By The Star Staff
By January 2025, a significant number of municipalities in Puerto Rico could be facing a precarious fiscal situation, Municipal Revenue Collections Center (CRIM by its acronym in Spanish) Executive Director Reinaldo Paniagua Látimer warned Tuesday.
Most towns face problems with their budgets after the Equalization Fund for municipalities was eliminated and the government enacted laws that negatively impacted municipal coffers, he said.
The Equalization Fund, which provided $300 million to the 78 municipalities, has already disappeared and officials are discussing the future of the Capital Improvements Fund and the contribution to other funds.
“The Financial Oversight and Management Board … was trying to reinvent the way in which funds are distributed to municipalities and putting in certain restrictions,” Paniagua Látimer said. “In other words, it is not bad that they establish exactly what the funds are going to be used for. What happens is that in a time of economic crisis like this, these funds cannot be used for things other than solving problems. Right? But now, apart from establishing restrictions, the problem is that the amounts do not add up.”
Besides the Equalization Fund, towns lost about $350 million from the Exemption Fund and other amounts taken away from them, the CRIM director said.
Likewise, Paniagua Látimer stressed that the municipalities are being held responsible for debts or items such as those of the Vital health plan, which is the responsibility of the state.
“Financing the Vital health plan, which is something that costs $162 million annually, should be the total and complete responsibility of the state and not of the municipalities, just as they are also contributing to the state pension fund; that is, when they had to match that payment of the employees, dollar by dollar, because the municipalities already contributed it, but then now they also have to pay the pensions,” he said.
“We have to deal with this early in the year because we are going to start to see complicated situations in the municipalities at an economic level,” he added. “They are going to put the capacity to continue offering the service and paying the payroll to the municipalities in a precarious situation.”
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