Oversight board certifies PRASA’s proposed FY2023 budget
By The Star Staff
The Financial Oversight and Management Board on Thursday certified the Puerto Rico Aqueduct and Sewer Authority’s (PRASA) proposed budget for fiscal year (FY) 2023, but noted that the budgets for the University of Puerto Rico (UPR), Puerto Rico Sales Tax Financing Corp. (COFINA by its Spanish acronym) and the Municipal Revenues Collection Center (CRIM) had problems.
The oversight board certified a compliant $1.1 billion budget for PRASA for FY 2023. Despite PRASA’s efforts to stabilize or reduce operating costs, inflation and other macroeconomic factors are expected to result in higher operating expenditures. PRASA’s payroll is also projected to increase as it implements measures designed to retain and expand its workforce with a focus on critical workers, such as plant operators and electromechanics. Those employee retention initiatives are expected to increase payroll by $14 million in FY 2023.
“This is the first time that a covered entity under PROMESA has submitted a compliant budget, without need for the Oversight Board to issue a Notice of Violation,” Oversight Board Chairman David Skeel said. “PRASA’s financial condition has gradually improved in recent years as a result of implementing modest annual rate adjustments, improving collections and carrying out various debt reprofiling and refunding transactions. Having made progress in achieving financial stability, PRASA can now focus on making the operational enhancements necessary to provide safe and clean water and wastewater services.”
After careful review, the oversight board determined that the proposed budget for UPR requires certain substantive revisions and additional supporting information before the board can certify it as compliant with the requirements of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).
The oversight board found deviations from the 2021 Certified Fiscal Plan for UPR which it said reflect the continued decision of the UPR administration and governing board not to implement critical revenue and expenditure measures required to ensure fiscal responsibility and the long-term sustainability of the institution.
“Most notably, the Proposed Budget reflects an operating deficit of $17 million, which is directly contrary to a core purpose of PROMESA: to achieve fiscal responsibility,” the oversight board said.
The proposed budget is out of alignment with UPR Fiscal Plan projections by $16 million.
Regarding COFINA, the oversight board said the proposed budget includes total operating expenses of $1.7 million, which is higher than the $1.4 million projected in the 2022 COFINA Fiscal Plan.
The oversight board meanwhile found a total of 15 problems with the CRIM’s budget. Most notably, the board said, the proposed budget of $31.8 million is higher than the projected FY 2022 operating revenue in the Certified Fiscal Plan, which was based on certified real and personal property tax collections.