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  • Writer's pictureThe San Juan Daily Star

Mayors: Fiscal board scrapping Equalization Fund puts billions in federal funds at risk

Island mayors told advisers to the Financial Oversight and Management Board, among other things, that the fiscal stability of Puerto Rico’s municipalities guarantees the availability of federal funds from various programs.

By The Star Staff

By trying to take $88 million from the municipalities, $1.5 billion in federal funds could be lost, Coamo Mayor Juan Carlos “Tato” García Padilla said Monday as he and several other mayors left a meeting with advisers to the Financial Oversight and Management Board.

“The example of [the municipality of] Jayuya is a very good one. Jayuya is one of the towns that has claimed the most [federal funds] and has obligated funds from FEMA [the Federal Emergency Management Agency] at this time,” García Padilla said in response to questions from the press. “It has over $500 million already obligated by FEMA as part of the [Hurricane] Maria disaster. If you leave Jayuya insolvent, almost $500 million will be lost in works and projects that we have to be able to carry out in the town of Jayuya, that Jayuya activated, that Jayuya claimed and that FEMA recognized as valid. A request made to the board by the mayor of Bayamón is: ‘be careful with eliminating the funds from the next $88 million that you can put at risk over $1.2 billion in the recovery process, nothing more than the interaction of the municipality with FEMA. We are not talking about CDBG-DR, ARPA [funds] that are a substantial amount of dollars that would be lost within the economy that we are going to need them prospectively.”

“In other words, for $88 million, which they want to remove from the Equalization Fund, they could lose practically $1.5 billion when you add them all up,” the Coamo mayor added.

Bayamón Mayor Ramón Luis Rivera Cruz told the advisers of the oversight board that the fiscal stability of the municipalities guarantees the availability of federal funds from various programs.

“What would happen to all the federal programs that all these municipalities have when the municipality no longer has enough money to run the administrative structure?” Rivera Cruz said. “We are talking, for example, about the Head Start programs, the ARPA [funded] programs, the FEMA programs. What can happen to the ARPA funds if the municipality does not have the capacity? That money is lost in its entirety and there is a lot of money from ARPA funds in Puerto Rico right now.”

“We are talking about such a large amount of money, that, at least, then, the $44 million that you are trying to take away now, you are going to lose it two, three or four times due to those federal programs that could be starting,” he added.

Mayors Association President Luis Javier Hernández Ortiz, meanwhile, said that in addition to requesting a two-year moratorium for the equalization fund, the mayors presented several proposals with which they intend to mitigate the impact of the loss of those funds after the two-year moratorium.

“The first thing is to use the municipal consolidation fund to consolidate municipal operations, restructure many municipalities in operational terms, work on the issue of employees and various initiatives so that the municipalities can withstand the blow of reduced revenues,” Hernández Ortiz said. “We hope in God that the board can hear them with the seriousness that we have proposed.”

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