Means testing has now come to disaster aid — and it only applies to Puerto Rico.
When Congress passed a $36.5 billion disaster relief bill to bolster rebuilding efforts in several wildfire and hurricane-damaged areas in October, it shortchanged Puerto Rico, giving it a $4.9 billion loan instead of the grant that other areas received. Now, it appears the debt- and hurricane-ravaged island won’t even get that money.
First reported in El Nuevo Dia, Puerto Rico’s daily newspaper, the Federal Emergency Management Agency and the Treasury Department informed the Puerto Rican government on January 9 that they will not disburse the loan through the Community Disaster Loans Program, after finding that Puerto Rico had a cash balance on December 29 of last year of $1.7 billion for ongoing operations. The letter also cited $6.875 billion scattered in various local government accounts. Since the loan was intended to fill in a gap in day-to-day funding, FEMA determined Puerto Rico does not need the money at this time.
“Funds will be provided through the CDL Program when the Commonwealth’s central cash balance decreases to a certain level,” wrote FEMA official Alex Amparo and Deputy Assistant Treasury Secretary Gary Grippo. They didn’t specify that level but added that municipalities could also apply for loans.
There’s no question that the Puerto Rican government has lacked fiscal transparency. But the very fact that Puerto Rico must receive assistance as loans rather than grants, unlike any other entity receiving disaster assistance, is bad enough. That the island is being treated like a welfare recipient found to have too much money in its bank account takes it to another level. Among U.S. territories suffering from catastrophe, only Puerto Rico is being means-tested.
“Puerto Rican working families continue to be treated as second-class citizens by the Trump administration and Congress,” said Héctor Figueroa, president of the Service Employees International Union’s Local 32BJ, in a statement. “Despite being unable to carry out many vital functions, Puerto Rico is deemed by these federal agencies as not poor enough to qualify for emergency loans.”
The Puerto Rican government has asserted that its state-run power and sewer companies will exhaust funding this month. Nearly half of the island’s citizens remain without power. With FEMA and the Treasury refusing to release government-approved loans, it’ll be difficult for the Puerto Rican government to float money to the power and sewer companies.
The congressional assistance had to be tied to a specific purpose, like ongoing day-to-day management, only because it was offered as a loan. The October disaster relief bill also allocated $13.58 billion to FEMA’s regular disaster relief fund, but Puerto Rico is competing for that money against Florida, Texas, and the U.S. Virgin Islands, which all experienced damage in violent summer hurricanes.
A more recent $81 billion disaster relief bill passed by the House in December also split its aid between Florida, Texas, Puerto Rico, the Virgin Islands, and California, for the recent wildfires. In the debate over the bill, Puerto Rico was denied $4.6 billion to boost its Medicaid program, which has long suffered from inequities, receiving less in matching funds than U.S. states. The bill has languished in the Senate, where Democrats want the Medicaid funding included.
Puerto Rican officials have said Medicaid funding will run out early this year without the increased funding. Though this would seem to fit the definition of ongoing operations covered in the CDL program, FEMA and the Treasury did not reference Medicaid in their letter.
Puerto Rico also took a hit from the Tax Cuts and Jobs Act, the Republican overhaul of the tax code, which treats manufacturing operations on the island like they’re in a foreign country, subject to a large export tax. Democrats want that rolled back in the next disaster supplemental as well. As The Intercept has reported, utility workers restoring power in Puerto Rico have alleged that the Army Corps of Engineers is hoarding supplies that could be used in the reconstruction effort. So FEMA and the Treasury’s decision fits with a recent history of smacking Puerto Rico while it’s down.
“Our federal government is telling 3.3 million Puerto Ricans that exercising its colonial power is more important than the survival of Puerto Rico’s people,” Figueroa of SEIU said.