Opinion

OPINION: Puerto Rico Should Be Thanking Hurricane First Responders. Instead, Municipalities Are Taxing Them

Joe Raedle/Getty Images

Ross Marchand Policy Analyst, Taxpayers Protection Alliance

America has a rich and storied tradition of organizations and businesses helping battered and beleaguered citizenry after natural disasters. Even before the federal government began to regularly assist disaster-afflicted areas, organizations such as the Red Cross and local utilities would band together and “front” the resources needed to get people back on their feet.

The aftermath of Hurricane Maria in Puerto Rico was no different, with hundreds of utilities’ employees across the country spending their holiday breaks assisting residents of the struggling territory. Unfortunately, municipalities in Puerto Rico are cynically exploiting these first responders for money to feed their coffers.

After “fronting” resources for the relief effort, the New York Times reports that “Florida Power & Light was given five days to pay the first $2 million, and 30 days for $333,000 more in taxes, fees, penalties and interest.”

To put this in perspective, New York waived any and all taxes in the aftermath of Super Storm Sandy. Fees were also waived in the cleanups of storms Matthew, Irma, Nate and Florence. Unless Congress puts the brakes on the twisted ambitions of Puerto Rican municipalities, taxpayers and island residents will pay the price.

When utilities spend millions of dollars to get trucks and manpower to a “ground zero” location of a natural disaster, federal, state, and territorial governments are essentially borrowing from utilities in good faith.

Sure, first responding organizations won’t get interest on the money they put on the table, but a reasonable expectation has emerged over time that all expenses incurred will be reimbursed by the Federal Emergency Management Agency (FEMA), i.e. taxpayers.

But instead of being rewarded for expediently delivering such assistance, utilities will now be asked to pay millions of dollars in taxes and fines to municipalities across the island with taxpayers paying the tax bill.

This move by local governments is unacceptable, and gives rise to disturbing precedent. If utilities in future disasters have to plan for the possibility of municipal taxes as the cost of doing business, many (especially ones with fewer assets) will have a hard time coming to the rescue or will at least wait for federal reassurances that all expenses will be reimbursed.

This scenario also sets the stage for stealth bailouts to municipalities above and beyond disaster relief monies. If localities believe that billing outrageous utility taxes will result in federal reimbursement, there’s nothing to stop this activity from happening again.

This sort of behavior is occurring from state governments who promulgate wasteful health-care spending that will be reimbursed by the federal government.  

Incentives are made even worse by the government of Puerto Rico, which has a track record of dubious dealings and a lack of transparency.

The October 2017 deal inked with Whitefish handed $300 million over to a tiny, inexperienced company, without any sort of coherent explanation as to why the deal made sense. The contract drawn up with Whitefish was littered with questionable clauses that seemed designed to protect the business from any sort of oversight, including a $188 hourly rate for “groundmen.”

Opaqueness and judgment lapses seep down to a municipal level, as the territorial government lacks the ability and ambition to hold more local governments accountable. Revelations in September that New Progressive Party Vice President Abel Nazario used his position as the mayor of Yauco to withhold workers’ wages only worsened the reputations of local-governments island-wide.

While it’s difficult to correct for decades of bad governance in Puerto Rico, confronting the municipal tax issue head-on would be a welcome start. The Federal Trade Commission (FTC) would be wise to investigate territorial municipalities for deceptive billing practices.

If the FTC can pursue Amazon for billing consumers for unauthorized in-app purchases, surely they can go after city governments for bilking first responders and taxpayers. In the meantime, no one should be forced to pay these ludicrous fees.

Longer-term reform island-wide needs to include tying future funding to transparency benchmarks and investigating island corruption more widely. But until these more substantial actions can be realized, the federal government must rebuke greedy municipalities. 

Ross Marchand is the director of policy for the Taxpayers Protection Alliance.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.