Fiscal Control Board

FISCAL CONTROL BOARDS
Origins and Structures of Fiscal Control Boards Understanding the origins and the structure of fiscal control boards is crucial in this discussion, since it provides a framework for this mechanism. The Harvard Law Review argues that municipal financial problems and state responses to them are not new phenomena because cities throughout the nation have faced urban fiscal crisis since the 1800’s (Harvard Law Review 1997). Moreover, the study defines urban fiscal crisis as “existing when a city lacks the ability both to repay creditors for monies borrowed and to continue to meet the city’s other financial obligations” (Harvard Law Review 1997, p. 735). It also defines a fiscal control board as “any state-created agency
For the purpose of this project, the strengths and weaknesses of fiscal control boards will be measured through the Harvard Law Review’s standard on how “fiscal control board effectiveness at both redressing the immediate fiscal crisis and responding to the underlying structural factors that lead cities to experience chronic financial difficulties” (Harvard Law Review 1997, p.739). In terms of the debt management aspects, the Harvard Law Review argues that fiscal control boards are generally successful at laying out a base for restoring a city’s creditworthiness (Harvard Law Review 1997). They attribute this to the fact that in the creation of a fiscal control board allows the reassurance of municipal creditors that when a crisis arises it will be managed with seriousness, “such that necessary negotiations may commence to restructure the debt and to prevent a default” (Harvard Law Review 1997, p. 739). Moreover, this mechanism is often supported by state legislators to prevent “statutory limits on municipal debt issuance that may have limited the ability of local elected officials to respond to the crisis” (Harvard Law Review 1997, p. 739). Thus, these factors appear generally sufficient in restoring the credit of the disrupt
750). Despite this, critics of fiscal control boards argue that the policies adopted can harm the residents and sacrifice long-term financial interests of the city (Harvard Law Review 1997). Since authors like Backiel, Pierluisi, Colon, and Dick speak against the lack of a voice of Puerto Rico in its financial matters, the Harvard Law Review’s proposal of the harms of fiscal control boards provide ground for questioning the negatives of this measure. According to the Harvard Law Review, “by responding to urban fiscal crises through fiscal control boards, states have chosen to pass up the opportunity to involve citizens at the decision-making that affects their lives in favor of a process that ensures swift and decisive action by ‘experts’ free from political considerations” (Harvard Law Review 1997, p. 734). Additionally, this claim argues that while financial control boards are generally successful in resolving the immediate crisis, this comes at the expense of democratic decision-making and lasting prosperity (Harvard Law Review 1997). The counterargument to this is that the requirements of participatory democracy will make the process too slow (Harvard Law Review 1997). This project will analyze if the level of citizen input affected the outcome