Municipal Revenue Collection Center has no money for January payments
SAN JUAN – The Municipal Revenue Collection Center (CRIM by its Spanish acronym) is waiting for the federally established Financial Oversight & Management Board to approve a $50 million line of credit with Banco Popular, which will be vital to pay municipalities in early January.
If the oversight board does not approve this financial transaction, for which documents were sent last week, CRIM won’t have funds to make beginning-of-the-year payments to municipalities, something that could affect smaller city halls’ operations, CRIM Chairman Jorge Márquez told Caribbean Business.
“In January, we won’t have financial resources available, neither to pay obligations to municipalities nor pay obligations through CRIM. It will be difficult [to make those payments]. That is why we want [the transaction through the fiscal board] to be approved quickly so we have money in January,” said Márquez, who is also the mayor of Maunabo.
The mayor believes there should be no problems with the transaction because CRIM operates that way. “We activate the line of credit in January and at the end of the month it is paid off. We have never failed [in making] a payment to the bank,” he said.
“Taxes used to be paid differently before. Before, you paid taxes twice a year, now it’s four. Therefore, there’s room for the center to have liquidity and, therefore, you activate the line of credit a fewer number of times,” he added.
In its third official meeting, the fiscal board established the guidelines to be followed by overseen entities, including CRIM, to conduct financial transactions. Documents must be delivered at least 15 days before a transaction is slated to take place. The period begins when the board determines it has received all the documents.
“If the board is going to approve it after 30 days,” meaning, after January begins, he explained that municipalities wouldn’t be able to receive payment on time and CRIM might have received enough money from real estate and personal property taxes to make a late payment.
Regarding the matter, San Juan Mayor Carmen Yulín Cruz told CB that if the municipalities fail to receive these funds from CRIM on Jan. 5, when the checks are expected to be sent, “many will close.”
“In January, there is no money at CRIM to pay, there isn’t any. If this line of credit isn’t granted, all of Puerto Rico’s municipalities will no longer receive the money they receive on a monthly basis. Some of us will be able to absorb the hit, others will have to close,” said Cruz, whose municipality receives $4 million a month in CRIM payments.
The fiscal oversight board requires that certain documents be submitted before any financial transaction. These include a detailed memorandum from the agency and the transaction’s elements, the public interest of the transaction, a summary of the legal documents and a letter from the fiscal agent, the Fiscal Agency & Financial Advisory Authority created by the Puerto Rico Emergency Moratorium & Financial Rehabilitation Act. A letter from the government endorsing the transaction is also required.