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  • Writer's pictureThe San Juan Daily Star

Study shows half of island towns operate at a deficit

But only 27% depend on commonwealth funds, the lowest rate in survey’s 8 years

The towns found to be in the best fiscal health were Vega Alta, Culebra, Hatillo, Aibonito and San Sebastián (seen above), while Carolina, Dorado and Aguada showed the most improvement.

By The Star Staff

Over half (55%) of the island’s 78 municipalities have been operating in financial deficit, according to the nonprofit ABREPR in a new Municipal Fiscal Health Index released Wednesday.

The percentage, which corresponds to fiscal year 2021, represents five percentage points less than the previous year, which points to an improvement in municipal finances at a general level. It is the eighth index of this type that the well-known nonprofit entity has launched, and it makes an exhaustive analysis of the finances of all the municipalities on the island.

This time, the towns with the best fiscal health were Vega Alta, Culebra, Hatillo, Aibonito and San Sebastián. Vega Alta tops the list for the first time since the publication of the index began in 2015. The municipalities with the worst fiscal health are Maricao, Santa Isabel, Naranjito and Las Marías.

Carolina, Dorado and Aguada were the municipalities that most improved their fiscal health for the latest edition. The towns that worsened their fiscal condition the most were Comerio, Cabo Rojo, Luquillo and Moca.

“The index was born eight years ago as an innovative initiative that made access to a survey of municipal finances publicly available for the first time,” noted Kevin González, an economist and member of the ABREPR board of directors, regarding the entity’s methodology. “Since then, this analysis has used 13 indicators with information derived from the audited financial statements of all municipalities.”

“In these eight years, this continues to be the main analysis tool of this type that both the media and citizens have to evaluate the fiscal performance of the municipal councils and, therefore, supervise the fiscal decision-making of the mayors,” González added.

In the latest edition, the numbers show that, in general, the municipalities significantly improved their financial indicators relative to the last edition of the index, which used data from fiscal year 2020 and that ABREPR released in April of this year.

Among the most notable findings of this eighth edition are that only 20% of the municipalities decreased their net assets. In comparison, in the previous publication 54% had decreased their financial support. In addition, only 32% saw a decrease in their general fund, versus 46% that had seen a reduction, according to the data from the two most recent editions.

“The most striking thing about the analysis of this edition is how the number of municipalities that depend on state funds to operate decreased, only 27%, the lowest number of municipalities since this index began eight years ago,” González highlighted.

The index analyzes the data through 2021, the first year of the most recent four years, since the municipalities have a considerable delay in presenting their financial reports because, since the pandemic, municipal councils have said that human resources and remote work challenges have affected the ability to complete activities related to audits. Additionally, they have received an unprecedented amount of federal funding, which has complicated accounting. At the same time, hurricanes and other emergencies have also affected municipalities’ operations and priorities.

Four municipalities did not provide information and are not part of the latest edition: Añasco, Corozal, Guánica and Morovis.

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