• In this Aug. 20, 2015 photo, a supporter of the New Progressive Party waves a pro-statehood flag at a rally marking the party's 48th anniversary Manati, Puerto Rico. Advocates for making the Caribbean island the 51st state say the economic woes are strengthening their arguments. As a state, Puerto Rico’s municipalities and public utilities would no longer be prohibited from restructuring their debts through bankruptcy. It would also receive more of certain kinds of federal funding that other states get. (AP Photo/Ricardo Arduengo)

    In this Aug. 20, 2015 photo, a supporter of the New Progressive Party waves a pro-statehood flag at a rally marking the party's 48th anniversary Manati, Puerto Rico. Advocates for making the Caribbean island the 51st state say the economic woes are ... strengthening their arguments. As a state, Puerto Rico’s municipalities and public utilities would no longer be prohibited from restructuring their debts through bankruptcy. It would also receive more of certain kinds of federal funding that other states get. (AP Photo/Ricardo Arduengo) (The Associated Press)

  • In this Aug. 20, 2015 photo, supporters of the New Progressive Party attend a rally marking the pro-statehood party's 48th anniversary Manati, Puerto Rico. Statehood supporters say joining the union would provide the kind of needed economic benefits Puerto Ricans get when they move to the mainland.  (AP Photo/Ricardo Arduengo)

    In this Aug. 20, 2015 photo, supporters of the New Progressive Party attend a rally marking the pro-statehood party's 48th anniversary Manati, Puerto Rico. Statehood supporters say joining the union would provide the kind of needed economic benefits ... Puerto Ricans get when they move to the mainland. (AP Photo/Ricardo Arduengo) (The Associated Press)

  • In this Aug. 20, 2015 photo, a New Progressive Party supporter wears a U.S. flag T-shirt during a rally marking the pro-statehood party's 48th anniversary in Manati, Puerto Rico. Statehood supporters say joining the union would, among other things, end their perceived second-class status. Even though residents are U.S. citizens, they cannot vote in the presidential election and have only one representative in Congress who has limited voting power. (AP Photo/Ricardo Arduengo)

    In this Aug. 20, 2015 photo, a New Progressive Party supporter wears a U.S. flag T-shirt during a rally marking the pro-statehood party's 48th anniversary in Manati, Puerto Rico. Statehood supporters say joining the union would, among other things, ... end their perceived second-class status. Even though residents are U.S. citizens, they cannot vote in the presidential election and have only one representative in Congress who has limited voting power. (AP Photo/Ricardo Arduengo) (The Associated Press)

Supporters of Puerto Rico statehood see opportunity as island's woes deepen

Markets Associated Press

Revelers arrived in cars sporting the American flag and wore clothes in red, white and blue as they celebrated the anniversary of Puerto Rico's pro-statehood political party with deafening salsa music and speeches.

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Like many others worried about the U.S. territory's future, those rallying Thursday night in the coastal town of Manati believe that statehood can help pull it out of a nearly a decade of economic stagnation. "Puerto Rico has to become a state," insisted 63-year-old celebrant Norma Candelario.

With unemployment at 12 percent, and the public debt reaching $72 billion, advocates for making the Caribbean island the 51st state say the economic woes are strengthening their arguments. As a state, Puerto Rico's municipalities and public utilities would no longer be prohibited from restructuring their debts through bankruptcy. It would also receive more of certain kinds of federal funding that other states get.

"The crisis has made us more visible worldwide," said Carlos Pesquera, a former Puerto Rico transportation secretary who attended the rally. "I would have preferred that the crisis not happen, but we're going to take this as an opportunity to define our status, to see it as a solution."

Puerto Ricans have been divided over their relationship to the U.S. mainland for decades. Since 1967, most voters in three referendums have favored remaining a semi-autonomous territory, which advocates say preserves the island's cultural identity and provides more local control.

Statehood was a close second place in all three votes, with independence coming in a distant third. But support for joining the union rose in each referendum and appears to be gaining. In the most recent election, in November 2012, for the first time more than half of voters said they favored a change from the territory's current status and a plurality said they supported statehood. Backers of the status quo said the ballot was flawed and rejected the outcome.

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A recent poll by local research firm Gaither International found 40 percent of Puerto Ricans favored statehood, with 27 percent opposed and 33 percent expressing no opinion. Among those with an opinion, 60 percent favored statehood, compared with 56 percent in a similar poll conducted five years ago.

"Puerto Rico needs statehood at some point because of the economic crisis," said Nel Balseiro, 43, a funeral home owner and former mayor who until two years ago supported the status quo. "We need that to have a real chance at progressing."

The gains for statehood reflect the dismal times on the island, said Gilberto Castro de Armas, managing director at Gaither International.

An estimated 144,000 people left the territory between 2010 and 2013 in the largest exodus in decades and about a third of all people born in Puerto Rico now live in the U.S. mainland. So many businesses and schools have closed and so many people have left the island that some neighborhoods resemble ghost towns.

"Political changes occur during times of economic and social stress," said Castro de Armas. "You don't have to be a fortune teller. People are abandoning the ship because they think it's sinking."

Statehood proponents say the exodus is the best proof of growing support for their cause.

Judith Colon, 44, who manages social media accounts for Puerto Rico's pro-statehood party, said moving to the U.S. is among the few options available to Puerto Ricans struggling economically.

She and other statehood supporters say joining the union would provide the kind of needed economic benefits Puerto Ricans get when they move to the mainland.

The local government receives lower Medicaid and Medicare reimbursements, forcing it to spend more than $1 billion a year in Medicaid alone than if it were a U.S. state, said island congressional representative Pedro Pierluisi, who is running for governor next year. Puerto Rico also faces limited child tax credits and is barred from accessing other tax credits including one meant to promote labor participation, and there is no supplemental Social Security income for disabled people, he said. In addition, there's a cap on a nutritional assistance program in which the island is shortchanged by roughly $1 billion a year, he said.

"The current crisis has brought to light the limits of Puerto Rico's current territorial status," said Pierluisi, who promises to hold a referendum on whether the island should become a state if he's elected. "From an economic standpoint, there's no question that billions of additional dollars would be flowing into Puerto Rico's economy if we were treated equally and fairly ... The disparities we have in the way federal programs apply in Puerto Rico are atrocious."

Statehood supporters also say joining the union would end their perceived second-class status. Even though Puerto Rico residents are U.S. citizens, they cannot vote in the presidential election and have only one representative in Congress who has limited voting power.

But the island's Gov. Alejandro Garcia Padilla, whose party supports the current commonwealth status, has said statehood "would turn Puerto Rico into a ghetto."

Others, like Jorge Colberg, secretary of Garcia's Popular Democratic Party, say Puerto Rico's economic problems are a result of poor public administration, not its status. "Spending more than what you have has nothing to do with political status," Colberg said.

He said that holding a plebiscite now would create uncertainty for investors as the island tries to restructure its debt and warned that statehood would eliminate certain tax breaks and increase other taxes.

Puerto Rico statehood would require approval from Congress, where it would face a tough fight because the territory is considered to lean Democratic and it would have two senators and five representatives if it became a state. But it could be hard for Congress to block it if a strong majority of Puerto Ricans demonstrated support for joining the union.

President Barack Obama has said he supports statehood if Puerto Ricans clearly back it, and Republican presidential candidate Jeb Bush has said he believes statehood is the best option.

Many on the island think Puerto Rico is nearing that day.

"This is the best inheritance we can leave our children," said Candelario, who moved back to the island from the Bronx to help out a struggling daughter. "I have grandchildren, and I would like to leave them something special. It would be good if they could study here and work here."

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Danica Coto on Twitter: www.twitter.com/danicacoto