Senator Hatch says Puerto Rico faces 'enormous fiscal challenges'

NEW YORK (Reuters) - Senate Finance Committee Chairman Orrin Hatch on Tuesday said Puerto Rico faces "enormous fiscal and economic challenges" as he opened a committee hearing about the island's problems.

Puerto Rico has suffered nearly a decade of recession. Its debt load has grown to $72 billion, while the number of taxpayers shouldering the burden has dwindled, with thousands moving to the U.S. mainland each year.

A bailout from Washington is not expected, and while some on Capitol Hill are pushing laws or reforms that could help Puerto Rico, their prospects are uncertain.

"While the government of Puerto Rico has taken some steps in recent years to address these matters, many more changes - significant and fundamental changes - needed to be made," Hatch told the committee.

Democrats in the U.S. Senate in August introduced a bill proposing eliminating a cap on the amount of funding that the federal government provides to support Medicaid in U.S. territories including Puerto Rico. That bill was referred to the Committee on Finance.

Hatch said problems surrounding the island's healthcare were "multi-dimensional and extremely complicated."

"It isn't as simple as deciding to give more health funds to Puerto Rico, because doing so would necessarily mean reduced funding for other priorities, increased taxes, or even more federal debt," Hatch said.

Hatch urged witnesses at the hearing to focus on areas that are within the Finance Committee's jurisdiction and said it was not a hearing on Chapter 9 of the bankruptcy code or on Puerto Rico's status as a territory.

In July, Hatch sent a letter to Treasury Secretary Jack Lew requesting information about what actions the Obama administration was taking to alleviate Puerto Rico's fiscal stress.

In the letter, Hatch said there were two "reasonable principles" to apply to the debt problems: that there should not be a federal bailout and that "orderly resolution of debt defaults are preferred to chaotic resolutions."

(Reporting by Megan Davies and Jessica DiNapoli; Editing by Christian Plumb)

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