1 final Remarks for Governor Luis Fortuo CPAC Orlando Conference September 23, 2011 Good afternoon.

Thank you, Dr. (Larry) Eastland, for that kind introduction. It is great to be with you all today and have the opportunity to talk with you at this moment of both great promise and great peril for our country. All of us are worried that something is wrong in America. We are worried that we are losing something important. We are worried that the greatest nation on earth is becoming something less than it has been. Something less than it should be. We are at a critical moment and we are worried that if we dont reverse course, we will be the first generation of American moms and dads who will pass onto our children more debt, less opportunity, and less of a country than we were given. I am here today to tell you it doesnt have to be that way. I can prove it. And conservative Governors all across this country can prove it. Freedom is alive, freedom works and conservative principles can turn this country around just as they are turning around some of our countrys bestrun states and territories. I am here to tell you that the American people are greater than all our problems. And that if we can change Washington, the way plenty of my fellow governors and I are changing government at the state level, this country your country ... my country... is destined to achieve great things. Its a matter of leadership. And its in the peoples hands to change the course of this country in 2012. Almost three years ago, my constituents voted to change the way our government worked or actually didnt work. It was spending beyond what we could afford. As Governor, from Day One, I laid out the case directly before the people I was elected to serve. I told them what we faced and what we had to do to fix it. I told them that it will be toughbut doable. I told them the

2 government we could no longer afford must be smaller for their family budgets and businesses to grow. Some have asked if those of us who cherish freedom, individual liberty, and personal responsibility can win the Hispanic vote while upholding our principles. Well, in Puerto Rico, weve done it. Three years ago, we won because people are ready for leadership and honesty. They can take it. Actually...they are yearning for it. Because when government takes the peoples work and uses it to grow its own economy at the expense of the real economy - the peoples economy Americans will choose freedom, opportunity and growth. Leadership and action are needed to take on the big challenges we face, with honesty and courage. The good news is that while Washington has stumbled, a growing number of Governors and State Houses around the country are showing the way. Those who are leading that change know this: We need to put our faith in the citizens of this country, because they can out-think, out-dream, out-work and out-produce anybody in the world, as long as they are rewarded fairly when they do it. Thats exactly what we are doing in Puerto Rico. We did not use a crisis to grow government. We addressed our problems: an inherited fiscal crisis that was the worst in the nation. When I took office in January 2009, we were in the deepest recession since the 1930s, and our downturn started a full two years before it began in the rest of the country. I inherited a $3.3 billion budget deficit - the largest proportionally in the country, representing 44 percent of revenues. The deficit was more than twice as large as what had been disclosed to the public or to me during the transition. I actually had to fly up to meet with the rating agencies before I was sworn in to avoid a downgrade of our bonds to junk status.

3 After I was sworn in, we didnt have money to meet our first payroll, and had to take out a loan to pay it. Hundreds of millions of dollars in bills to government suppliers had gone unpaid. We immediately enacted fiscal emergency legislation requiring significant spending cuts with the support of our Legislature. Sometimes politicians talk about taking this or that difficult vote. I can tell you - this was a tough vote. We cut government expenses by almost 20 percent.
o o o o

I started with my own salary. Agency heads also took a pay cut; We froze all salaries, cut government contracts by 15 percent and reduced political appointments by 30 percent; We shrank government employee ranks by over 20,000 through voluntary and mandatory measures. And we reversed the free-fall in the funding of the pension plans for our state government employees.

We didnt dodge the tough decisions or shy away from our responsibility to lead. In the time since we entered office, our progress is clear and compelling. We cut expenses and brought down the budget deficit from 44 percent to 7 percent of revenues. And we are on course to balance our budget before the end of my first term. Weve reduced our deficit proportionally more than any other state or territory. We started off dead last in a ranking of all the states by budget deficit. Now, we are ranked among the top 15 in the country and closing. The rating agencies have noticed. For the first time in decades, they all increased our bond ratings. With our fiscal situation stabilized, we turned our focus to restoring growth. What government CAN do is create a better business climate, where the private sector is the driver of economic growth and opportunity, not government. We started with our tax code, a code that at the national level puts American business at a competitive disadvantage around the globe.

4 Puerto Rico, as a U.S. territory, has a code that was a mirror image of the federal Internal Revenue Code. High taxes were limiting our ability to compete. Let me ask you this: Do you believe that if we take a dollar out of your pocket, send it to Washington, pass it around to all the smart people up there, burden that dollar with some regulations, then pass whats left of that dollar back to you that we will create more jobs and growth in America? I dont. A dollar in our taxpayers hands will be used more effectively than if that same dollar remains in the governments hands. So in Puerto Rico, we approved the largest, across-the-board, individual and business tax cuts in our history. We cut the top corporate rate from 41 percent to 30 percentand in twoyears time, well drop it further to 25 percent. Individual tax rates dropped an average 25 percent, and will continue to slide down to a nearly 50 percent reduction over six years. We have implemented other significant reforms to promote growth and create jobs. We enacted one of the most advanced and aggressive Public-Private Partnership laws in the country to encourage greater private investment and bring competition and efficiencies to schools, roads, airports, energy, water facilities and other public infrastructure. Just yesterday, we closed a $1.4 billion dollar deal on two of Puerto Ricos biggest toll roads. In the coming months, we expect to finalize a P3 concession for our main airport. We also implemented an initiative that successfully jump-started our housing market. Its primarily a tax incentive program that cuts capital gains and property taxes for buyers and sellers. In its first 11 months, new home sales increased over 90 percent and existing property sales have climbed by 35 percent. Meanwhile, throughout most of the rest of the country, home sales during this period have been in negative territory. We are also merging government agencies to cut duplication and putting more services online so that government red tape doesnt get in the way of entrepreneurship and job creation.

A perfect example is the government permitting process. Instead of going to 21 different agencies, businesses in Puerto Rico can now go to one office to get their permit. Our pro-growth efforts are working and the proof is in the data. Puerto Rico is moving in the right direction. Real estate sales are up. Hotel occupancy is up. Retail sales are up. The islands exports are up. Year over year car sales are up, as are cement sales for construction. This year, we are experiencing our first net gain in job creation in over five years. And between May and August of this year, over 3,000 new corporations were registered for business. We are spurring job creation and doing everything within our power to make our economy more competitive, more prosperous and stronger than its ever been. This is the time for all of us to stand up. This is the time for us to stand strong. We cant wait. We cant blink. We have to compel Washington to make tough decisions now and stick to them with courage. We must show the promise of this country can still be realized by a younger generation who may be questioning the American legacy we have never before had reason to doubt. We must show that our brightest days are ahead and that we can reignite Americas engine of growth. People are expecting something they havent received for a while: real leadership. Some may not like every decision you make, but they will respect you for doing whats right and what you said you would do. Its time for Government to fix its finances. Its time for Washington to live within its means. I am confident that through clear and steady leadership, we will be able to address these challenges, just as many Governors are doing around our nation.

6 ... You know, I started in the Republican Party as a student in D.C., stuffing envelopes for Ronald Reagan. President Reagan brought many Latinos into the party. He said: Hispanics are Republicans, they just dont know it yet. And he was right. We understand that we must live within our means; faith, family and education are key to us; and we want our small and medium-size businesses to flourish.

Those are Hispanic values, those are conservative values, and those are American values. They are the values that will turn America around. They are the values that will win. We dont have to run away from our principles to attract Latino support or any support. On the contrary, we have to proudly lift them up and explain where they will lead. If we are true to ourselves, true to our principles, a better and brighter day is waiting for us, just over the horizon. Lets get to work and make America better than it has ever been. Thank you, God bless you, and may God continue to bless the United States of America. ###