A bill to provide for referenda in which the residents of Puerto Rico may express democratically their preferences regarding the political status of the territory, and for other purposes.

Declares that it is U.S. policy that the residents of Puerto Rico should be afforded periodically the opportunity freely to express a preference for preserving its current political status or choosing to seek U.S. statehood or separate sovereignty (independence or free association). Requires a referendum on these questions to be held by December 31, 1998. Sets forth specified requirements with respect to the referendum and implementation of its results.

Makes funds derived from excise taxes collected on rum imported into the United States and deposited into the treasury of Puerto Rico available for grants to the State Elections Commission of Puerto Rico for: (1) costs of conducting the referendum; and (2) voter education.