Puerto Rico revenue higher than expected in Q1 2024
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Puerto Rico’s General Fund has collected $212 million more than was projected in Q1 2024, and $207 million higher than was collected in the same period last year, the Financial Oversight and Management Board for Puerto Rico said.
Fiscal year 2024 began on July 1 and despite the positive results, which were driven mostly by taxes on corporations, there are still significant obligations outstanding.
“The report for the first quarter shows that Puerto Rico’s revenues are higher than previously forecasted, mainly because of higher income tax collections,” said Robert Mujica, Jr., executive director of the Puerto Rico Oversight Board. “There are, however, significant pressures on Puerto Rico’s fiscal stability. Puerto Rico faces significant potential financial obligations the Governor and the Legislature must consider when deciding on any initiatives which impact the financial plan.”
The announcement comes a few weeks after the Oversight Board
The Oversight Board also noted that its future spending obligations include increased funding for healthcare, uncertain long term Medicaid funding levels, recurring expenditures that are currently paid with one-time federal funds, reductions in revenues without commensurate budget actions, potential added Commonwealth contributions for disaster relief projects, and recent spending bills, among others.
Expenditures were also $609 million below projections for the quarter but $177 million higher than the same period a year earlier and around $270 million in expenditures were incurred but not yet recorded.
“Pressures to increase spending while also reducing taxes contributed to the current fiscal crisis,” Mujica said. “One-time Federal government emergency and stimulus funds continue to temporarily impact the economy. Taking on additional expenditures or reducing revenue without a sustainable recurring funding source could create a budget imbalance. All risks and Government priorities must be balanced against not just today but over a multi-year planning period.”
The board also noted its heavy reliance on corporate taxes as a proportion of its General Fund revenues, making up 38% of the total and compared to 8% in U.S. states.
The Treasury Single Account (TSA), the Commonwealth’s main operating account, currently has an unallocated net cash balance of $816 million.
“We’re trying to restore fiscal responsibility, get back to the debt markets and pass balanced budgets that are gonna last over the long term,” Mujica said during a roundtable discussion on the projections.
