Majority lawmakers call for Legislature-wide effort to avert shutdowns in 30 towns
By The Star Staff
The commonwealth fiscal plan may cause the shutdown of 30 municipalities in the new fiscal year, which starts July 1, Popular Democratic Party lawmakers said Sunday.
The chairpersons of the House Municipal Affairs and Treasury committees, Juan José Santiago Nieves and Jesús Santa Rodríguez, respectively, along with House Speaker Rafael Hernández Montañez, urged the five political parties and independent lawmakers to join forces in approving bills that would mitigate the impact of the new fiscal plan on towns.
Last week, the Financial Oversight and Management Board rejected the central government’s request to maintain the $88 million government contribution to the Municipal Equalization Fund, and to allow the government to pay for the municipalities’ share of the Puerto Rico Health Insurance Administration (ASES) obligation to help financially strapped municipalities.
“The House of Representatives, proactively, obtained over $60 million annually to mitigate the impact of the fiscal plans, but it is not enough to cover the immense gap accumulated over the past five years,” Santiago Nieves warned. “The smallest municipalities have lost an average of 50% of their collections, and in some cases much more.”
He said that with loans and federal funds many municipalities have “maneuvered” to stay afloat until the end of the fiscal year on June 30.
“The time has come to sit down at the table and legislate permanent solutions to, simultaneously, present an orderly transition plan to the Financial Oversight and Management Board, to avoid the closing of municipalities,” Santiago Nieves said.
The Municipal Affairs committees of the House and Senate, together with the Mayors Association and the Mayors Federation, and with the technical support of the Municipal Revenues Collection Center (CRIM by its Spanish acronym), have addressed related issues that will have to be sped up after the recent oversight board determination, Santiago Nieves said.
Santa Rodríguez highlighted some key points that will be presented to the oversight board. They are: structurally improving the inspection system to increase the property tax base, the elimination of property exemptions, changes to the inventory tax to collect it at the time of the sale of goods, and increasing the supervision of the room tax in the Airbnb network while giving municipalities a share.
Other ideas include modifying the provision that exempts certain businesses from paying municipal taxes under the Act 60 Incentives Law; revisiting measures that would transfer assets and powers to the municipalities to lower government spending; using the $44 million allocated for the creation of consortiums to finance the structural and regional changes necessary to implement the new public policy in the CRIM; and allocating $120 million to the Equalization Fund, with a reasonable, phased reduction as changes are implemented in an orderly manner.
“We believe that the issue must be dealt with urgently because the Board’s determination certainly puts several municipalities in danger of shutting down,” Santa Rodríguez said. “We cannot stand idly by. The municipalities deal with the immediate needs of the people.”
Hernández Montañez emphasized the importance of all parties working together to save the municipalities.
“We call on the delegations of the New Progressive Party, Dignity Project, Citizen Victory [Movement], Puerto Rican Independence Party, and independent lawmakers to join forces and participate in all the work meetings that will be held, leading the Municipal Affairs and Treasury committees in the process of seeking alternatives to avoid the disappearance of these municipalities,” Hernández Montañez said.