Bonds

Puerto Rico board increases budget 12%

The Puerto Rico Oversight Board approved an amended general fund budget for the current 2023 fiscal year that is 12% larger than the budget approved in June and contains funds for the Puerto Rico Electric Power Authority.

The $13.9 billion budget “reflects updated revenue and expense projections,” the board said when it announced the revised plan, which replaced the $12.42 billion budget approved in June.

The budget allots $650 million to refill the government’s emergency reserve, $545 million for a loan to PREPA, and $100 million to cover a potential Medicaid funding shortfall. 

Puerto Rico Oversight Board Executive Director Robert Mujica Jr. said Puerto Rico’s emergency budget reserve had run too low.

Office of Gov. Kathy Hochul

The emergency reserve is used “to help the people, the government, and municipalities in case of natural disasters and other emergencies had run too low,” said Board Executive Director Robert Mujica Jr. “The amended budget also reflects the government’s and the Oversight Board’s shared priority of improving healthcare in Puerto Rico and completing the transformation of Puerto Rico’s energy system to provide the people and businesses with more reliable, more affordable, and cleaner energy.”

The emergency reserve was used to provide assistance to people affected by natural disasters, fund the temporary relocation of schools during the COVID-19 pandemic, and offer support to the municipalities, the board said.

The loan to PREPA, detailed in the agreement between Puerto Rico’s government, PREPA, and Genera PR, allows Genera, the outside generating company, to invest in the system, make upgrades, and pay suppliers, the board said.

Mujica decried the Puerto Rico legislature’s failure to submit a budget. “The budget is a key element of fiscal responsibility owed to the people of Puerto Rico,” he said.

The board is working on the fiscal year 2024 budget, due at the end of June, and said it hopes the legislature will submit a fiscally compliant budget for the board’s review.

A board spokesman said, “It’s premature to discuss the termination of the Oversight Board,” when The Bond Buyer asked if the legislature’s non-participation in creating the last three budgets means those budgets should not count toward the four spending plans needed to end the Oversight Board.

Earlier this month the Puerto Rico Treasury Department announced general fund revenues were 15% above projections in the July to March period.

The board’s decision to approve an expanded budget follows recent months’ revenues coming in strong and improved collection rates for the island’s sales and use tax.

Puerto Rico House President Rafael Hernández Montañez and Puerto Rico Senate President José Dalmau Santiago did not immediately respond to a request for a comment.

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