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{{Infobox political system|name=Government of the Commonwealth of Puerto Rico
|image=[[File:Commonwealth of Puerto Rico logo.svg|235px]]<br>Logo of the Government of Puerto Rico (English)<br>[[File:Seal of Puerto Rico.svg|130px]]
|image_size=
|caption=[[Coat of arms of Puerto Rico |Great Seal of Puerto Rico]]
|part_of=[[United States of America]]
|constitution=[[Constitution of Puerto Rico]]
|legislature=[[Legislative Assembly of Puerto Rico|Legislative Assembly]]
|legislature_type=[[Bicameral]]
|legislature_place=[[Capitol of Puerto Rico]]
|upperhouse=[[Senate of Puerto Rico|Senate]]
|upperhouse_speaker=[[Thomas Rivera Schatz]]
| upperhouse_speaker_title=[[President of the Senate of Puerto Rico|President]]
|lowerhouse=[[House of Representatives of Puerto Rico|House of Representatives]]
| lowerhouse_speaker=[[Carlos Johnny Méndez]]
|lowerhouse_speaker_title=[[Speaker of the House of Representatives of Puerto Rico|Speaker]]
|title_hosag=[[Governor of Puerto Rico|Governor]]
|current_hosag=[[Jenniffer González Colón]]
|appointer_hosag=[[Election]]
|cabinet=[[Executive branch of the government of Puerto Rico|Cabinet of the Commonwealth of Puerto Rico]]
|cabinet_leader=Governor
|cabinet_deputyleader=
|cabinet_hq=[[La Fortaleza]]
|judiciary=[[Judiciary of Puerto Rico]]
|judiciary_head_title=Chief Justice
|judiciary_head=
|courts=[[Judiciary of Puerto Rico#Courts |Courts of Puerto Rico]]
|court1=[[Supreme Court of Puerto Rico |Puerto Rico Supreme Court]]
|court_seat1=[[Supreme Court Building (Puerto Rico) |Supreme Court Building of Puerto Rico]]
|chief_judge1=[[Maite Oronoz Rodríguez]]}}
{{Politics of Puerto Rico}}

The '''government of''' '''Puerto Rico''' encompasses the local administrative structure of the [[Geography of Puerto Rico|archipelago and island]] of [[Puerto Rico]], an [[Territories of the United States|unincorporated territory]] of the [[United States|U.S.]] organized under the [[Constitution of Puerto Rico]] since its establishment as the ''Commonwealth of Puerto Rico'' in 1952. The government is a [[Republic|republican]] [[democracy]] divided into three [[Separation of powers|branches]]: the law-implementing [[Executive branch of the government of Puerto Rico|executive]], the law-making [[Legislative Assembly of Puerto Rico|legislative]], and the law-interpreting [[Judiciary of Puerto Rico|judicial]]. The [[Governor of Puerto Rico|Governor]] is the [[Governor (United States)|chief executive]], the [[Legislative Assembly of Puerto Rico|Legislative Assembly]] is the [[legislature]], and the [[Supreme Court of Puerto Rico|Supreme Court]] is the highest [[court]] of the territory, which is divided into [[Municipalities of Puerto Rico|78 municipalities]], each one headed by a [[Mayor–council government#Strong-mayor government form|strong mayor]] and a [[Unicameralism|unicameral]] [[Municipal council|legislature]]. Like [[U.S. state|U.S. states]] and other [[List of states and territories of the United States#Territories|U.S. territories]], Puerto Rico is subject to the [[Sovereign state|sovereign]] [[jurisdiction]] of the [[Federal government of the United States|U.S. federal government]].<ref>{{cite web |date=January 3, 2013 |title=7 fam 1120 acquisition of u.s. nationality in u.s. territories and possessions |url=https://fam.state.gov/FAM/07FAM/07FAM1120.html#M1121_2_1 |url-status=dead |archive-url=https://web.archive.org/web/20151222081013/https://fam.state.gov/FAM/07FAM/07FAM1120.html#M1121_2_1 |archive-date=December 22, 2015 |access-date=December 13, 2015 |work=U.S. Department of State Foreign Affairs Manual Volume 7- Consular Affairs |publisher=U.S. Department of State |format=PDF}}</ref><ref name="InsularDOI2">{{cite web |date=June 12, 2015 |title=Definitions of Insular Area Political Organizations |url=https://www.doi.gov/oia/islands/politicatypes |url-status=live |archive-url=https://web.archive.org/web/20180713013603/https://www.doi.gov/oia/islands/politicatypes |archive-date=July 13, 2018 |access-date=September 27, 2017 |publisher=U.S. Department of the Interior}}</ref>

With the American [[annexation]] of Puerto Rico during the [[Spanish–American War]], the [[United States|U.S.]] established a [[Military Government of Porto Rico|military government]] to administer the [[Territories of the United States|unincorporated territory]] from 1898 to 1900, when it was replaced by a civil [[Insular Government of Porto Rico|insular government]]  organized under the [[Organic act|organic acts]] of the [[Foraker Act]] from 1900 to 1917 and the [[Jones–Shafroth Act]] from 1917 to 1952. The [[Constitution of Puerto Rico]] established the ''Commonwealth of Puerto Rico'' and its government under the continued status of unincorporated territory in 1952. With the ratification of the constitution, the full authority and responsibility for the local administration of Puerto Rico was vested in the residents of Puerto Rico, resulting in complete [[Autonomous administrative division|self-governance]] within the [[Geography of Puerto Rico|archipelago and island]]. 

Puerto Rico has a [[Republic|republican form]] of government [[Seat of government|seated]] in the capital [[Municipalities of Puerto Rico|municipality]] of [[San Juan, Puerto Rico|San Juan]] with executive, legislative, and judicial powers. The [[executive branch of the government of Puerto Rico|executive branch]] is led by a [[Governor of Puerto Rico|Governor]], currently [[Jenniffer González-Colón]], who is also the [[head of government]]. The [[legislative branch of the government of Puerto Rico|legislative branch]] consists of a [[bicameral]] [[legislature]], namely the [[Legislative Assembly of Puerto Rico|Legislative Assembly]], which is composed by the [[Senate of Puerto Rico|Senate]] as its [[upper house]] and by the [[House of Representatives of Puerto Rico|House of Representatives]] as its [[lower house]]. The governor and legislators [[Elections in Puerto Rico|are elected by popular vote every four years]]. The [[judicial branch of the government of Puerto Rico|judicial branch]] is headed by the [[Chief Justice of the Supreme Court of Puerto Rico|Chief Justice of the Supreme Court]], currently [[Maite Oronoz Rodríguez]]. It consists of one [[Supreme Court of Puerto Rico|Supreme Court]], one Court of Appeals, and the Court of First Instance, which is composed of 13 Superior Courts and 78 Municipal Courts. The legal system is a mixture of the [[Civil law (legal system)|civil law]] and the [[common law]] systems. Members of the judicial branch are appointed by the Governor with [[advice and consent]] from the Senate.  

The [[President of the United States|U.S. President]], currently [[Donald Trump]], is [[head of state]]. The extent of the powers of the local government and the rights of its citizens as enumerated in the Puerto Rican [[Constitution of Puerto Rico|constitution]] and [[Statute|law]] are bound to the [[Supremacy Clause|authority]] of the [[Constitution of the United States|U.S. Constitution]] and [[Law of the United States#Federal law|law]], which are enacted and amended by the [[United States Congress|U.S. Congress]], executed and enforced by the U.S. President, and interpreted and validated by the [[Supreme Court of the United States|U.S. Supreme Court]].<ref name="prconstitution">[http://www.oslpr.org/english/PDF/The%20Constitution%20of%20the%20Commonwealth%20of%20Puerto%20Rico.pdf Constitution of the Commonwealth of Puerto Rico, Article I, Section 2] {{webarchive|url=https://web.archive.org/web/20091229150849/http://www.oslpr.org/english/pdf/the%20constitution%20of%20the%20commonwealth%20of%20puerto%20rico.pdf|date=2009-12-29}}</ref><ref name="ussd">{{cite web |title=Dependencies and Areas of Special Sovereignty |url=https://2009-2017.state.gov/s/inr/rls/10543.htm}}</ref><ref>U.S. {{USPL|82|447}}</ref> Puerto Rico does not have voting representation in the U.S. Congress, as the only congressional member from the archipelago and island is the [[Resident commissioner of Puerto Rico|Resident Commissioner]], a non-voting member to the [[United States House of Representatives|U.S. House]] elected by popular vote every four years. 

Neither a [[sovereign state]] nor a [[U.S. state]], Puerto Rico is a self-governing [[Territories of the United States|U.S. unincorporated territory]] subject to the [[Supremacy Clause|constitutional]] and [[U.S. territorial sovereignty|territorial sovereignty]] of the [[Federal government of the United States|U.S. federal government]]. Specifically, the U.S. Congress has [[Plenary power|plenary authority]] or unlimited power over the archipelago and island through the [[Property Clause|Territorial Clause]] in [[Article Four of the United States Constitution|Article IV]] of the U.S. Constitution. As such, it operates as an [[Autonomous administrative division|administrative division]] and [[dependent territory]] belonging to, but not an integral part of, the U.S., which is composed of the [[U.S. state|50 states]] and the federal [[Washington, D.C.|District of Columbia]].

The U.S. federal government has [[Enumerated powers (United States)|enumerated powers]], including [[Monetary policy of the United States|monetary policy]], [[Foreign and intergovernmental relations of Puerto Rico|foreign relations]], and [[Military of Puerto Rico|defense]], while the local government  has [[reserved powers]], including [[Education in Puerto Rico|education]], [[Law enforcement in Puerto Rico|law enforcement]], and [[Elections in Puerto Rico|elections]]. Both governments share [[concurrent powers]], including [[Taxation in Puerto Rico|taxation]] and [[Economy of Puerto Rico|fiscal policy]]. The [[Political status of Puerto Rico|political status]] of Puerto Rico is an [[Proposed political status for Puerto Rico|ongoing debate]].

==History==
{{Further|History of Puerto Rico}}

Puerto Rico was ceded to the United States by [[Spain]] at the end of the [[Spanish–American War]] by the [[Treaty of Paris (1898)|Treaty of Paris of 1898]]. The [[Foraker Act]] of 1900 provided for an organization of the civilian government. The [[Jones–Shafroth Act]] of 1917 re-organized the government.

The [[Federal Government of the United States|United States government]] authorized Puerto Rico to draft its own [[constitution]] by {{USStatute|81|600|64|319|1950|07|03}}. On June 4, 1951, the Puerto Ricans voted to hold a constitutional convention in a referendum, and elected delegates on August 27, 1951.<ref>{{cite journal | title= Puerto Rico: A New Constitution in American Government | first= Gordon K | last= Lewis | journal= [[The Journal of Politics]] | volume= 15 | issue= 1 | pages= 42–66 | date= February 1953 | jstor= 2126192 | doi= 10.2307/2126192| s2cid= 154340486 }}</ref>{{sfn|Lewis|1953|p=43}} The convention adopted a constitution on 6 February 1952 and was ratified by Puerto Rico's electorate in [[Puerto Rican constitutional referendum, 1952|a referendum on March 3, 1952]].{{sfn|Lewis|1953|pp=43-44}}

The United States government approved an amended version by {{USStatute|82|447|66|327|1952|07|03}}, and on July 10, 1952, the Constitutional Convention of Puerto Rico reconvened and approved the conditions established by {{USPL|82|447}}. On July 25, 1952, Governor [[Luis Muñoz Marín]] proclaimed that the [[Constitution of Puerto Rico]] was in effect.

==Executive branch==
{{Main article|Executive branch of the government of Puerto Rico}}

The executive branch is responsible for administering public resources, as well as providing all necessary public services to the Puerto Rican general public. It is by far the largest branch in the government as well as the largest employer in Puerto Rico with more than 150,000 workers.

===Governor===
{{Main article|Governor of Puerto Rico}}
{{See also|List of governors of Puerto Rico}}

The [[head of government]] is the Governor of Puerto Rico, who is elected every four years in a general election. The position is similar in nature, responsibility, and power as those of a [[Governor#United States|governor of a U.S. state]]. The position of Governor has the overall responsibility of the state of the commonwealth, equivalent to the state of the union in the U.S. The official residence of the governor is [[La Fortaleza]], the oldest executive mansion in continuous use in the Western Hemisphere.

The Governor has the authority to nominate agency heads, trial and appellate [[judge]]s, as well as Supreme Court [[justice]]s and directors of public corporations, although these must be confirmed by the Senate and, in a handful of cases, the House, as well. Similar to a U.S. State, the Governor has authority over the Puerto Rico National Guard.

Although Puerto Rico does not have the position of [[Lieutenant Governor]], sections 7 and 8 of the Constitution empower the Secretary of the Puerto Rico State Department to act as Acting Governor, should the governor be absent from Puerto Rico, become temporarily disabled or unable to discharge his/her duties, and as Governor for the remainder of the term should a permanent vacancy occur.

===Lieutenant governor===
Puerto Rico does not have a post for [[lieutenant governor]] but it has a [[Secretary of State of Puerto Rico|Secretary of State]] which performs a similar role. The Secretary of State is the successor of the Governor and is empowered to act as [[acting governor]]&mdash; the [[Constitution of Puerto Rico]] and [[Puerto Rican law]] establishes a [[Puerto Rico governmental line of succession|governmental line of succession]] starting with the [[Secretary of State of Puerto Rico|Secretary of State]].

===Acting Governor===
{{Main article|Secretary of State of Puerto Rico|Puerto Rico governmental line of succession}}

[[Article Four of the Constitution of Puerto Rico|Article IV]] of the [[Constitution of Puerto Rico]] establishes that the [[Secretary of State of Puerto Rico|Secretary of State]] should serve as [[acting governor]] when the Governor is not available. The [[Constitution of Puerto Rico|Constitution]] and [[Puerto Rican law]] establishes a [[Puerto Rico governmental line of succession|governmental line of succession]] for special cases when neither the Governor nor the Secretary are available.

===Cabinet===
{{Main article|Cabinet of Puerto Rico}}

[[Article Four of the Constitution of Puerto Rico|Article IV]] of the [[Constitution of Puerto Rico]] establishes that the Governor shall be assisted by [[Minister (government)|Secretaries]] who shall collectively constitute the Governor's [[Adviser|advisory council]] and be designated as the ''Council of Secretaries'' although it's mostly referred to as the ''Cabinet''.

The Cabinet is composed by the '''Constitutional Cabinet''', composed by the Secretaries established by the Constitution, and the '''Operational Cabinet''', composed by the Secretaries established by extraconstitutional [[Puerto Rican law]] or appointed by the Governor. These Cabinets do not exist as agencies, but are referred as such in transcripts, records, official documents, and conversations for brevity and easiness.

All Cabinet members are nominated by the [[Governor of Puerto Rico|Governor]] and then presented to the [[Senate of Puerto Rico|Senate]] for [[advice and consent]] by a [[Majority|simple majority]]. If they are approved, they are sworn in and then begin their duties. All members receive the title of ''Secretary''.

Members of the Cabinet serve at the pleasure of the Governor, who may dismiss them or reappoint them (to other posts) at will.

===Executive departments===
{{Main article|Executive departments of the government of Puerto Rico}}
[[File:Puerto Rico State Department.JPG|250px|thumbnail|right|The main offices of the [[Puerto Rico Department of State]] in front of [[Plaza de Armas, San Juan|Plaza de Armas]] in [[Old San Juan]].]]

The day-to-day enforcement and administration of laws is delegated by the Governor to 16 [[Executive Departments of the Government of Puerto Rico|executive departments]] created by the Constitution or by statute to deal with specific areas of government. The heads of the departments, chosen by the governor and approved by the Senate (with the exception of the Secretary of State, who requires Senate and House confirmation), form a council of advisers generally known as the Governor's Cabinet.

The Constitution provides for the creation of at least 8 departments: Departments of [[Puerto Rico Department of State|State]], [[Puerto Rico Department of Justice|Justice]], [[Puerto Rico Department of Education|Education]], [[Puerto Rico Department of Health|Health]], [[Puerto Rico Department of Treasury|Treasury]], [[Puerto Rico Department of Labor and Human Resources|Labor]], [[Department of Agriculture of Puerto Rico|Agriculture]], [[Puerto Rico Department of Economic Development and Commerce|Commerce]], and [[Puerto Rico Department of Transportation and Public Works|Public Works]]. However, due to the increase in population, economy, and public needs over the years, the Puerto Rico government has expanded the executive branch by establishing additional executive departments not specified in the Constitution. These additional departments are established by public law or so-called "reorganization plans", as approved by the legislative assembly.

The title of [[Secretary]] is given to the heads of the executive departments, whose position is also created by statute. Cabinet member is another title primarily given by the media and the public, though it is considered unofficial. All cabinet-level Secretaries are first nominated by the Governor and are confirmed by the legislative assembly.

Each department has different [[division (organization)|division]]s, [[Government agency|agencies]], [[Government agency|bureaus]], [[office]]s, and [[Public services|service]]s, each with specific duties, in order to provide the necessary services to the general public across the island.

===Government-owned corporations===
{{Main|List of government-owned corporations of Puerto Rico}}

Puerto Rico has also established several government-owned corporations in order to provide basic and public services to its citizens, including electricity, water, transportation, and education, among others. These are separate legal entities from the Commonwealth, but the government owns virtually all of these corporations' [[stock]]. Each corporation is headed by an executive director who is appointed by the corporations’ [[Board of Directors]]. The directors are nominated by the Governor and confirmed by the state legislative assembly.

Although government-owned corporations are separate from the commonwealth government, who generate their income and expenses independently, several of those have faced financial troubles, and have constantly relied on so called “bail-outs” from the commonwealth to offset recurring losses and deficits, and have been unable to [[Puerto Rican government-debt crisis#Bankruptcy|legally declare bankruptcy]].

==Legislative branch==
{{Main article|Legislative branch of the government of Puerto Rico|Legislative Assembly of Puerto Rico}}
[[File:Puerto Rico Capitol.JPG|thumb|left|South view of the Puerto Rico Capitol, home of the Legislative Assembly.]]

[[Article Three of the Constitution of Puerto Rico|Article III]] of the [[Constitution of Puerto Rico]] grants all legislative powers of the commonwealth government to the [[Legislative Assembly of Puerto Rico]], which is divided into two chambers: a 27-member [[Senate of Puerto Rico|Senate]] and a 51-member [[House of Representatives of Puerto Rico|House of Representatives]]. The chambers are presided over by the [[President of the Senate of Puerto Rico|President of the Senate]] and the [[Speaker of the House of Representatives of Puerto Rico|Speaker of the House]], respectively. Both positions are occupied by an active member of each body, elected by a majority of both chambers. The current heads are Senator [[Thomas Rivera Schatz]] and Representative [[Carlos Johnny Méndez]], respectively.

Members are elected to both chambers in [[Elections in Puerto Rico|general elections]] held every four years, along with the elections for the Governor and [[mayors of Puerto Rico|the 78 municipal mayors]]. Each member of the Legislative Assembly represents an [[electoral district]], with the exception of a number of legislators who are considered [[at-large]] and represent the island as a whole. Members representing specific districts are elected by the citizens residing within the district, while at-large legislators are elected by accumulation of all island votes.

===Constitutional changes===
In recent years, two referendums have been held to propose constitutional changes to substantially modify the composition of the Legislative Assembly.

Various organizations pushed for changing the legislative assembly from the current two-chamber system (House and Senate) prevalent in 49 of the 50 states of the nation to one-chamber ([[unicameralism]]). The reasons for this proposed change was based on the growing public opinion that members of the assembly are overpaid, and that a smaller assembly might achieve the same work results as the bicameral one with less public expenditures. However, an official report of 1995 indicates that this argument should not be considered the primary objective because the savings are not significant. The legislative spending in Puerto Rico, compared with the consolidated government budget is less than 1% of total government spending.<ref>{{Cite web |url=http://www.oslpr.org/spanish/PDF/Unicameralidad.pdf |title=Informe |trans-title=Report |access-date=2010-01-20 |archive-date=2009-01-24 |archive-url=https://web.archive.org/web/20090124104212/http://oslpr.org/spanish/PDF/Unicameralidad.pdf |url-status=dead }}</ref>

Lacking the two-thirds majority necessary in both houses of the Legislature to submit constitutional amendments to the electorate, in 2004 the Popular Democratic Party's then-majority approved legislation to hold a [[Puerto Rican unicameralism referendum, 2005|referendum]], not on a particular constitutional amendment as such, but on the general concept of switching from a bicameral to a unicameral system which was held on July 10, 2005. Attended by less than 25% of the islands' electorate, Puerto Rican voters approved the change to a [[unicameralism|unicameral legislature]] by 456,267 votes in favor, versus 88,720 against.<ref>{{cite news|author = María Vera|title = Trabajan borrador unicameralidad|publisher = [[El Vocero]]|url = http://www.vocero.com/noticias.asp?s=Locales&n=78249|access-date = 2006-10-02 |archive-url = https://web.archive.org/web/20070927182019/http://www.vocero.com/noticias.asp?s=Locales&n=78249 <!-- Bot retrieved archive --> |archive-date = 2007-09-27}}</ref> ([[Voter turnout]] was 22.6% of the electorate.)<ref>{{cite web|title = La Participación Ciudadana en los Procesos Electorales en Puerto Rico|work = Oficina de Asuntos Legales|publisher = Comisión Estatal de Elecciones de Puerto Rico (CEEPUR) / State Electoral Commission|url = http://www.ceepur.org/sobreCee/leyElectoral/pdf/LaParticipacicion.pdf|access-date = 2006-10-02|url-status = dead|archive-url = https://web.archive.org/web/20061004193306/http://www.ceepur.org/sobreCee/leyElectoral/pdf/LaParticipacicion.pdf|archive-date = 2006-10-04}} (via {{cite web |url=http://www.ceepur.org/sobreCee/leyElectoral/ |title=Comisión Estatal de Elecciones |access-date=2007-03-17 |url-status=dead |archive-url=https://web.archive.org/web/20041206040957/http://www.ceepur.org/sobreCee/leyElectoral/ |archive-date=2004-12-06 }})</ref> Almost four years later, incoming Governor [[Luis Fortuño]]  (from the [[New Progressive Party of Puerto Rico|New Progressive Party or New Party of Progress (NPP)]]) discarded the alternative of unicameralism claiming that the NPP's platform, rather than advocating unicameralism, supported submitting to the people a constitutional amendment proposing a substantial reduction in seats in the existing bicameral legislature.<ref>[http://www.wapa.tv/noticias/politica/derrotada-otra-vez-la-unicamara_20090122181536.html Derrotada otra vez la unicamara] {{Webarchive|url=https://web.archive.org/web/20120415104848/http://www.wapa.tv/noticias/politica/derrotada-otra-vez-la-unicamara_20090122181536.html |date=2012-04-15 }} on [[WAPA-TV]] (January 22, 2009)</ref><ref>[https://archive.today/20120913040921/http://www.primerahora.com/danvueltaalapagina-267390.html Dan vuelta a la página] on ''[[Primera Hora (Puerto Rico)|Primera Hora]]''; Díaz Alcaide, Maritza (January 22, 2009)</ref>

In 2012, Governor Fortuño proposed, and by a two thirds majority in both houses, the Legislature approved submitting to the people a constitutional amendment reducing the size of the House from 51 to 39 seats and the Senate from 27 to 17 seats, essentially a 30% reduction in size.  However, in an August 18, 2012 referendum, the constitutional proposition failed by a 54% to 46% margin.

==Judicial branch==
{{Main article|Judiciary of Puerto Rico}}

The [[judiciary of Puerto Rico]] consists of the [[Supreme Court of Puerto Rico]], [[Court of Appeals of Puerto Rico|Court of Appeals]], and the [[Court of First Instance of Puerto Rico|Court of First Instance]] consisting of the [[Superior Court of Puerto Rico|Superior Courts]] and the Municipal Courts. The Supreme Court, the commonwealth's highest court, holds its sessions in [[San Juan, Puerto Rico|San Juan's]] [[Miramar, Puerto Rico|Miramar]] district.

==Local government==
{{Main article|Municipalities of Puerto Rico|Mayors of Puerto Rico}}

Puerto Rico is divided into 78 municipalities, each headed by a mayor. The municipalities also have a municipal legislature, which is in charge of overseeing the mayor's operations, holding public meetings, and enacting municipal resolutions and ordinances. Both the mayor and the municipal legislators are elected [[At-large voting|at-large]] by the municipality's citizens in general elections held every four years. Unlike most towns, cities and states in the United States, Puerto Rico does not have local or state sheriffs; sheriff duties are instead performed by the Puerto Rico Commonwealth Marshal's Office.  Many municipalities have established municipal police departments, although most law enforcement activity is carried out by the Puerto Rico Police (PPR).

==Government finances==
{{Main article|Puerto Rico government budget balance|Budget of the Government of Puerto Rico|Puerto Rico Consolidated Fund|Puerto Rico General Fund}}
{{Update|inaccurate=yes|section|date=November 2012}}

Puerto Rico's central government, which includes all three branches of government but excludes public corporations and municipalities, has an annual general budget that currently ranges from $8.5 billion to $9 billion in revenues and expenditures.<ref name="PR_2005_budget">[http://www.hacienda.gobierno.pr/downloads/pdf/cafr/FINANCIAL_REPORT_2005.pdf Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report] for the fiscal year ended on June 30, 2005; pg. 30; Statement of Revenues and Expenditures - Budget and Actual – Budget Basis – General Fund</ref> The government also receives more than $4.2 billion annually in [[subsidy|subsidies]] and [[federal aid]] from the United States.<ref name="PR_Op_and_Cap_Grants">[http://www.hacienda.gobierno.pr/downloads/pdf/cafr/FINANCIAL_REPORT_2005.pdf Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report] for the fiscal year ended on June 30, 2005; pg. 24; Statement of Activities; Operating and Capital Grants and Contributions (columns)</ref> A substantial portion of this amount is earmarked for [[Public welfare in Puerto Rico|public welfare]], including funding educational programs (such as [[Head Start (education)|Head Start]]), subsidized housing programs (such as [[Section 8 (housing)|Section 8]] and [[Public housing in Puerto Rico|public housing projects]]), and a [[Nutrition Assistance for Puerto Rico|food stamp]] system called the [[Nutrition Assistance for Puerto Rico]] program.

[[List of government-owned corporations of Puerto Rico|Government-owned corporations]] generate approximately $6.3 billion in general revenues by charging citizens for the services they provide. The largest government-owned corporation, the [[Puerto Rico Electric Power Authority]] (PREPA), generates almost half of those revenues alone ($3 billion). However, government-owned corporations generate about $10.6 billion in expenses when combined, requiring substantial subsidies by the central government. In 2005, the central government provided more than $2.6 billion in subsidies, while the remaining expenditures were funded through interest and investment earnings.<ref name="PR_components">[http://www.hacienda.gobierno.pr/downloads/pdf/cafr/FINANCIAL_REPORT_2005.pdf Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report] for the fiscal year ended on June 30, 2005; pg. 38; Combining Statement of Activities: Major Component Units</ref>

When considering all three branches of government, including all government-owned corporations and municipalities, the government of Puerto Rico's annual expenditures can reach to more than $28 billion.<ref name="PR_Activities1">[http://www.hacienda.gobierno.pr/downloads/pdf/cafr/FINANCIAL_REPORT_2005.pdf Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report] for the fiscal year ended on June 30, 2005; pg. 24; Statement of Activities; Primary Government and Component Units Expenditures (column)</ref>

===Central government revenues===
{{Further|Taxation in Puerto Rico}}

The central government's main source of revenue is income tax imposed on individual citizens and private companies, which can amount to approximately $5.5 billion.<ref name="PR_2005_budget"/> Other significant sources of revenue include excise taxes on imports, cigarettes, liquor, hotel rooms, cement, and vehicles ($2 billion);<ref name="PR_2005_budget"/> and lotteries ($870 million).<ref name="PR_2005_proprietary">[http://www.hacienda.gobierno.pr/downloads/pdf/cafr/FINANCIAL_REPORT_2005.pdf Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report] for the fiscal year ended on June 30, 2005; pg. 32; Statement of Revenues, Expenses, and Changes in Net Assets-Proprietary Funds</ref>

====Sales and Use Tax====
{{Main article|Puerto Rico Sales and Use Tax|Puerto Rico Sales Tax Financing Corporation}}

On November 15, 2006, the government eliminated the excise tax of 6.6% on imports (taxes on cigarettes, liquor, and cars are still in effect) and substituted it for a 5.5% islandwide [[Puerto Rico Sales and Use Tax|Sales and Use Tax]], plus a municipal sales tax of 1.5%, for a total of 7%, in what has been known as the [[Puerto Rico Tax Reform]].<ref>{{cite news |author= Miguel Díaz Román |title= Incierto el impacto del nuevo tributo|url=http://www.endi.com/noticia/portada/noticias/incierto_el_impacto_del_nuevo_tributo/110378 |newspaper=[[El Nuevo Día]] |date=2006-11-15 |access-date=2006-11-15|language= es}}</ref> This change was partly due to the government's growing expenditures and fiscal deficits which remained unchecked and uncorrected for several years, until several [[credit agency|credit agencies]] warned public officials that all general-obligation [[Bond (finance)|bonds]] issued by the government were to be downgraded if the problem was not corrected.<ref name="Rodríguez">{{cite news|first=Magdalys |last=Rodríguez |url=http://www.endi.com/2006/05/01/index/412858.asp?category=Ultima+hora&title=No+hubo+acuerdo+y+el+gobierno+amanecio+cerrado&artdate=2006/05/01 |title=No hubo acuerdo y el gobierno amaneció cerrado |newspaper=[[El Nuevo Día]] |access-date=2006-05-01 |language=es }}{{dead link|date=May 2017|bot=medic}}{{cbignore|bot=medic}}</ref>

The situation reached a turning point when the executive branch of the government was partially shutdown, the events now known as the [[2006 Puerto Rico budget crisis]]. Thirty-three (33) agencies were closed and 95,762 employees were sent home without pay. Following public bickering between the two main political parties, the new sales tax was approved in favor of the excise tax on imports on May 10, 2006, ending the budget crisis.<ref name="Rodríguez"/>

===Central government expenditures===
{{Update|section|date=November 2012}}

The largest types of expenditures made by the government are those related to education. In 2005 alone, the government expended more than $5 billion in public education and education-related programs, representing approx. 28% of total government expenditures (excluding public corporations).<ref name="PR_2005_activities_expenditures">[http://www.hacienda.gobierno.pr/downloads/pdf/cafr/FINANCIAL_REPORT_2005.pdf Commonwealth of Puerto Rico 2005 Comprehensive Annual Financial Report] for the fiscal year ended on June 30, 2005; pg. 24; Statement of Activities; Expenditures (line items)</ref> Other significant expenditures include [[Public housing in Puerto Rico|public housing]] and welfare ($3.4 billion or 19%), public safety ($2.5 billion or 14%) and public health ($2.3 billion or 13%).<ref name="PR_2005_activities_expenditures"/>

===Public debt===
{{Main article|Public debt of Puerto Rico}}

In May 2007, local economists expressed serious concerns when it was revealed that the [[Puerto Rico public debt]] equaled to 76% of its [[gross national product]] (GNP), making it one of the most indebted countries by percentage in the world, even more than the United States.<ref name="ENDI_76_centavos">[http://www.endi.com/noticia/portada/noticias/debe_puerto_rico_76_centavos_de_cada_dolar/208760 ''Debe Puerto Rico 76 centavos de cada dólar''] by Joanisabel González, [[El Nuevo Día]], May 5, 2007, accessed May 5, 2007 (Spanish)</ref>{{update inline|date=November 2012}}  Economists have criticized the government's fiscal policy, whose level of expenditures and indebtedness has increased significantly within the past decade while the economy was grown at a much slower pace. Between 2000 and 2006 alone, Puerto Rico's GNP rose 5.37%, while its public debt's relation to GNP rose 18%.<ref name="ENDI_76_centavos"/> By comparison, many other Latin American countries have seen reductions in their GNP-public debt percentages during that same time period.<ref name="ENDI_76_centavos"/>

By early 2017, the [[Puerto Rican government-debt crisis]] posed serious problems for the government which was saddled with outstanding bond debt that had climbed to $70 billion or $12,000 per capita<ref name="Baribeau">{{cite web |url=https://www.forbes.com/sites/debtwire/2017/01/23/united-states-virgin-islands-risks-capsizing-under-weight-of-debt/#570913e73673 |title=United States Virgin Islands Risks Capsizing Under Weight Of Debt |last=Baribeau |first=Simone |date=January 23, 2017 |website=[[Forbes]] |access-date=February 15, 2017}}</ref> at a time with a 45 percent poverty rate and 12.4% unemployment that is more than twice the mainland U.S. average.<ref>{{cite web |url=http://www.thefiscaltimes.com/latestnews/2017/01/18/Puerto-Rico-oversight-board-favors-more-time-restructuring-talks |title=Puerto Rico oversight board favors more time for restructuring talks |author=Nick Brown |date=January 18, 2017 |website=Fiscal Times |publisher=The Fiscal Times |access-date=February 16, 2017}}</ref><ref name="Baribeau"/> The debt had been increasing during a decade long recession.<ref>{{cite news |author=Associated Press<!--Staff writer(s); no by-line.--> |title=Puerto Rico Gets More Time |url=http://www.starherald.com/news/nation_world/puerto-rico-gets-more-time-to-propose-fiscal-plan/article_b805f0e6-f333-5d33-8d94-d29a610d820a.html |newspaper=Star Herald |location=Scottsbluff, ME |date=January 29, 2017 |access-date=February 16, 2017 }}{{dead link|date=July 2017 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

The Commonwealth had been defaulting on many debts, including bonds, since 2015.  With debt payments due, the Governor was facing the risk of a government shutdown and failure to fund the managed care health system.<ref>{{cite news |last=Platt |first=Eric |date=January 19, 2017 |title=New Puerto Rico governor seeks amicable debt crisis resolution |url=https://www.ft.com/content/d9551584-de66-11e6-86ac-f253db7791c6 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/d9551584-de66-11e6-86ac-f253db7791c6 |archive-date=2022-12-10 |url-access=subscription  |newspaper=Financial Times |location=New York |access-date=February 17, 2017}}</ref><ref name="Watson">{{cite web |url=https://www.treasury.gov/connect/blog/Pages/Secretary-Lew-Sends-Letter-to-115th-Congress-on-Puerto-Rico.aspx |title=Secretary Lew Sends Letter to 115th Congress on Puerto Rico |last=Watson |first=Dan |date=January 17, 2017 |website=Department of the Treasury |access-date=February 16, 2017}}</ref> "Without action before April, Puerto Rico’s ability to execute contracts for Fiscal Year 2018 with its managed care organizations will be threatened, thereby putting at risk beginning July 1, 2017 the health care of up to 900,000 poor U.S. citizens living in Puerto Rico", according to a letter sent to Congress by the Secretary of the Treasury and the Secretary of Health and Human Services. They also said that "Congress must enact measures recommended by both Republicans and Democrats that fix Puerto Rico’s inequitable health care financing structure and promote sustained economic growth."<ref name="Watson"/>

Initially, the oversight board created under [[PROMESA]] called for Puerto Rico's governor [[Ricardo Rosselló]] to deliver a fiscal turnaround plan by January 28. Just before that deadline, the control board gave the Commonwealth government until February 28 to present a fiscal plan (including negotiations with creditors for restructuring debt) to solve the problems. A moratorium on lawsuits by debtors was extended to May 31.<ref>{{cite news |author=Associated Press<!--Staff writer(s); no by-line.--> |url=http://www.starherald.com/news/nation_world/puerto-rico-gets-more-time-to-propose-fiscal-plan/article_b805f0e6-f333-5d33-8d94-d29a610d820a.html |newspaper=Star Herald |location=Scottsbluff, ME |date=January 29, 2017 |access-date=February 16, 2017 }}{{dead link|date=July 2017 |bot=InternetArchiveBot |fix-attempted=yes }}</ref> It is essential for Puerto Rico to reach restructuring deals to avoid a bankruptcy-like process under [[PROMESA]].<ref>{{cite web |url=http://www.thefiscaltimes.com/latestnews/2017/01/18/Puerto-Rico-oversight-board-favors-more-time-restructuring-talks |title=Puerto Rico oversight board favors more time for restructuring talks |author=Nick Brown |date=January 18, 2017 |website=Fiscal Times |publisher=The Fiscal Times |access-date=February 16, 2017 |quote=The bipartisan, seven-member oversight board was created under the federal Puerto Rico rescue law known as PROMESA, passed by the U.S. Congress last year. It is charged with helping the island manage its finances and navigate its way out of the economic jam, including by negotiating restructuring deals with creditors.}}</ref>

Statehood might be useful as a means of dealing with the financial crisis, since it would allow for bankruptcy and the relevant protection. In the [[Puerto Rican status referendum, 2020]], the majority of voters approved of Puerto Rico becoming a state.<ref>{{cite web|title=Plebiscito Resulatados Isal|trans-title=Island Plesbiscite Results|work=Comisión Estatal de Elecciones|trans-work=[[Puerto Rico State Commission on Elections]]|url=https://elecciones2020.ceepur.org/Escrutinio_General_93/index.html#en/default/PLEBISCITO_Resumen.xml|access-date=December 31, 2020|language=es|archive-url=https://web.archive.org/web/20210202072404/https://elecciones2020.ceepur.org/Escrutinio_General_93/index.html|archive-date=2021-02-02|url-status=live}}</ref> However, the referendum was non-binding, and there has been little federal action since the referendum.

According to the Government Development Bank, statehood might be the only solution to the debt crisis. Congress has the power to vote to allow Chapter 9 protection without the need for statehood, but in late 2015 there was very little support in the House for this concept. Other benefits to statehood include increased disability benefits and Medicaid funding, the right to vote in Presidential elections and the higher (federal) minimum wage.<ref>{{cite web |url=https://www.theatlantic.com/business/archive/2015/11/ben-carson-puerto-rico/415014/ |title=Why Puerto Rican Statehood Matters So Much Right Now |last=White |first=Gillian B. |date=November 9, 2017 |website=[[The Atlantic]] |publisher=The Atlantic Monthly Group |access-date=February 21, 2017 |quote=Six words: the ability to file for bankruptcy}}</ref>

==See also==
{{Portal|Puerto Rico|Politics}}
* [[Nutrition Assistance for Puerto Rico]]
* [[Political party strength in Puerto Rico]]
* [[Politics of Puerto Rico]]
* [[Puerto Rico Federal Affairs Administration]]
* [[Puerto Rico Health Reform]]
* [[Law of Puerto Rico]]

==References==
{{Reflist|30em}}

==External links==
* {{official website|http://www.pr.gov/}}

{{Puerto Rico topics}}
{{Governments of the United States}}
{{North America topic|Government of|title=Governments of North America}}
{{Governments of Puerto Rico}}

[[Category:Government of Puerto Rico| ]]