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Governor’s proposed fund for towns would draw from operational budget surplus


By The Star Staff


Gov. Pedro Pierluisi Urrutia on Tuesday detailed his request to the Financial Oversight and Management Board to allow a series of amendments to the commonwealth Fiscal Plan to help the island’s 78 municipalities financially.


The governor said he wants to create a fund to help municipalities pay for essential services that they provide to their constituents.


About 25 percent of the surplus of the government’s operational budget in any year would go into the proposed Municipal Fund for Essential Services after paying first for government debt obligations. The central government recently reached a debt adjustment plan.


“In other words, any surplus we have, 25 percent would go to that fund,” Pierluisi said at a press conference. “So that, among other things, guarantees that the municipalities can have their finances to provide the essential services they offer to their towns. It is a formula, what we are proposing is a formula, which is fiscally responsible, and now it is up to the oversight board to decide.”


The governor noted that the proposal is not the same as the existing Equalization Fund, which the oversight board insists on repealing. However, he said the formula for allocating funding for essential services is the same as the one followed by the Equalization Fund.


“It depends on a series of factors, population among others, but it would be available to the municipalities,” Pierluisi said. “The formula would resemble the formula used for the equalization fund at the time of distribution, but it is a percentage of the surplus. That is, it works differently. It is no longer that they have to say $88 million every year; no, this is more responsible.”


The Equalization Fund’s objective is to ensure equitable treatment of all municipalities, with increased focus on those that are economically disadvantaged. The program provides assistance of last resort, up to $50 million a year, for the provision of government services. The oversight board has said the fund must be eliminated.

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