By early 2017, the Puerto Rican government-debt crisis posed serious problems for the government which was saddled with outstanding bond debt that had climbed to $70 billion or $12,000 per capita[21] at a time with a 45 percent poverty rate and 12.4% unemployment that is more than twice the mainland U.S. average.[22][21] The debt had been increasing during a decade long recession.[23]
The Commonwealth had been defaulting on many debts, including bonds, since 2015. With debt payments due, the Governor was facing the risk of a government shutdown and failure to fund the managed care health system.[24][25] "Without action before April, Puerto Rico’s ability to execute contracts for Fiscal Year 2018 with its managed care organizations will be threatened, thereby putting at risk beginning July 1, 2017 the health care of up to 900,000 poor U.S. citizens living in Puerto Rico", according to a letter sent to Congress by the Secretary of the Treasury and the Secretary of Health and Human Services. They also said that "Congress must enact measures recommended by both Republicans and Democrats that fix Puerto Rico’s inequitable health care financing structure and promote sustained economic growth."[25]
Initially, the oversight board created under PROMESA called for Puerto Rico's governor Ricardo Rosselló to deliver a fiscal turnaround plan by January 28. Just before that deadline, the control board gave the Commonwealth government until February 28 to present a fiscal plan (including negotiations with creditors for restructuring debt) to solve the problems. A moratorium on lawsuits by debtors was extended to May 31.[26] It is essential for Puerto Rico to reach restructuring deals to avoid a bankruptcy-like process under PROMESA.[27]
Statehood might be useful as a means of dealing with the financial crisis, since it would allow for bankruptcy and the relevant protection. In the Puerto Rican status referendum, 2020, the majority of voters approved of Puerto Rico becoming a state.[28] However, the referendum was non-binding, and there has been little federal action since the referendum.
According to the Government Development Bank, statehood might be the only solution to the debt crisis. Congress has the power to vote to allow Chapter 9 protection without the need for statehood, but in late 2015 there was very little support in the House for this concept. Other benefits to statehood include increased disability benefits and Medicaid funding, the right to vote in Presidential elections and the higher (federal) minimum wage.[29]
^Nick Brown (January 18, 2017). "Puerto Rico oversight board favors more time for restructuring talks". Fiscal Times. The Fiscal Times. Retrieved February 16, 2017. The bipartisan, seven-member oversight board was created under the federal Puerto Rico rescue law known as PROMESA, passed by the U.S. Congress last year. It is charged with helping the island manage its finances and navigate its way out of the economic jam, including by negotiating restructuring deals with creditors.
