House legislation aimed at addressing Puerto Rico’s $70 billion debt crisis will have “no significant net effect on the federal deficit,” according to the nonpartisan Congressional Budget Office.
A CBO score of H.R. 5278 on Friday said the bill’s federal oversight board would likely require $370 million in administrative costs, but the government of Puerto Rico would pay for those costs to offset any direct spending.
“All cash flows related to the oversight board established for Puerto Rico under H.R. 5278 should be recorded in the federal budget,” CBO said. “”More specifically, amounts provided by Puerto Rico to fund the board’s operations should be recorded in the federal budget as revenues, and subsequent expenditures should be recorded as federal direct spending because they would not be contingent on further legislation.”
On the creditor front, CBO said it’s unclear what effect the legislation will have if implemented.
“Because CBO is uncertain about how claims by creditors would be affected and the amount of losses that would occur as a result of the bill, CBO cannot determine whether the aggregate cost of the mandates on private entities would exceed the annual threshold established” in the Unfunded Mandates Reform Act “for private-sector mandates.”
That yearly threshold is currently $154 million.