Rivera Schatz proposes plan to pay for PREPA pensions, eliminate inventory tax

Senate President Thomas Rivera Schatz, at right

By THE STAR STAFF

Senate President Thomas Rivera Schatz has proposed a plan to redirect revenue from the Puerto Rico Trust Fund to help stabilize the Puerto Rico Electric Power Authority (PREPA) pension system and offset the financial impact of eliminating the island’s inventory tax.

In a letter sent to Gov. Jenniffer González Colón and Robert Mujica Jr., the executive director of the Financial Oversight and Management Board, Rivera Schatz outlined a strategy to use funds collected from duties and taxes on imported and exported goods to address two longstanding economic challenges: high electricity costs and an outdated tax structure.

“These challenges require solutions that make use of existing resources,” Rivera Schatz wrote, “without resorting to new taxes, tax hikes, or increases in electricity rates.”

The Senate president said the Puerto Rico Trust Fund receives some $200 million annually from U.S. Customs and Border Protection, as authorized under 48 U.S.C. § 740. While the funds are legally designated for the benefit of Puerto Rico, he noted that previous administrations had earmarked them for infrastructure projects -- such as the PR-10 highway -- that have not been implemented.

Rivera Schatz is now proposing that the funds be reallocated to two key areas: The first is PREPA’s retirement system, to reduce the financial pressure on electricity rates caused by pension obligations. The second is the Special Fund of the Municipal Revenue Collections Center (CRIM by its acronym in Spanish), to ensure municipal fiscal stability following the planned elimination of the inventory tax.

He emphasized that the goal is to phase out a tax that undermines Puerto Rico’s competitiveness while safeguarding essential municipal services.

In addition to the funding proposal, Rivera Schatz requested that the oversight board provide certified documentation of all requests, authorizations and approvals related to the Trust Fund, along with revenue projections for the next decade. That information, he said, is essential for the Legislature to evaluate the availability of resources and plan their reallocation in line with Puerto Rico’s economic priorities.

Rivera Schatz asserted that the proposed measures align with the island’s broader goals of fiscal responsibility and economic development.

“Energy stability and fiscal modernization can be achieved using Puerto Rico’s existing resources,” he wrote, “without increasing taxes or the cost of living for families and businesses.”