News about the economy

See letter http://rec-end.gfrcdn.net/docs/editor/1 … ajunta.pdf

Goverment is working on fines for internet stores that do not declare the individuals that made purchases from them and the amount of the purchases.
Also working on getting Internet companies to charge the IVU (11.5%) tax.

ReyP wrote:

Goverment is working on fines for internet stores that do not declare the individuals that made purchases from them and the amount of the purchases.
Also working on getting Internet companies to charge the IVU (11.5%) tax.

So PR I s trying to do what most states had failed every time. Let's see how far that will go.....

Is there a source or article that shows what happened with all the money that the PR government borrowed? Or who the bond holders are?

Justpeachyy wrote:

Is there a source or article that shows what happened with all the money that the PR government borrowed? Or who the bond holders are?

Nope, people want an audit to determine that and the governor is against it. But people want to know.

Related to internet taxes. https://www.thestreet.com/story/1406126 … _ven=YAHOO

Justpeachyy wrote:

Is there a source or article that shows what happened with all the money that the PR government borrowed? Or who the bond holders are?

The idea that the bonds are held by unscrupulous "fat cats" and that they wouldn't be harmed by a reduced payment simply isn't the case.

http://money.cnn.com/2016/02/22/investi … rs/?iid=EL

ReyP wrote:

Related to internet taxes. https://www.thestreet.com/story/1406126 … _ven=YAHOO

I didn't know this....More money for the politicians to steal and waist, because if you think they're going to be used for good you are dreaming!!

I hope they end up doing an audit. 70 billion in debt with constant power outages, poor roads, and no funds for retirement pay? What did they do with all the money?

ReyP,  Man you stay busy on the Forum.  Question, I noticed that the last update on this topic was in Mar. I see that you stay pretty much on top of many subjects. Is there no current update since late Mar?  The reason is I have been reading the many topics and I am beginning to worry that right now may not be the time to move to the Mayaquez/Rincon/Aquadilla area. Did the UPR ever get its budget resolved?  Anyway, Thanks for keeping all of us "Hopeful Puerto Rican " in the loop. Have a great day1

gls2163

Most of the news is small details, seems about the same.
The UPR has come up with a combination of cuts and making money with services to the government and using some of their patents that amount to around 210 million or so. The Promesa Federal board targeted the UPR cuts at 300 million and later was revised to 450 million, so the cuts are only about 1/2 of where they need to be. Not sure if the demonstrations have stopped yet, I stopped following it. When the board cuts their budget it is game over they will have no choice.

There is news that the medicare will go up some but the number is not yet fixed some say PR will get 300 more million and some say 400 million. Depends which politician you listen to.

Medicaid / Obamacare funds is a different story. PR government was hoping to get 1.2 billion so services could continue with the same rate as years before, however in the last 2 occasions that congress could have added that to the bill, congress has decided to delay discussion about it and has not yet become part of any bill. It is unpopular to give PR any bailout or anything that some may consider it a bailout, this is the reason why it is not part of the latest Obamacare replacement or the 2018 budget yet as it will complicate its passage.

Governor continues to refuse performing an audit of the 70+ billion debt, he says we should just negotiate. The people want an audit and somebody to go to jail and determine which parts of the debt was illegal and which is actually due. Governor says we don't have time and that it will just be a bunch of court battles. People think there are a lot of dirty politicians that need go to jail and that the debt first need to be reduced by eliminating any illegal bonds and then sitting down to negotiate. There is one thing on the governor side ..... PR is required under the PROMESA law being enforced by the Federal board to balance their budget for 4-5 years in a row, before PROMESA and the board can go away, the longer we delay in reaching a balanced budget because we are fighting in court the longer they will remain in power and the government will basically will continue to just run around doing what the board wants. Current estimates is that the board will be in power for a minimum of 7 years assuming we continue moving toward a balanced budget.

Careful crossing the road, several cases of people running over someone and leaving the scene.

Drugs are still a problem, most crimes are drug related and most murders are also drug related.

The senate passed a bill to speed up permits but it is not yet law, there is still some infighting going on.

In other words ..... not much has changed.

I been quiet about it since I have not seen anyone commenting so I figure they are reading the same newspapers as me.

By the way, I was a regular member but I accepted the position of Advisor which gives me some responsibilities for the forum, as such I dedicate a fair amount of time to the forum instead of watching TV. I also spend some time in the experts section of the board discussing with the owners and others experts and advisors where we go from here and what changes need be made.

Yeah, I've actually been trying to keep up with UPR situation. I was planning on continuing my education here. Rio Piedras UPR stopped receiving Pell Grants Federal funding and student loans payments since the campus was closed. This was as of March 29th, no April 5th payment was made and neither will there be a May 2nd payment.  Link is here but in Spanish http://www.elnuevodia.com/noticias/loca … l-2308836/
Mayagüez UPR joined the strike as well on Friday. Article here
http://www.elnuevodia.com/noticias/loca … r-2308541/
There was a concert at UPR Rio Piedras today with local music groups to bring attention to the situation. Students want an audit of the debt, no budget cuts, no tuition increases and no consequences for defending their university. Link here https://www.metro.pr/pr/noticias/2017/0 … edras.html

Hope this gives some insight on the current status.

The main big thing is the upcoming plebiscite. which so far is on target for June 11. The vote is to decide if PR will ask for statehood or some form of Sovereignty. If sovereign wins then it will be decided in another vote in Oct as to plain independence or something similar to the Mariana islands where PR is independent but has an arrangement with the US for items like defense and military. (free association)

There are 3 major types of parties in PR.
1) The PNP wants PR to be a state
2) The PPD used to want PR to remain a colony, this option is not allowed under the June 11 vote since remaining a colony was deem illegal. The party is divided some going for statehood, some for the Mariana deal (free association), some for independence. In the next 45 days they will decide which way their members are to go.
3) Independence & sovereignty parties which if it wins will resolve what sort of sovereignty they will seek sometime in October.

Each party is throwing out scare tactics about loosing the US citizenship, about devalued money, about possible tyrant coming to party, etc. Most of that coming from people who wants to scare the rest as to how best to vote.

The reality is that it is up to congress to decide for real, they do not have to accept PR as a state or as independent or any flavor of it.

So, expect a little noice with people driving with speakers on their vehicles and pamphlets being passed around and lots of coverage in the radio and news. Each party will spread their lies, specially since they have no idea how congress will view the vote or how they will decide to deal with it.

One big item most do not understand is that once you are a US citizens, you can not loose it, but those born later after PR becomes free may not be eligible for US citizenship. You can't have your cake and eat it too. One item I do not understand is what is the rush for this vote now if congress may ignore it for close to a decade and by that time people may have changed their mind.

**** It is highly unlikely that congress will act one way or the other for the next 10 or more years, the PNP is targeting 2025 and some in congress have said they will not take any action until PR is out of the debt problem which will take 7-15 years to be resolved. So do not worry about it.

Lets not discuss this item, it is here for information purposes, it is against forum policy to discuss politics. I only made the entry because it is something that could affect you so you must be aware of it and if a resident you get to vote.

If you have to express your opinion or have questions PM me, do not add to the forum.

boy, you folks are in the know!!!!!   Thanks for the update. Again , the reason I like to learn this type of information is due to economics. If there is a bad economic outlook , then you can have massive social upheaval. Looks like PR is handling it as best they can.
Again , thanks for the quality info. It will help me to make up my mind.

Unlike Venezuela and other Latin American countries, Puerto Ricans tend not to demonstrate to the same levels or become violent about it. Hunger can drive them that way, but hunger is not likely to be an issue here.

Justpeachyy wrote:

Yeah, I've actually been trying to keep up with UPR situation. I was planning on continuing my education here. Rio Piedras UPR stopped receiving Pell Grants Federal funding and student loans payments since the campus was closed. This was as of March 29th, no April 5th payment was made and neither will there be a May 2nd payment.  Link is here but in Spanish http://www.elnuevodia.com/noticias/loca … l-2308836/
Mayagüez UPR joined the strike as well on Friday. Article here
http://www.elnuevodia.com/noticias/loca … r-2308541/
There was a concert at UPR Rio Piedras today with local music groups to bring attention to the situation. Students want an audit of the debt, no budget cuts, no tuition increases and no consequences for defending their university. Link here https://www.metro.pr/pr/noticias/2017/0 … edras.html

Hope this gives some insight on the current status.

UPR was given an opportunity to decide where the cuts are to be applied and they keep not coming with a number that matches the target 450 billion. Come the next budget their funding from the PR government will be cut in half, they used to get a little over 900 million a year now they will only get a little over 450 million for the year. I am working for Harvard University and most of their budget comes from previous students and corporations that donate. I am not sure if PR UPR does the same or not. But regardless, when the new budget takes effect they are being cut, protests or not, the Federal board does not care how they like it or not. If they want to continue to operate at the same level they are going to have to get money from outside of the goverment.

About the medicare increases I mentioned earlier.
http://www.elnuevodia.com/english/engli … d-2307343/

Municipalities are being affected also, they are being cut by the PR government and also loosing some federal grants.

In my opinion some of the projects they want to fund are wasted money, but what do I know.

http://www.elnuevodia.com/english/engli … s-2306954/

Speaking of municipalitie, there is a movement to create super municipalities which will cover several of the towns/municipalities that already exist. The system would be like the counties in the states, where the counties have a mayor that run several towns not just a town like it works currently.

This would reduce the number of mayors and personnel from 78 mayors to 20.
Needles to say not very popular measures as the number of mayors that would loose out is greater than the number of mayors that would have their power increased.

It is not likely that this will happen, at least not yet.

Board is exerting itself over what laws are passed in the island and what sort of financial impact it has. The days of the government looking good by giving people free stuff and buying votes may be over.
http://www.elnuevodia.com/english/engli … r-2306710/

The Federal oversight board (PROMESA) is being funded by Puerto Rico per congress mandate at a /!\ I AM A STUPID SPAMMER /!\50 million dollars a year.

There are a lot of unhappy people in PR over the board hiring this lady for over 625,000 a year plus benefits, travel once a month to Ukrane, plus moving expenses. And Puerto Rico has to pay it all during these difficult times.
http://www.elnuevodia.com/english/engli … o-2308124/

The program MySalud, the equivalent of Puerto Rico medicaid program that provides medical services to the poor is in question. As of yet there is no commitment from the US government about providing or not the Obamacare block grant that Puerto Rico normally receives. The deadline for this item is due in a week. Puerto Rico has enough funding for 4 more months and after that the program is in question.

The current budget for fiscal 2017-2018 which was approved by the Federal Control Board under PROMESA law, was made not counting on the Obamacare funds so the government is prepared to make cuts on the program as mandated by the board which requested a cut by 1 billion dollars (yes, 1 billion)..

For those not familiar with Obamacare in PR, the island receives a block grant and has a requirement to meet the same standards of quality and services required by Obamacare but has no markets unlike many of the states. Money from the government and from the block grant is combined to provide the service.

The bill in congress for the replacement of Obamacare (pulled back because there was not enough votes for passage), has no mentions about Puerto Rico on it to my knowledge so that is a big Question.

See article about this subject: http://www.elnuevodia.com/english/engli … d-2309446/

Mayaguez is having issues with picking up trash. Apparently the company EC Waste is contracted to do the pickup and has not been payed. They are only picking up trash in some areas and in others not.

Some towns are considering imposing a trash removal tax of some kind  typically household do not pay for trash removal in PR

That is coming, in addition to property taxes! Rumor has it, there'll be at least a 70% increase in property taxes, that sounds like a lot, but I just talked to a guy who's got a 3br home, and pays $7/year...

mac00677 wrote:

That is coming, in addition to property taxes! Rumor has it, there'll be at least a 70% increase in property taxes, that sounds like a lot, but I just talked to a guy who's got a 3br home, and pays $7/year...

Depends on what the property was evaluated for and if they are aware of changes such as additions or not to the home. It is possible his house is fairly old when prices were lower and his house value according to CRIM is very low. Not sure about recent purchases, they may go by the last sale price. If that is the case it is going to hurt real-estate like hell. A house build 20 years ago for 7k may sell today for 120k, previous owner pays based on 7k the new buyer pays based on 120k. Big difference if it goes that way. It is estimated that close to 50% of the properties are not listed with CRIM so they been paying zero and the other half pays CRIM every year. That is another argument going around that not all homes are listed in CRIM and as such it is unfair on the ones that are.

The government is looking for a quick fix, so going ahead with an increase in any form against the properties they know, lets them collect money fast and with little effort instead of going after those that were never listed under CRIM.

If a house was build with no permits the government may not know they exist, if a house was renovated or grew in size they government does not know if there were no permits. People try not to get permits if they can get away with it.

I can tell you from our experience, before we built the house, the land paid $100/yr in taxes. After we have the house built, the property was re taxed and we don't have to pay taxes on the property. The lady at the CRIM office told us the property "value" was under $85K so it was exempt from taxes. The tax on private property is .0925% in SG. It may vary from one municipality to another but not by much. My rental property is valued at $35K, not sure how much we will be paying for it since the municipality still "evaluating " our taxes. If we have to pay, it will be around $250-300/yr WAY less than what we used to pay in Texas.

Hey Adlin, that formula does not work for me I tried 85,000 * .0925 = 7,862.50 and if I try 150,000 * .0925 = 13,875 both are way over what you are explaining. How should I modify the formula?

I am not sure to be honest with you. When we went to the tax office the lady there told us this information. And once she said my house was exempt I stop listen to her...lol!
We were told that your main property is exempt up to $85K, you will pay taxes for any taxable amount above that on your first property. Secondary and above properties are fully taxable. Just like in the states, the taxation on the property is less than the real value.
My rental property paperwork had not been finalized so I cannot tell you what's the tax amount. And as you know how "efficient" the government is, I am sure we will get a bill for last year and this year together. And they will tackle late fees even if they are the ones taking their sweet time.

Remember, if you are a Veteran, you do not pay property tax.

frogrock wrote:

Remember, if you are a Veteran, you do not pay property tax.

Hey Frogrock, that sounds great, do you know where to get info on that?

frogrock wrote:

Remember, if you are a Veteran, you do not pay property tax.

I am not sure if that applies in the island. At least we were not asked on the CRIM application. But it's worth looking into it.

ReyP wrote:

Hey Adlin, that formula does not work for me I tried 85,000 * .0925 = 7,862.50 and if I try 150,000 * .0925 = 13,875 both are way over what you are explaining. How should I modify the formula?

You'd have to add a couple of zeroes to that formula, as she stated "%".

mac00677 wrote:

ReyP wrote:

Hey Adlin, that formula does not work for me I tried 85,000 * .0925 = 7,862.50 and if I try 150,000 * .0925 = 13,875 both are way over what you are explaining. How should I modify the formula?

You'd have to add a couple of zeroes to that formula, as she stated "%".

So it should be .000925
So 150,000 - 85,000 = 65,000
65,000 * .000925 = 60.13 rounding up,  a year.
I should be able to afford that if correct.
I am paying 4,000 a year right now.

In other news, looks like the June 11 Plebiscite will likely be delayed. The US Justice department did not accept the descriptions and the removal of the current territorial status from the voting choices for the Plebiscite.

Looks like the law will be modified probably on Tuesday next week to allow voting for 3 choices: Statehood, Current territorial/colonial (ELA) status, and independence.

Governor grumbled a few times, but will go back and modify the parameters and get a new vote and probably a new date as they can not print the new form on time to make the June 11 date.

The PPD (political party that wants to keep Puerto Rico current status "Estado Libre Asociado") has requested the cancelation of the June 11 Plebiscite, apparently they do not want to participate in the vote and since their description of the ELA must be part of the ticket, their actions are aimed at stopping the Plebiscite from being carried out any time soon.

It seems to me the most immediate and significant event on the horizon occurs May 1, 2017 when the deadline to restructure $70 billion in debt expires. When U.S. Congress last year passed PROMESA, it froze creditor lawsuits so the oversight board and creditors could negotiate restructuring PR debt.  An extension of that deadline is widely reported as "not going to happen."  So, with the deadline passing and no agreement "a growing number of analysts" (whoever that is) say Puerto Rico will seek protection from creditors under PROMESA's court-sanctioned restructuring process, akin to U.S. bankruptcy.  All bets are off and the bankruptcy judge and court-appointed team of administrators decide who and how taxes are imposed and debt repaid.  Maybe municipalities (not able to file bankruptcy) stop services and fire employees.  Could be an ugly scenario unfolding real soon.  The PR government will make a bad deal with bondholders before they give up power in bankruptcy.  If so, then it's back to demonstrating to the oversight board where the money will come from.
http://www.reuters.com/article/us-puert … SKBN17E0GN

The goverment keeps negotiating bad deals but the board is a participant and will not allow a deal that will not allow PR to be in the hole again 4 years from now. How it will unfold in the end is hard to say.

ReyP wrote:

The goverment keeps negotiating bad deals but the board is a participant and will not allow a deal that will not allow PR to be in the hole again 4 years from now. How it will unfold in the end is hard to say.

The government does not have the political will to make the severe spending cuts and tax increases necessary to fix its problems or the time and ability to do so with so many of the legacy issues you've identified - inefficient national and municipal governments, poor tax enforcement and collection, outdated infrastructure hindering development and growth - have their own long timelines to correct.  Beginning in May, money badly needed for public services will have to be diverted to lawyers defending bond collection and settling claims piecemeal.  Those first in line and moving the fastest are likely to get more than others so it'll be like a starting pistol going off.  Bankruptcy will be the poison pill needed to be taken to stop the suits.  We will then see at least a decade of court administration and oversight.  Any debate on the June referendum on statehood/independence or whatever is akin to wondering "how many angels can dance on the head of a pin."  (Pursing the inquiry is of no value.)

This weekend there are a lot of last minute negotiations with some of the bond holders about the debt. Not all parties are represented in these negotiations.

As of May 2 the current stoppage of the law suits runs out and it is up to the Federal board to decide if they will seek restructuring of the debt under article III of promisa which means they may go ahead and start the process for bankruptcy under an appointed judged by the Chief Justice of the US supreme court.

Things are on hold waiting the results of the negotiations this weekend, but even if there is agreement this weekend, not all bond holders are represented so they are likely to end up in bankruptcy court.

Apparently a vote by the board will occur soon to seek or not bankrupcy. See article.
http://www.elnuevodia.com/english/engli … d-2316064/

Bankruptcy is the only way out IMO.

Sitka wrote:

Bankruptcy is the only way out IMO.

It was the only option to start with, the bond holders do not want to accept anything that will help Puerto Rico. Previous negotiations have been around a cut of 15% with a break on principal payments for 5 years then the bonds are extended for 5 more years at around 4.5% interest. The longer it is extended the more interest, so this has very little effect on the bottom line.

The government just made a new offer for 50% cut to the constitutional bond holders and 60% cut to the COFINA bond holders, needless to say, they did not like the terms and rejected the offer. Those not part of Cofina and constitutional bond holders were told they would get a cut of the principal around 70%.

The Federal Control Board, has been talking about a 79% cut on the principal given that PR after all legal expenses can only pay all the bond holders less than 1 billion a year. Since the board controls the finances, in the likely event that the board on Monday or Tuesday files for Bankruptcy, likely the offering will be in the 79% cut range and go from there. It will be up to the court to decide who is right and what PR can afford to pay. If we go into bankruptcy, all payments are stopped, and no other legal issues can be filed other than additional bankruptcy claims against PR. In my opinion the constitutional bond holders will get the most (.50 on the dollar), the coffin bond holders will likely be second (.35 on the dollar), the rest will get probably around .20 cents on the dollar if any.

A lot depends on the judge, what he permits and what he left out, also the length of time to come to a ruling. I am not sure if the ruling can be challenged or not (not a lawyer), but if that is the case the length of time is further extended.

The bankruptcy puts pressure on all sides to do a deal as soon as possible, but when, will depend on how the bond holders and Puerto Rico view the questions and mood of the court appointed judge. If the judge is fair and decided based on financial realities of what Puerto Rico can pay, then PR will come out OK from it, but not before the court decides to order a massive cut on government spending to release more funds, in my mind there is a good likelihood the court may order a cut in government expending of around 25% so that means more public employees will be in the unemployment line.

The single employer law recently passed, basically says that all employees can be used anywhere in the government, and may require some employees to relocate to other towns if assigned across the island. The idea is to not have people sitting on their hands while another branch or agency of the government is short handed. Sending a secretary that handles constructions permits to an accounting office will create huge training issues, bad attitudes and major incompetence. But the government is set on merging 115 agencies into only 35 agencies, all without the need to send people home. Given all the personnel issues that will occur like being forced to learn something new and or go to work 50 miles away, I think they will end up loosing employees which will emigrate if they have any useful skills. Also some will retire so the government will shrink again, but all this takes time.

I think that with in a year we are going to see about 85,000 move to the states which would be a record for a single year, the higher I know of was 65,000. More houses on the market, more depressed real state market, more personal bankruptcies and more pressure on the banks due to bad loans.

Monday's work stoppage is going to be a major pain in the behind for everyone else and it may extend, causing significant lost of revenues for businesses and angry drivers and employees in the private sector. There will be a little violence, mostly in a clash with the police of which 15 thousands are being deployed. I don't expect it to be major, but some injuries are likely.