Senate president calls for using rum revenue to pay for police pensions, CRIM

Senate President Thomas Rivera Schatz

By THE STAR STAFF

Senate President Thomas Rivera Schatz has formally requested that the Financial Oversight and Management Board authorize the use of newly secured federal rum tax revenues to bolster public safety and modernize municipal operations across Puerto Rico.

In a letter addressed to Robert Mujica Jr., the executive director of the oversight board, Rivera Schatz highlighted the recent federal legislation -- known as the One Big Beautiful Bill -- which permanently increases Puerto Rico’s share of the rum excise tax from $10.50 to $13.25 per gallon starting in January 2026. The measure is expected to generate over $100 million in additional annual revenue, totaling nearly $1 billion over the next decade.

“These funds represent a significant, stable, and recurring source of income, directly tied to the productivity of our people and local industry,” Rivera Schatz wrote, emphasizing that the revenue is not derived from debt or budget reallocations, but rather from federal recognition of Puerto Rico’s economic contributions.

Rivera Schatz outlined two key initiatives for the use of the new fund. The first would strengthen the police retirement system by allocating half of the revenue to support it, aiming to provide long-term stability, dignity and justice for officers who have borne the brunt of austerity measures. The remaining 50% would be directed to the Municipal Revenue Collections Center (CRIM by its acronym in Spanish) to drive administrative and technological transformation, including digitizing processes, updating property assessments, and enhancing fiscal and operational capacity at the municipal level.

The proposal gains urgency in light of pending legislation -- House Bill 420 -- which would eliminate the inventory tax, making municipal modernization even more critical. The governor has not yet said whether she will sign the bill into law.

Rivera Schatz stressed that the plan does not involve new taxes or borrowing. Instead, it leverages additional federal resources to address two pressing areas: public safety and municipal efficiency.

“The fiscal sustainability of our municipalities must not rely on creating new taxes, but rather on improving the business climate, attracting private investment, and strengthening government efficiency,” he said.

The Senate president went on to urge the oversight board to embrace a forward-looking approach.

“The Board’s decision will mark a pivotal moment -- either perpetuating outdated mechanisms or embracing a development model based on productivity, efficiency, and growth.”