Sec. 111. Establishment of Fiscal Stability and Reform Board
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Effective on the date on which the Governor of a territory signs a resolution adopted by the legislature of the territory to request the establishment of a Fiscal Stability and Reform Board under this subtitle, a Board is established for the territory. A Board, at such time as the Board determines to be appropriate, may designate a territorial instrumentality as a covered territorial instrumentality that is subject to the requirements of this subtitle. A Board may require the Governor or the Chief Financial Officer of the applicable covered territory to submit to the Board such annual budgets or monthly or quarterly reports relating to a covered territorial instrumentality as the Board determines to be necessary.
The Governor of the applicable covered territory shall include in the applicable Fiscal Plan a description of each requirement under section 113(c) for each covered territorial instrumentality. A Board, at such time as the Board determines to be appropriate, may exclude any territorial instrumentality of the covered territory from the requirements of this subtitle. A territorial instrumentality excluded pursuant to this paragraph shall not be considered to be a covered territorial instrumentality.
A Board, and each member of the Board, shall not be liable for any obligation of, or claim against, the applicable covered territory resulting from any action of the Board to carry out this subtitle. A Board shall consist of 9 members who meet the qualifications described in paragraph (6), and of whom: 2 members shall be appointed by the President in accordance with the requirements described in paragraph (5). 2 members shall be appointed by the Governor of the applicable covered territory. 1 member shall be appointed by the chief justice of the highest appellate court of the applicable covered territory. 4 members shall be appointed by the legislature of the applicable covered territory as follows:
If the legislature has 2 chambers— 1 member shall be appointed by the political party holding the most seats in the lower chamber of the legislature; 1 member shall be appointed by the political party holding the second-most seats in the lower chamber of the legislature; 1 member shall be appointed by the political party holding the most seats in the upper chamber of the legislature; and 1 member shall be appointed by the political party holding the second-most seats in the upper chamber of the legislature.
If the legislature has 1 chamber— 2 members shall be appointed by the political party holding the most seats in the legislature; and 2 members shall be appointed by the political party holding the second-most seats in the legislature. The member appointed under paragraph (1)(C) shall serve as the chairperson of the Board. Except for the member appointed under paragraph (1)(C) and for the initial terms of members, each member of the Board shall be— appointed for a term of 4 years; and eligible for reappointment.
For members appointed under paragraph (1)(A), as designated by the President at the time of appointment— 1 member shall be appointed for a term of 2 years; and 1 member shall be appointed for a term of 4 years. For members appointed under paragraph (1)(B)— both members shall be appointed to a term to terminate 6 months after the next gubernatorial election; and in the event that the Governor of a territory signs a resolution adopted by the legislature of the territory to request the establishment of a Board under this subtitle within 12 months of the next gubernatorial election, both members shall be appointed to a term of 2 years.
For members appointed under paragraph (1)(C), the member shall remain appointed for the life of the Board. For members appointed under paragraph (1)(D), as designated by the appointing entity at the time of appointment— if the legislature has 2 chambers— 1 member shall be appointed by the political party holding the most seats in the lower chamber of the legislature to a term to terminate 6 months after the next legislative election of the applicable territory; 1 member shall be appointed by the political party holding the second-most seats in the lower chamber of the legislature to a term to terminate 6 months after the next legislative election of the applicable territory; 1 member shall be appointed by the political party holding the most seats in the upper chamber of the legislature to a term to terminate 30 months after the next legislative election of the applicable territory; and 1 member shall be appointed by the political party holding the second-most seats in the upper chamber of the legislature to a term to terminate 30 months after the next legislative election of the applicable territory; and if the legislature has 1 chamber— 1 member shall be appointed by the political party holding the most seats in the legislature to a term to terminate 6 months after the next legislative election of the applicable territory; 1 member shall be appointed by the political party holding the second-most seats in the legislature to a term to terminate 6 months after the next legislative election of the applicable territory; 1 member shall be appointed by the political party holding the most seats in the legislature to a term to terminate 30 months after the next legislative election of the applicable territory; and 1 member shall be appointed by the political party holding the second-most seats in the legislature to a term to terminate 30 months after the next legislative election of the applicable territory.
Each member shall remain appointed as long as the applicable qualifications of appointment under paragraph
(6)remain satisfied, except that any member may be removed by the original appointing entity. Any vacancy in the Board— shall not affect the powers of the Board; and shall be filled in the same manner as the original appointment by the original appointing entity as soon as practicable after the date on which the vacancy occurs, subject to the approval described in paragraph (3). A member appointed to fill a vacancy shall serve for the remainder of the term to which the member was appointed. A new member appointed shall be approved by the full board, excluding the member that the new member was appointed to replace. As soon as practicable after the date on which a territory submits to the President a resolution described in subsection (a), and after consultation with the appropriate committees of Congress and the Governor of the applicable covered territory, the President shall appoint members to the Board under paragraph (1)(A). The President may remove a member appointed by the President only for cause. An individual meets the qualifications for membership on the Board if the individual has knowledge and expertise relating to finance, management, economics, or the organization or operation of business or government. Not less than 6 members shall have knowledge and expertise relating to the history, socioeconomic circumstances, and heritage of the applicable covered territory. Not less than 6 members shall maintain a primary residence in the applicable covered territory. No current member of the applicable territory’s legislature shall be eligible to serve on the Board. An individual appointed to serve as a member of the Board— shall be subject to— the Federal conflict of interest requirements described in section 208 of title 18, United States Code, except with respect to subsection
(b)of that section; and the conflict of interest disclosure requirements under title I of the Ethics in Government Act of 1978 (5 U.S.C. App.); and shall not have any other conflict of interest relating to the duties of the Board, including ownership of any debt security of— the applicable territorial government; or a territorial instrumentality. For purposes of subparagraph (A)(ii), the term conflict of interest includes the interests of an organization in which the individual is serving as officer, director, trustee, general partner or employee, or any person or organization with whom the individual is negotiating or has any arrangement concerning prospective employment. Any individual who serves as a member of the Board shall not, during the 3-year period beginning on the date on which membership on the Board terminates, knowingly make, with the intent to influence, any communication to or appearance before any member of the Board or Chief Financial Officer on behalf of any other person (except the United States or a State or local government). Any individual who violates clause
(i)shall be subject to the penalties described in section 216 of title 18, United States Code. If a member of the Board is determined to be in violation of the requirements described in subparagraph (A), the member shall be removed from membership on the Board and may be subject to additional actions or penalties set forth under Federal ethics rules. Each member of the Board shall— serve without compensation; and be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from the home or regular place of business of the member in the performance of the duties of the Board. As soon as practicable after the appointment of all members to the Board, the Board shall adopt bylaws, rules, and procedures to govern the activities of the Board under this subtitle, including procedures for hiring experts and consultants. The bylaws, rules, and procedures adopted pursuant to this subsection shall be— public documents; and on adoption, submitted by the Board to— the President; and the Governor and legislature of the applicable covered territory. On the approval of the chairperson, the Board may appoint such staff as are necessary to enable the Board to perform the duties of the Board. For purposes of chapter 11 of title 18, United States Code, and section 2635 of title 5, Code of Federal Regulations, or any successor thereto, the executive director and other staff employed by the Board shall be considered employees of an Executive agency (as defined in section 105 of title 5, United States Code), including a member of the staff who is— a private citizen; an employee of the applicable territorial government; or an employee of the Federal Government. On request of the chairperson of the Board, the head of a Federal department or agency may detail to the Board, on a reimbursable or nonreimbursable basis, and in accordance with the Intergovernmental Personnel Act of 1970 ( 42 U.S.C. 4701 et seq. ), any of the personnel of the department or agency to assist the Board in the performance of the duties of the Board. On request of the chairperson of the Board, the head of any department or agency of the applicable territorial government may detail to the Board, on a reimbursable or nonreimbursable basis, any of the personnel of the department or agency to assist the Board in the performance of the duties of the Board. The chairperson may appoint to the Board an executive director or such other officers as the chairperson determines to be necessary to assist the Board in the performance of the duties of the Board. An executive director or officer appointed pursuant to subparagraph
(A)shall serve for such period and be paid such compensation as the Board determines to be appropriate. The Board— may use funds provided by the applicable territorial government to ensure sufficient funds are made available to cover all expenses of the Board; and shall submit to the Governor and legislature of the applicable covered territory for inclusion in the annual budget appropriations process of the applicable territorial government a report describing any request and use of funds provided by the applicable territorial government. A covered territory shall designate a dedicated territorial government source of funding, not subject to subsequent legislative appropriation, sufficient to support the annual costs of the Board, as determined by the Board, to carry out this subtitle. The Board may, for the purpose of performing the duties of the Board— hold such hearings, meet and act at such times and places, take such testimony, receive such evidence, and administer such oaths as the Board considers to be appropriate; and require, by subpoena or otherwise, the attendance and testimony of such witnesses and the production of such books, records, correspondence, memoranda, papers, documents, tapes, and materials as the Board considers to be appropriate. A subpoena issued under paragraph (1)(B) shall— bear the signature of the chairperson of the Board; and be served by any person or class of persons designated by the chairperson to serve a subpoena under paragraph (1)(B). In the case of contumacy or failure to obey a subpoena issued under paragraph (1)(B), the United States district court for the district in which the subpoenaed person resides, is served, or may be found may issue an order requiring the person— to appear at any designated place to testify; or to produce documentary or other evidence. Any failure to obey the order of a court under this paragraph may be punished by the court as a contempt of court. The Board, or any of the staff of the Board on behalf of the Board, may enter into such contracts as the Board considers appropriate to carry out the duties of the Board. Based on information provided in a monthly report submitted under section 112(f)(1)(A), the Board may recommend to the Governor and legislature of the applicable covered territory policy adjustments that should be made to ensure the expenditures and revenues of the adopted budget for the applicable fiscal year are balanced. The Board shall work with the applicable territorial government to improve the operational efficiency of the applicable territorial government, including the efforts of the applicable territorial government— to strengthen financial recordkeeping and reporting; to control the number and cost of government contracts; to collect and enforce the collection of taxes; to promote economic growth; to improve Federal grant management; and to increase the effective use of information technology. Within a reasonable period of time, the Board shall submit to the applicable territorial government a report describing recommendations to improve the operational efficiency of the applicable territorial government, including efforts described in subparagraph (A). The Governor of the applicable covered territory shall submit to the Board for review a proposed budget for each fiscal year, in consultation with the Chief Financial Officer and based on the applicable forecast of revenues submitted by the Chief Financial Officer, by not later than the earlier of— the date that is 120 days before the first day of the fiscal year covered by the proposed budget; and the date that is 60 days before the date by which the Governor is required under applicable law to submit to the legislature of the applicable covered territory a proposed budget for the applicable fiscal year. Not later than the date that is 15 days after the date on which a Board receives a proposed budget under clause (i), the Board shall— determine whether the proposed budget is a compliant budget; and if the proposed budget is a compliant budget— approve the compliant budget; and submit the compliant budget to the legislature of the applicable covered territory; or if the proposed budget is not a compliant budget, provide to the Governor of the applicable covered territory— a notice of violation that includes a description of any corrective action suggested by the Board; and an opportunity to correct the violation by requiring the Governor to submit to the Board a revised budget by not later than the date that is 15 days after the date on which the notice of violation under subitem
(AA)is provided. Not later than the date that is 7 days after the date on which the Board receives a revised budget under clause (ii)(II)(bb)(BB), the Board shall— determine whether the revised budget is a compliant budget in consultation with the Chief Financial Officer; and if the revised budget is a compliant budget— approve the compliant budget; and submit the compliant budget to the legislature of the applicable covered territory; or if the revised budget is not a compliant budget— issue a notice of noncompliance; publicly submit recommendations of the Board and the Chief Financial Officer for adjustments that should be made to ensure the adopted budget of the territorial government for the applicable fiscal year is a compliant budget; submit the noncompliant budget to the legislature of the applicable covered territory with recommendations of the Board and the Chief Financial Officer for adjustments that should be made to ensure the adopted budget of the territorial government for the applicable fiscal year is a complaint budget; and issue a directive that the legislature shall strive to adopt the Board’s recommendations in the budget of the territorial government for the applicable fiscal year. The legislature of the applicable covered territory shall submit to the Board the budget adopted by the legislature not later than— the date that is 30 days before the first day of each applicable fiscal year; or the date previously approved in writing by the Board not to exceed 60 days after the first day of the applicable fiscal year, if a date was approved in writing. Not later than the date that is 7 days after the date on which the Board receives an adopted budget submitted under clause (i), the Board shall— determine whether the adopted budget is a compliant budget in consultation with the Chief Financial Officer; and if the adopted budget is a compliant budget, issue a compliance certification for the compliant budget; or if the budget is not a compliant budget— issue a certificate of noncompliance; publicly submit recommendations of the Board and the Chief Financial Officer for adjustments that should be made to the budget of the territorial government for the upcoming fiscal year to ensure the revenues and expenditures are consistent with the Fiscal Plan; provide to the Governor and legislature of the applicable covered territory a certificate of noncompliance that includes a description of any recommendations of the Board and the Chief Financial Officer for adjustments that should be made to the budget of the territorial government for the upcoming fiscal year to ensure the revenues and expenditures are consistent with the Fiscal Plan; and issue a directive that the Governor and the legislature shall strive to adopt the Board’s recommendations in the budget of the territorial government for the upcoming fiscal year. On receipt of a quarterly report from the Chief Financial Officer under section 112(f)(1)(B), the Board shall— conduct a review to determine whether the actual quarterly revenues and expenses for the applicable territorial government are in compliance with the applicable approved budget; and if the Board determines that the actual quarterly revenues and expenses for the applicable territorial government are not in compliance with the applicable approved budget under clause (i), provide to the Governor recommendations for adjustments that should be made to ensure the revenues and expenditures of the adopted budget of the applicable territorial government for the applicable fiscal year are balanced. No territorial government may, without providing prior written and public notice to the Board, issue debt or guarantee, exchange, modify, repurchase, redeem, or enter into a similar transaction with respect to the debt of the territorial government. Not later than the date that is 180 days after the date of the establishment of a Board under subsection (a), the Governor of the applicable covered territory shall submit to the Board an audited report documenting each outstanding discretionary tax waiver agreement to which any entity of the applicable territorial government is a party, including each agreement pursuant to which the applicable entity of the territorial government waived, changed the due date of, or changed the amount of taxes due. Effective on the date on which a Board is established under subsection (a), no new tax waiver agreement may be executed by the applicable territorial government without prior approval of the Board. A Board shall terminate on certification by the Board that— the Board has been in operation for not less than 3 years and the applicable territorial government has adequate access, on an unsecured basis, to short-term and long-term credit markets at reasonable interest rates to meet the borrowing needs of the territorial government using a compliant budget; or for not less than 3 consecutive fiscal years prior to the certification, the expenditures made by the applicable territorial government for each fiscal year did not exceed the revenues of the territorial government during that fiscal year, using a compliant budget.
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Sec. 111
Establishment of Fiscal Stability and Reform Board
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