The Government Accountability Office has prepared a new report on Puerto Rico’s recovery from Hurricane Maria. The news is not good.
“As of June 2023, FEMA has awarded $23.4 billion in Public Assistance funds for Puerto Rico to recover from the 2017 hurricanes and 2019 and 2020 earthquakes,” the report begins. “Of that, it has spent $1.8 billion and a lot of work remains, but increased costs may lead to funding shortfalls for projects. For example, parts for the San Juan Power Plant project exceeded estimates by $3 million. In prior work, we identified risks to Puerto Rico’s recovery, such as problems in starting construction. In response, FEMA drafted a risk management plan but has yet to finalize it.”
$11.3 billion still needs FEMA authorization. In addition to trouble getting the funds, the municipalities and organizations which have requested the funds are finding that their requests were not adequate to cover the actual costs. The funds were awarded under an expedited program which created final fixed-cost budgets for the projects. Since the amounts turned out not to be sufficient to complete the projects, many of those projects have not been started.
Rising costs and difficulty making accurate cost analyses have been serious problems. The earthquakes of 2019 and 2020 and the COVID-19 pandemic added to the complications. Now, more than six years after the destruction of Hurricane Maria, Puerto Rico continues to work toward recovery. FEMA has still not taken the actions the GAO recommended in the past.
FEMA’s responsibility
FEMA’s response to Hurricane Maria in Puerto Rico has been criticized for years. The report brings up two recommendations from the GAO to FEMA. “We recommended that FEMA, in coordination with Puerto Rico and relevant federal agencies, identify and assess the risks to Puerto Rico’s recovery, including Puerto Rico’s capacity to carry out projects, and identify potential actions to manage the risks,” the report explains. “FEMA is working to address these recommendations and has thus far drafted a risk management plan in response.” That plan has not yet been finalized.
GAO has also asked Puerto Rico to give up storage taxes on construction materials. This is an example in the report of changes that could be made to help keep costs in check. Puerto Rico generally has higher taxes than any of the states; for example, sales taxes are at 11.5%, the highest in the nation.
Another issue identified is the red tape from FEMA. Puerto Rico had problems with improper payments, which could be payments that should not have been made but was just as likely to be about correct documentation. This history of improper payments caused FEMA to add more safeguards and oversight, making it more difficult for organizations to receive funds with which to begin working on projects.
In 2018, 15% of the payments made were flagged as improper, but in 2020 this was just 0.13%, an amount which is not considered significant. Puerto Rico’s improvement in this area should make a difference.
Other issues
A lack of specialized labor has slowed recovery, as have disruptions in supply chains which have delayed access to essential materials by months or even years. The territorial government also reported, in response to the GAO document, that insurance issues are delaying projects. They asked that Congress provide greater flexibility for funding, including the projects which have already been given fixed amounts.
On the question of skilled labor, the territorial government points out that high levels of competition for the limited number of skilled workers has caused competition that increases prices. At the same time, they see high turnover which could make it difficult for companies to provide knowledgeable workers. The timeframes also create difficulties, according to Puerto Rico’s government. “The current FEMA guidelines do not adequately align with the realities in Puerto Rico,” they said,”resulting in unrealistic timeframes.”
In testimony before Congress, the GAO identified the following issues as things that have delayed recovery:
- Limited institutional knowledge and capacity in Puerto Rico to manage disaster recovery programs
- Difficulties between FEMA and grant applicants in reaching agreement on the scopes for work for projects
- Increases in costs for projects because of inflation
- Difficulties in procuring resources such as goods and services for construction projects
We believe that all of these things result from territory status. Puerto Rico’s infrastructure was in bad shape before the hurricane. Getting funds was difficult. The Island did not have the capacity for the necessary rebuilding and the federal government did not provide the help that was needed. Congress is allowed to treat territories differently from states, and Puerto Rico has no voting members in Congress to demand the needed support. While some members of Congress have spoken up, the situation would be very different if Puerto Rico had four Members of the House and two senators as it will as a state.
Contact your congressperson today and let them know that you support statehood for Puerto Rico.
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