Puerto Rico Highway Authority (oct. 1970)

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Highway Authority Commonwealth of Puerto Rico

Government Development Bank for Puerto Rico San Juan,Puerto Rico

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DATE DUE

625.7 Banco Gub. de Fom. para P.R. B213s 1970

A special report on Puertc Rico Highway Authority.

C.i^ATE

ISSUED TO

Governor Luis A. Ferre

625.7 B213S

1970

J. Raymond Watson Executive Director

Banco Gub. de Fom. para.-P.R. A special report on Puerto Rico Highway Authority.

C.2

Principal Officers ZQUEZ Secretary of Public Works

J. RAYMOND WATSON Executive Director ANGEL LUIS ALLENDE

Deputy Executive Director ANGEL R. CABAN

Special Assistant ILL

3 Planning Board f Juana Diaz

HUMBERTO CUEBAS

Assistant Executive Director-Finance FELIX L. GONZALEZ Controller JOSE R. AYALA Treasurer ANGEL SANTIAGO MATOS

Assistant Executive Director-Planning GERMAN LANDRAU

Assistant Executive Director for Design MANUEL FEBO ORTEGA

Assistant Executive Director for Construction ANGEL LUIS RODRIGUEZ

Assistant Executive Director for Administration JOSE E. ROSSY

Assistant Executive Director for Right of Way Acquisition and Management HOMERO RIVERA PEREZ Internal Auditor

SOFIA HEYN

Legal Advisor SAMUEL CAMPOS LOPEZ Public Relations Officer DANIEL SOSA BERRIOS

Safety Officer

Consulting Staff ON THE COVER

The Mayaguez-Po)ice Expressway links Puerto Rico's second and third largest cities and helps to open jor development the entire south coast of the island. Shown here is the GuayanillaTallaboa Section.

Wilbur Smith and Associates, Traffic Engineers

Auditors Peat, Marwick, Mitchell & Co.

COMMONWEALTH OF PUERTO RICO

Puerto Rico

Highway Authority The Puerto Rico Highway Authority, a body cor porate and politic constituting a public corporation and governmental instrumentality of the Common wealth of Puerto Rico, was created by Act No. 74 of the Legislature of Puerto Rico, approved June 23, 1965.

Prior to this time, the construction of roads and

highways had been the responsibility of the Depart ment of Public Works. The highway program was, therefore, dependent on annual appropriations from

the Legislature, and was only one of many functions carried out by this department.

As the rate of economic development rose steadily in the decade 1956-1965, higher income levels re

sulted in a sharp increase in automobile ownership.

The increase in economic activity and in the number and dispersal of manufacturing plants required vastly improved transportation facilities, especially if in dustry was to spread throughout the Island, and not

HIGHWAY AUTHORITY The Authority was created, therefore, to provide a separate public agency, whose sole responsibility was directed towards improving vehicular transpor tation facilities. The Authority would have a specific, allocated source of revenues which could be pledged to secure bonds and as a result, financial and long range construction programs could be established.

The Authority has broad powers under the Puerto Rico Highway Authority Act, including among other things: to have perpetual existence as a corporation; to have complete control and supervision of any traffic facilities owned, operated, constructed or acquired by it; to have complete control and super vision over the character of and necessity for all of its expenditures; to sue and be sued; to make con tracts and to execute all instruments necessary or incidental in the exercise of any of its powers; to

be concentrated around the San Juan and Ponce

determine, fix, impose, alter and collect tolls or fer riage, rentals, assessments and other reasonable charges for the use of the traffic facilities owned,

harbor areas.

operated, constructed, acquired or financed by the

Triijillo Alto Avenue is a four-fane, divided arterial highway in Metropolitan San Juan.

k

subject to the provisions of Section 8 of Article VI

highways and public housing development roads serving localized traffic of an intra-regional nature.

The Commonwealth Highway System, prior to the creation of the Authority, had been financed by annual appropriations from the Commonwealth Gen eral Fund and by Commonwealth bond issues which included among various other purposes, funds for

of the Constitution of the Commonwealth, to pledge

highways and streets. During the eleven-year period

Authority or for the services rendered thereby; to borrow money for any of its corporate purposes, and to issue bonds, notes or other obligations of the

Authority in evidence of such indebtedness and to secure payment thereon by pledge, or other lien on, all of its properties, revenues or other income and,

for the payment of said bonds and interest thereon,

the proceeds of any tax or other funds which may be

1956-1966, approximately $291,800,000 had been

appropriated from the General Fund for this purpose,

made available to the Authority by the Common

and at the end of 1966, out of total Commonwealth

wealth; to issue bonds for the purpose of funding,

bonds outstanding, approximately $121,000,000 of these bonds had been issued for highway and street

refunding, purchasing, paying or discharging any of its outstanding bonds or obligations; and to do all acts or things necessary or desirable to the carrying out of the powers granted to the Authority by the

Act or by any other act of the Legislature of Puerto Rico; provided, however, that neither the Common

improvements. These bonds consist of a number of issues dating back to 1950, and constitute an obli

gation of the Commonwealth payable from General Fund revenues.

wealth of Puerto Rico nor any political subdivision thereof shall be liable for the payment of the prin

Importance of Commonwealth Highway System

cipal of or interest on any bonds issued by the Authority and such principal and interest shall be payable only from the funds of the Authority pledged

The Commonwealth Highway System is a vital fac tor to the well-being and economic progress of the Commonwealth. The highways provide for the inter

for such payment under the Act.

city movement of persons and goods and function as

The Secretary of Public Works is authorized to enter into agreements with the Authority for the study, design, construction, repair, maintenance, ac

quisition of properties and easements, and any other matters necessary to carry out the purposes of the Act. The Authority may also enter into agreements under which the Secretary of Public Works agrees

main arteries over which the industrial, commercial

and agricultural products of the Commonwealth move to market. Most of the people in their daily commuting, shopping and normal travel will use and benefit from an extended and improved highway sys tem. An improved highway system is also important to the movement of tourist traffic to the resort areas

to pay, totally or partially, and with funds of the

and beaches of the Island. It is therefore imperative

Commonwealth covered into the Public Treasury,

that the System keep pace with the economic growth

the repair, maintenance and operation costs of any

of the Island and be sufficient not only to sustain the

traffic facilities financed under the provisions of the

normal growth but be adequate to induce a further expanded growth.

Act.

As a result of the growing awareness of the vital

Existing Commonwealth Highway System

The present Puerto Rico Highway System totals 6,315 miles, consisting of 3,965 miles of Common wealth Highway System primary, secondary and municipal highways and public housing development roads, and 2,350 miles of municipal system local

city streets and vicinal roads. In the Commonwealth Highway System there are 527 miles of primary system highways comprising the more important routes in terms of inter-regional traffic, 1,200 miles

of secondary system highways serving the needs of intra-regional traffic and 2,238 miles of municipal

necessity of accelerating highway construction, the Authority was created and revenues were provided to implement the construction program.

Resources Available to the Authority Gasoline Tax. At the same time that the Author

ity was created, funds were provided for it under Act No. 75, passed by the Legislature and approved June 23, 1965, which increased the gasoline tax from 8(f to 11^^ and allocated the revenues from 6/llths of the net receipts from this tax to the Authority for highway construction or to finance construction. Ad-

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Gradinu for a municipal road in Sabana Grande, in the southwestern part of the island east of San German.

ditional funds were provided to the Authority by Act

No. 24 approved June 20, 1970. This Act allocated to the Authority the full ll(i of the gasoline tax per gallon now being levied. Of this increase the alloca tion of Id became effective July 1, 1970 and the re maining 3(? allocation will become effective July 1,

of right-of-way be included in the annual budget sub mitted to the Legislature, estimated at approximately $20,000,000 for each of the years 1971-72 to 1974-75.

In the Bond Resolution the Authority covenants

1971.

Gas OH and Diesel Oil Tax. Act No. 24 approved June 20, 1970 increased the present Atj; per gallon tax on gas oil or diesel oil to per gallon effective July 1, 1970, and allocated to the Authority the revenues received from A<j: of the tax.

Right-of-way. In the past the Legislature has appropriated certain amounts annually for right-ofway acquisitions and appropriations of additional amounts for this purpose will be requested in the future, under the procedure outlined in the follow

ing paragraph. Such appropriations were as follows: 1965-66

The Authority will continue to request each year that the full amount of funds required for purchases

that on or before October 1 of each year it will sub mit to the Planning Board, the Director of the Bureau

of the Budget, the Secretary of the Treasury, the Fis cal Agent and the Traffic Engineers, a statement set

ting forth (i) a brief description of the program of traffic facilities to be carried out during the next fiscal year, (ii) its estimate of the total construction cost

of such program, (iii) a description of the right-ofway which will be needed to carry out such program

and the respective dates by which they will be needed, and (iv) the estimated costs of such rightof-way and the amount of general funds of the Com monwealth which the Legislature is requested to appropriate for such purpose. The Authority cove

1967-68

i 9,250,000 7,900,000 6.000,000

1968-69

9,000,000

nants that it will, pursuant to Section 14 of the Puerto Rico Highway Authority Act, file a copy of

1969-70

11,000,000

such statement with the Legislature prior to its next

1970-71

7,100,000

1966-67

regular session.

Federal Aid. The Authority also benefits from Federal Aid funds for highways on the Federal Aid primary, secondary and urban systems which are distributed to Puerto Rico on the same basis as these

funds are apportioned to the States. These funds must be matched equally by Puerto Rico. Apportion ments have averaged over $6,600,000 annually in

recent years but will amount to $15,900,000 for 1970-71. It is estimated for projection purposes that

such appropriations will amount to $8,400,000 in future years.

Toils. The Authority is authorized to levy tolls on facilities constructed by it, and it is expected that

it may do so from time to time as may be deemed to be appropriate, on divided, multi-lane, limited access

highways as they are constructed, and where exist

At present two limited access, divided highways are under construction. In designing both highways provision has been made for the imposition of tolls to provide supplemental revenues in order to expe dite the Authority's program. The larger one, run ning north to south across the Island, will extend from San Juan to Ponce, the two principal cities in Puerto Rico. The other one, running east to west along the north coast, will connect San Juan and Arecibo, and will eventually be extended to Mayaguez, located on the west coast. It is presently esti mated that approximately 20 miles of limited access roads will be completed by Deeember 31, 1971.

Toll collection facilities will be installed, tolls will

be imposed and the initially constructed facilities will be used for training personnel in the operations

ing toll-free roads are adequate to serve local traffic needs. The Authority does not propose to enter into any covenants to maintain any toll charges, if im posed on traffic facilities financed under the Bond Resolution, for any particular period of time, or at

of toll collections. Additional sections will be com

any particular level of rates and it will retain the right to change or to eliminate any such tolls, if

In addition to the gasoline and diesel oil taxes, additional highway user taxes are imposed, consist ing of registration fees, operators' licenses, miscel laneous motor vehicle fees (such as duplicate

imposed, at its discretion, in the best interests of the

economy of Puerto Rico. However, any such tolls as

pleted during 1972.

Present Highway User Taxes and Fees

may be collected on traffic facilities in and under the Bond Resolution will be pledged to the payment of

licenses, transfers, titling fees, etc.) and various

any bonds issued thereunder.

taxes are credited to the General Fund of the Com-

The Loiza Expressway, pictured here at the Iiiterchange with Ca/npo Rico Avenue, is a six-lane, controlled access highway in

Metropolitan San Juan.

excise taxes. All revenues from these latter fees and

monwealth and are not available to the Authority in any respect.

Revenues from

registration fees and

related

charges totaled $14,251,000 and operators' licenses $431,000 for 1969-70. Annual excise tax collections

on motor vehicles, parts and accessories have aver

aged about $35,000,000 for the five years ending June 30, 1970. Excise taxes on motor vehicles and

registration fees were substantially reduced by Legis lative Acts No. 1 of May 1970 and No. 4 of June 1970.

As stated heretofore, the gasoline tax was in creased in 1965 to llf' from 8(i per gallon, the tax in effect since 1947. The retail price of gasoline is subject to control by the Consumer Services Admin istration and is related to the current cost to the

retail dealer. It presently averages 33(i per gallon, tax included, and the price of premium gasoline averages 38^ per gallon, tax also included.

Commonwealth Highway System— Results, 1966-1970

III

Original Priority Program. In July 1966 the Authority retained the firm of Wilbur Smith and Associates, Consulting Engineers, hereinafter re

ferred to as the "Traffic Engineers" or "Engineers", to conduct a study of the highway needs of the Commonwealth System, to recommend a construc tion program and to estimate revenues available for its implementation.

In the report of the Engineers dated March, 1968,

1 he first section of the new ^cin Jiicin-rcnce 1 oil

Road, from Ponce to Jtiana Diaz, is Hearing completion. This expressway, the first toll road on the island, will link the two largest commercial centers.

States. By 1986 the population is expected to total 4.1 million persons, an increase of 51.9% over 1967 (47.7% over 1970)

a five-year priority improvement program, estimated

2. The number of motor vehicles has been

to require an expenditure of $394,500,000, was

increasing at a relatively faster rate than popu lation. In 1960, there were 172,000 registered

recommended. This priority program, which was

part of an existing backlog of highway needs esti mated at $707,800,000, included those projects

motor vehicles and in 1967 403,000 (1970

believed by the Engineers and the Authority to rep

614,000) were registered, an increase of approx imately 134% (1970—257%) since 1960. By

resent the most critical needs and those required to bring the greatest economic benefit to highway users and to the general economy of the Commonwealth.

over one million registered motor vehicles, more

The reasons for the need for highway improve ments were then identified by the Engineers as:

1 - The population of Puerto Rico has in

creased substantially in the past and is expected to grow rapidly in the future. In 1960 the popu

1986 it is estimated that there will be slightly

than 21/2 times the 1967 (1.7 times the 1970)

total. Density of motor vehicle ownership, which changed from 38.7 persons per vehicle in 1950 to 6.7 persons in 1967 (4.4 in 1970), is expected to become 4.0 persons per vehicle by 1986.

3. Highway travel, which increased by 243%

lation totaled 2.3 million and in 1967 was esti mated at 2.7 million (1970—2.8 million), an increase of over 17% (1970—21.7%), com

billion vehicle-miles by 1986, an increase of 88.4% over the 4.3 billion for 1967 (58.8%

pared to an increase of 11.7% for the United

over the 5.1 billion for 1970).

between 1950 and 1960, is expected to total 8.1

These indicators of intensified highway use— population, number of vehicles, and travel—clearly demonstrate the present and future need for an ade quate Commonwealth Highway System.

The original five-year priority program included: various projects selected from the primary, second ary and urban systems. In addition the total pro

for reconstruction, and for right-of-way acquisition.

It was believed that this program represented an

gram costs included costs for the municipal system,

the Commonwealth.

excellent approach toward satisfying the highway needs of Puerto Rico and would alleviate traffic

congestion, reduce the number and severity of acci dents, reduce travel time, and, in general, benefit both the highway users and the general economy of

COMMONWEALTH HIGHWAY SYSTEM—PROGRAM, 1971-1975 Current Priority Program. As a result of the Authority's excellent progress in design and planning, and in actual

construction during 1968 and 1969, and recognizing the importance of providing an extended and improved road

system as soon as possible to overcome the backlog of highway needs, the Authority in 1969 prepared a revised five year priority program which called for a construction schedule at a much faster rate than was estimated when the original studies were made in 1967-68. Actual expenditures for the first year, 1969-70, of this revised five year priority program exceeded estimates by approximately $7,300,000. In accordance with the requirements of the Bond Resolution which calls for an updating each year of the Traffic Facilities to be constructed by the Authority

in the ensuing five year period, a revised current Priority Program has been prepared by the Authority. This revised

priority construction program, which has been reviewed and approved by the Engineers, is predicated on construction and administrative expenditures over the next five years, starting with 1970-71, of $618,300,000. The estimated annual costs, excluding debt service, and the required funds for its implementation are set forth below.

Projected Expenditures Fiscal Year 1970-71

1971-72

1972-73

1973-74

1974-75

Total

(thousands of dollars)

Design Right-of-Way

$ 6,000 19,500

$ 5,500 $ 4,600 $ 2,000 $ 2,000 $ 20,100 20,000 20,000 20,000 20,000 99,500

Construction

76,100

92,200

78,900

75,900

62,400

385,500

Special Programs(l)

17,500

14,000

12,000

12,000

12,000

67,500

8,300

8,800

9,200

9,500

9,900

45,700

$127,400

$140,500

$124,700

$119,400

$106,300

7,100(3)

20,000

20,000

20,000

20,000

87,100

15,900(4)

8,400

8,400

8,400

8,400

49,500

Administration and Operation Total

Less Appropriations of Commonwealth

Funds for Right-of-Way

Federal Aid

$618,300(2)

Net Funds Required, excluding debt serv ice from sasoline tax revenues, bor

rowings and additional sources

$104,400

$112,100 $ 96,300 $ 91,000 $ 77,900 $481,700

(1) Includes Municipal Roads (design, right-of-way and construction) reconstruction, safety, urban mass transportation and TOPICS (Traffic Operation Program to Increase Capacity and Safety).

(2) Excluding debt service, which if added would increase this total program to around $740,000,000, depending upon time and cost of financing.

(3) Appropriated.

(4) Includes $7,000,000 special appropriation.

6

Historic and Projected Trends of Gasoline Tax Revenues

Set forth below are actual gasoline tax revenues for the past nine years and the amount allocated to the Authority since its creation. Projected revenues and allocations have been reviewed and concurred in by the Traffic Engineers.

Pursuant to that provision the Authority has en tered into an agreement with the Secretary of Pubhc Works by which he has agreed to pay the costs of maintaining, repairing and operating all traffic facili

ties which are constructed by the Authority and financed in whole or in part by the issuance of bonds of the Authority out of appropriations received from the General Fund of the Commonwealth which are

Fiscal Years

Total Net

Ending

Gasoline

June 30

Tax Revenue

1962

.

1963 1964 1965 1966

1967 1968 1969 1970

Authority

made available for such purposes. To provide fur

Allocation of Net Gasoline Tax Revenue

ther assurance with respect to maintenance, the Authority covenants in the Bond Resolution that it will cause an annual general evaluation to be made by the Traffic Engineers of the level of maintenance

$14,773,0001

17,811,000 1 20,142,000 ( (1) 22,358,000J 31,861,000 (2) 34,500,000 36,428,000 40,125,000 43,339,000

of such Traffic Facilities and that such evaluation $17,388,000 18,822,000 19,908,000 21,887,000 23,710,000

Projected

will be filed with the Secretary of Public Works and the Secretary of the Treasury. Moreover, the Au thority covenants that if and to the extent that main tenance of the highway system is not adequate as set forth in the annual survey to be made by the Engi neers, in accordance with the provisions of the Bond Resolution, the Authority will provide such main tenance costs from unencumbered funds then on

1981

45,650,000 47,870,000 50,151,000 52,300,000 54,448,000 56,596,000 58,744,000 60,893,000 63,041,000 65,189,000 67,337,000

1982

69.486.000

1983

71,634,000 73,782,000 75,930,000 78,078,000

1971 1972 1973 1974

1975 1976

1977 1978 1979 1980

1984 1985

1986

33,200,000 47,870,000 50,151,000 52,300,000 54,448,000 56,596,000 58,744,000 60,893,000 63,041,000 65,189,000 67,337,000 69,486,000 71,634,000 73,782,000 75,930,000 78,078,000

deposit in the Construction Fund or from the reve nues thereafter deposited to the credit of the Con struction Fund.

The Consulting Engineers have informed the Au thority that although, in general, maintenance may

have been adequate overall, those projects which The proliferation of shopping centers in the San Juan area underscores the continuing need for

improved access roads and expressway connections.

( 1 ) Gasoline tax 8c" per gallon.

(2) Gasoline tax increased to lie?, effective July 1, 1965.

Maintenance

Maintenance of the Commonwealth Highway Sys tem is the responsibility of the Department of Public

Works. The Puerto Rico Highway Authority Act provides that the Authority may enter into agree ments under which the Secretary of Public Works agrees to pay, totally or partially, the cost of repairs,

maintenance, and operation of any traffic facilities financed under the provisions of that Act with funds from the Commonwealth General Fund covered into

the public treasury.

mm ^

John F. Kennedy A venue in Metropolitan San Juan carries a heavy flow of commuter

traffic. Six lanes in width, the two center lanes are used for inbound traffic in the morning and for outbound traffic in late afternoon.

presently require maintenance should receive early attention in order to inhibit deterioration which can

be expected to accelerate in the absence of correc tive action.

The level of required maintenance expenditures over the next ten years is estimated to be approxi mately as follows: 1970-71 1971-72 1972-73 1973-74 1974-75

$ 8,100,000 8,700,000 9,000,000 9,600,000 10,200,000

1975-76 1976-77 1977-78 1978-79 1979-80

$10,800,000 11,600,000 12,400,000 13,200,000 14,000,000

agency, including the Highway Authority, as of Oetober 13, 1970, has been served with any notice that any such suit has been filed against them.

Exceptionally heavy rainfall occurred over all of the Puerto Rico area for most of the week of Octo

ber 5th and press reports indicate that flooding has caused substantial damage. Preliminary estimates of the amount of damage to roads and bridges under the responsibility of the Highway Authority have been assessed at approximately $4,300,000.

COMMONWEALTH OF PUERTO RICO General Information

Flood Damage and Potential Litigation

According to a statement published recently in the local press, a group of residents of San Juan have filed suit against the Commonwealth government, the Municipality of San Juan, several private firms and various Commonwealth agencies, claiming $10,000,000 for damages allegedly arising from

flooding conditions in various low-lying areas in Metropolitan San Juan during two days of heavy rain in June. According to the Department of Justice of the Commonwealth, no Government

Puerto Rico is the fourth largest of the islands in the Caribbean area. It is about 100 miles long and 35 miles wide, having an area of 3,423 square miles and a population of 2,688,289 according to 1970 preliminary census. The topography is characterized by a fertile coastal plain rising to interior mountains which run mostly from east to west. San Juan, Cap ital of Puerto Rico, lies some 1,690 miles southeast

of New York, VA hours by jet plane, and 1,000 miles southeast of Miami, 21A hours by jet plane.

Under its compact with the United States, the

Commonwealth of Puerto Rico exercises virtually

gress enacted Public Law 600, approved July 3,

the same control over its internal affairs, and with the same general procedure as do the fifty federated

pact," became effective upon its acceptance by the

1950. This law, which is "in the nature of a com

States over theirs. It differs from the States pri

electorate of Puerto Rico. It provides that those

marily in its relationship to the Federal Government.

In brief, residents of Puerto Rico do not vote in the

sections of the Organic Act which define the politi cal, economic and fiscal relationship between Puerto

national elections and are represented in Congress

Rico and the United States shall remain in full force and shall be thereafter known as the Puerto Rican

only by a Resident Commissioner who has a voice but no vote in the House of Representatives. On the

other hand. Federal taxes do not apply in Puerto Rico except by mutual consent, such as social secu rity taxes. No Federal income tax is collected from Puerto Rican residents on income earned in Puerto

Rico and Federal excise taxes collected on exported Puerto Rican products, such as rum and tobacco, are returned to the Commonwealth Treasury. This rela

Federal Relations Act. It also authorized the People of Puerto Rico to draft and approve their own con stitution. The Constitution was drafted by a freely elected constitutional convention, overwhelmingly approved in a special referendum, and approved by Congress and the President. It became effective on July 25, 1952.

tionship with the Federal Government is defined

through the medium of a compact entered into by

The Commonwealth Government

Congress and the People of Puerto Rico, and is fur

The Constitution recognizes and assures a separa tion of powers as in the Federal Constitution, and

ther described hereinafter.

those of the States. Both the Governor and the

bicameral legislature are subject to regular election Government History

Puerto Rico came under United States sovereignty by the Treaty of Paris on December 10, 1898. The Congress of the United States provided for a civil

government for the island in 1900. It provided for a Governor, a Cabinet, a Senate and a Supreme Court Judiciary, all appointed by the President of the United States; only a House of Delegates was elected by the people of Puerto Rico.

Over succeeding years strong feeling developed for a more autonomous form of government and in

favor of United States citizenship. The original Act was superseded in 1917 by the Organic Act or Jones

Act, which granted United States citizenship to Puerto Ricans, as well as unrestricted suffrage for local purposes. It also provided that members of

both Senate and House were to be elected by th: people, but the Executive and Judicial branches re

mained under control of Washington through ap pointment by the President.

In 1946 the President for the first time appointed a Puerto Rican as Governor. In 1947 the Jones Act was amended to permit Puerto Ricans to elect their

Governor, who was empowered to appoint his Cab inet and members of the Supreme Court.

The next advance toward complete local govern ment occurred in 1950 when, in accordance with the

wishes of the People of Ptierto Rico, the 81st Con

The Juncos By-Pass, representing the final tract oj the Caguas-Hinnacao Expressway, will be in service within a year.

Political Background

every four years. The Legislature operates under standard parliamentary and legislative rules.

Governmental responsibilities assumed by the

In 1938 a political party emerged in Puerto Rico which was to emphasize economic development.

From 1940 until the elections in November, 1968,

Commonwealth are greater than those normally

assumed by a State. Municipalities which combine both rural and urban areas are the only local politi cal subdivisions and are comparable to counties.

The only units of government with the right to levy

as the Popular Democratic Party, it was in control of the government and was instrumental in estab

lishing the present Commonwealth political rela tionship.

ad valorem taxes are the Commonwealth Govern

Since 1948 there have been two major thrusts in

ment and the municipalities. There is, therefore, no other overlapping taxation or bonded indebtedness payable from taxes. The Commonwealth Govern ment assumes responsibility for a number of impor tant functions performed by local governments in the Continental United States. Among these are police and fire protection, education, major road

political life in Puerto Rico towards close association with the United States and a minor and almost

negligible one in favor of independence. The trends are illustrated in the following data on election results by parties in recent years.

Governor Luis A. Ferre, a prominent and highly successful industrialist, and a leading philanthro

and highway construction, and public health and welfare programs. In addition, the Commonwealth Government supervises municipal fiscal affairs.

pist, was the candidate in 1968 of the New Pro

gressive Party which he organized in 1967 after leaving the Statehood Republican Party. He cam paigned on the basis of a need for change and for more effective government through new leadership.

Political status did not receive emphasis. He re ceived 45.0% of the vote compared with 41.8% by the candidate of the Popular Democratic Party.

Administration of Government

In the Legislature, the New Progressive Party gained

The operation of the executive branch of the gov ernment is similar to that in state governments, with separate departments responsible for major activi

control of the House of Representatives, although the Popular Democratic Party retained control of

the Senate, thus definitely establishing a two party

ties, each headed by a secretary who as a group

system.

form the Governor's cabinet and who are appointed

by the Governor subject to Senate approval. Puerto

1967 Plebiscite

Rico has also made substantial use of public cor porations or agencies which are largely autonomous

In 1962 the Legislature of Puerto Rico petitioned the Congress of the United States requesting a pleb iscite by the voters of Puerto Rico through which an expression of preference could be demonstrated

in providing specific services. Each is headed by an executive director or president who reports to a board of directors appointed by the Governor.

1952

1956

1960

1964

1968

64.8%

62.5%

62.4%

59.4%

41.8%

—

—

—

—

10.0%

12.9%

25.0%

34.3%

34.6%

0.2%

—

—

—

—

3.3%

—

—

—

19.0%

12.5%

—

—

Commonwealth

Popular Democratic Party Peoples Party Statehood

Statehood Republican Party New Progressive Party

Socialist Party

Independence Party Christian Action Party 10

3.3%

2.7%

—

3.3%

45.0%

—

3.0%

for either a continuation of the existing common wealth relationship with the United States, or the attainment of Federated Statehood in the United

affirmed the overwhelming desire of the Puerto Rican people to maintain permanent and close ties with the United States. Of the over 700,000 ballots cast

States, or the establishment of Puerto Rico as an

(66.3 percent of all registered voters) 99.4 percent

independent country.

In response. Congress approved a bill in 1964 providing for the establishment of a United StatesPuerto Rico Commission to study all factors. It con sisted of three persons appointed by the President of the United States, two each selected by the Senate and the House of Representatives, and six appointed by the Governor of Puerto Rico. The Commission concluded that the people of Puerto Rico should be consulted with regard to the status they preferred and, in December, 1966, the Puerto Rican Legis lature passed an act providing for the plebiscite.

This plebiscite, held July 23, 1967, strongly re

were for either Commonwealth or Statehood and

only 0.6 percent for Independence. A tabulation of the actual results is shown below:

425,132 (60.4%)

Commonwealth

274,312 (39.0%)

Statehood

4,248( 0.6%)

Independence

Thus, only a declining minority has favored in dependence. Both major parties hold maintenance of permanent ties with the United States as a basic principle, and differ only as to the form which that future political relationship should take.

The Minloz Rivera Expressway in Metropolitan San Juan will ease East-West traffic congestion, relieving the rush hoar overload.

. -A

*-â&#x2013;

^h^m intervals along the new San Juan-Ponce Toll Road, viewed here near Ponce.

Expansion and Diversification of the Economy of Puerto Rico Economic growth in Puerto Rico has been very

rapid. Gross product has increased more than 5 times over its 1950 level and has more than doubled

during the past nine years ($4,093 million in 1969 vs $1,681 million in 1960). In the year ended June 30, 1969 gross product totalled an estimated $4,093 million, representing an increase of 10.6% over the prior year.

Net income has increased from $1,355 million in 1960 to $3,759 million in 1970. Income, meas

ured in current prices, has shown an average in

crease during the last five years of about 10.7% compounded annually. Per capita net income is now $1,340 compared to $577 in 1960.

The Commonwealth Government's program of industrialization has aided the economy to shift from

principally agricultural to diversification between industry and agriculture. Concurrently, with the expansion in net agricultural income from $149 million in

1949-50 to about $187 million in

1969-70, manufacturing income increased from $89 million to $965 million in 1969-70, substantially surpassing agriculture.

Puerto Rican manufacturing has been increasingly

diversified during the last two decades. In 1939-40

/ between Juncos and Las Piedras, is helping to open southeastern Puerto Rico for the developnxent of both tourism and industry.

the manufacture of sugar products accounted for 35% of manufacturing income. By 1966-67 about

4.5% of manufacturing income resulted from this

industry. Manufacturing income is now generally derived from the production of new types of manu factured products, principally for shipment to the

United States. Such shipments amounted to only $33 million in 1949-50. By 1969-70 they had reached a total of about $1,216 million.

These new products cover a wide range such as

apparel, petroleum derivatives and electronic prod ucts. Large, heavily capitalized manufacturing operations have shown a significant increase in re cent years (especially during the last two fiscal

years). Some of the more important of the larger operations promoted during last year alone include the Union Carbide Corporation, Fibers International with a planned expansion of $41,000,000 for the production of nylon fibers, which will serve as raw

material in the attraction of new textile and apparel industries; Air Products & Chemicals, $9,000,000; AIRCO Ponce, Inc., $18,000,000; and other large operations, such as; Bristol Alpha Corporation, Squibb Beech-Nut, Inc., Southern Screw Company, Shulte & Diekoff (a German concern), Hercor Chemical Corporation, Pennyrich International and

many others that form part of the 493 projects pro moted during last fiscal year.

The petrochemical industry is steadily becoming the most important industrial sector. Its increasing importance to the economy of the Commonwealth is signaled by recent developments and rapid growth.

From an investment of $96,328,000 in 1960 with

two refineries (Commonwealth Oil Refining Co. Inc., and Caribbean Gulf Refinery) the industry has rapidly developed in recent years with a growing diversification of primary and secondary products that include gasoline, naphtha and a wide spectrum of aromatic products and olefins. Expansion in this sector is continuing with the incoming of Sun Oil Company which has announced its intention to in vest up to $120,000,000 through 1971, expansion

This secondary Cagiias-Cidra road will help promote agricultural development in the area.

of the operations of Union Carbide Caribe up to $225,000,000 in investment, the entrance of PPG Industries with three plants to produce caustic soda,

ethylene glycols and vinyl chloride with an expected investment of $65,000,000 and further expansion

by Commonwealth Oil Refining Co. Inc., and Phil lips Puerto Rico Core Inc. It is expected that the next few years will see an expansion in this sector that will bring the total investment up to $1,058 million, thus making this sector the largest part of the industrialization program of the island. To date, no major difficulties have been encountered with respect to import quotas for the crude oil and other feedstocks needed by this industry on the island.

^NIsEf'

*C Z-'/'.-K,.

Heavy equipment is used to grade a new expressway segment under construction in San Juan.

Should tariffs replace such quotas as proposed by the Cabinet Task Force On Oil Import Control no material adverse effect is expected, at least so long as the proposed preference is granted for Venezuela

The textile and apparel industry has continued to expand and is expected to continue to grow with the expansion of Fibers International, Inc., which

crude.

is a source of raw material in the form of nylon 66 fibers and nylon carpet yarns.

Food, pharmaceutical, textile and apparel indus tries have also been of significant importance in

Development Administration are branches or sub

industrial development. Three rice mills and large

sidiaries set up by such parent firms as General

Many of the plants encouraged by the Economic

flour and feed mills supply an important share of

Electric Co., American Can Co., Consolidated Cigar,

Puerto Rico's requirements in their field. Four large tuna canneries are now in operation and with an additional one under construction, the island has

Phelps Dodge, Sun Oil Company, Daystrom, Car borundum, Sprague Electric Co., Van Camp Sea Food, General Foods Corporation, Van Raalte, Hooker Chemical Corporation, PPG Industries Inc., B.V.D., Bristol-Myers Co., International Shoe, R.C.A. Corp., Westinghouse Electric Corp., Merck, Abbott Laboratories, Eli Lilly & Co., Squibb Beech-

become one of the leading suppliers of canned fish in the United States market.

In the pharmaceutical and chemical industry sec tor Puerto Rico is rapidly becoming a manufactur ing center. Bristol Alpha Corporation, Merck & Company, Pharmaseal Laboratories, Squibb BeechNut, Inc., Abbott Laboratories, Eli Lilly & Co., Parke, Davis & Co., and others manufacture phar maceutical products in Puerto Rico principally for export to outside markets.

Nut, Inc., Libby, McNeil & Libby, Del Monte Corp. and many others.

Underlying Puerto Rico's growing and changing

economy there has been a steady expansion in in vestment. Average gross fixed domestic investment

during the last five consecutive fiscal years, 1965-69,

ran at a rate of 26% of gross product. It has in

also expanded rapidly. University and college en

creased from $112 million in 1950 to $1,090 million

rollment which was only 13,000 in 1950 now is more than 56,000 students.

in 1969. Inflowing long-term U.S. capital rose from $31 million in postwar 1947 to an estimated $630 million in 1969.

The Puerto Rican people have benefited greatly from the economic expansion achieved since 1950.

Life expectancy has increased from 61 to 70 years and the death rate has declined from 10.5 per thousand to 6.1 per thousand at present, which is now about the same as the U.S. average. The birth rate has declined from 39.6 per thousand in 1950 to 24.8 per thousand in 1969. The people are better educated, with literacy increased from 75% to about 86% in 1967. Institutions of higher learning have The new De Diego Expressway, shown here

in ihe early stages of construction through an industrial area, will help to case traffic congestion in the northweste. n part of the island.

It is significant that the Commonwealth Govern ment has in the last three years directed approxi mately 47% of its expenditures to education and health.

The Government will continue to provide a cli mate inducive to further economic development and

growth. Thus it is expected that in the years ahead a sustained rate of economic growth can be main tained. Present projections indicate that gross prod uct in terms of current prices should reach $7,460 million in 1975. This will mean a personal income per capita of approximately $1,855.

STATISTICAL DATA CONCERNING THE ECONOMY OF THE COMMONWEALTH OF PUERTO RICO Fiscal Years Ending June 30

Population

1950

1955

1960

1965

1966

1967

1968

1969

1970

2,218,000 2,240,000 2,350,000 2,626,000 2,686,000 2,713,000 2,735,200 2,777,000 2,688,289**

Gross product—$ millions

755

1,142

1,681

2,748

3,050

3,358

3,740

4,093

Net income—$ millions ..

614

960

1,353

2,314

2,538

2,779

3,076

3,403

3,759

Exports—$ miUions Exports by new factoriest

235

353

622

974

1,155

1,321

1,449

1,496

1,736

—$ millions

Bank debits—$ miUions ..

Bank loans—$ millions ....

N.A.

33

132

380

640

804

926

1,012

1,092

1,216

319 128

418 217

835 450

1,661 1,010

1,893 1,210

1,841 1,220

1,715 1,362

2,123 1,670

2,548 2,041

270

323

562

1,207

1,349

1,556

1,830

2,216

2,561

51

77

152

298

304

346

407

486

553

28

32

63

127

141

162

186

220

250

14

21

32

40

44

48

49

53

58

Bank deposits (including

governmental)—$ lions

mil

Private savings accounts—

$ mUlions Income tax collections—$ millions

Property tax collectionst —$ millions Assessed valuation* (real & personal property)— $ millions

459

982

1,643

2,503

2,828

3,150

3,448

3,851

Average family income—$ Motor vehicles—number..

1,500 61,000

2,194 105,000

2,836 180,000

4,143 319,000

4,486 380,000

4,679 421,000

5,178 470,000

5,391 538,000

N.A. N.A.

431,000

529,000

567,000

618,000

631,000

652,000

659,000

669,000

672,000

36

55

132

226

240

228

262

268

4,066

Enrollment in public day

schools Estimated value of build

ing permits issued — $ millions

N.A.

Electricity generated§ — millions

of

kilowatt-

hours

Hydro

199

253

200

163

238

194

127

258

220

Thermal

340

710

1,822

3,656

4,192

4,847

5,644

6,397

7,320

* As of January 1 of preceding fiscal year. =• * Preliminary.

t Promoted by the Economic Development Administration. Does not include exports of other new factories, t Commonwealth and Municipal. § Includes purchased power.

N.A. Figures will not be available until the end of 1970.

Note: Figures shown above are subject to revision from year to year.

Source: Puerto Rico Planning Board. Data for 1965-70 subject to revision.

16

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