Stateside budget directors to join gov’t officials, economists to discuss revenue prediction.

By THE STAR STAFF

On April 15, government officials, economists and budget directors will meet in San Juan for the symposium “A Better Plan: Puerto Rico’s Fiscal Future – Budget Tools, Principles, and State Practices.” Their main focus will be a straightforward question: how much should the government actually spend? For fiscal policymakers, the answer depends on how well the government can predict its revenue.

The Financial Oversight and Management Board said in a recent blog post that it is organizing a symposium that will bring together budget directors from six U.S. states to examine how revenue forecasting supports responsible budgeting. The event is part of a larger effort by the Puerto Rico government and the oversight board to improve how economic and revenue estimates are made, following years of overly optimistic forecasts that led to repeated budget deficits.

Governments, much like businesses, need to estimate future income before deciding on spending. That involves predicting how many taxpayers will file returns, the amount of income and sales tax collected, economic growth, new business openings, and federal support. The projections are key to setting the budget and avoiding shortfalls during the year.

For almost 20 years, Puerto Rico struggled to make accurate revenue projections, the oversight board noted. Different administrations often overestimated income and approved budgets that were too large, leading to at least 16 years of deficits, rising debt and, eventually, bankruptcy. Since the oversight board approved its first budget for fiscal year 2017, deficits have been eliminated. However, officials caution that sustaining that progress will require lasting changes to how forecasts are made.

A major challenge has been the fragmented approach to revenue forecasting in Puerto Rico. Several agencies are involved, such as the Office of Management and Budget, the Treasury Department, the Puerto Rico Fiscal Agency and Financial Advisory Authority, and the Puerto Rico Planning Board. The setup has caused coordination issues, inconsistent timing, limited long-term planning, and capacity problems in some agencies. Sometimes, economic data was missing when budget decisions were made, and long-term planning often relied on assumptions that did not form a single, unified approach.

At the April 15 symposium, speakers will likely discuss how many U.S. states have addressed similar problems through consensus-based forecasting systems. These models usually include nonpartisan experts from government, universities and the private sector, and involve both the executive and legislative branches. Forecasts and methods are made public. Most states also forecast revenues four to five years ahead and update their estimates several times a year to keep up with economic changes.

The oversight board has already held economic forecast symposiums for 2025 and 2026 and plans to include more formal revenue outlooks in future events. Officials say the aim is to build a system focused on collaboration, transparency and shared assumptions, which should help prevent major forecasting mistakes.

Oversight Board Executive Director Robert F. Mujica Jr. highlighted the importance of the issue at a recent symposium, saying that responsible budgets start with an honest and transparent look at the economy. As Puerto Rico prepares for a future without federal oversight, participants in next week’s event are expected to emphasize that strong revenue forecasting is more than just a technical task. It is a safeguard against repeating past fiscal mistakes and a key to long-term stability.