Puerto Rico general fund revenue in decline
SAN JUAN — Puerto Rico Treasury Secretary Raúl Maldonado confirmed Thursday in a public hearing at the House of Representatives that the island’s general fund received $348 million less during the first half of the current fiscal year.
“In the first half of fiscal year 2017-18, from July to December, General Fund net revenue totaled $3.6 billion, which represents $348 million [or] 8.8 percent less compared with the same time last year. Compared with the projection for the period, revenue was lower by $157.3 million, or 4.3 percent. The main items were revenue drops are observed are in individual income tax, the sales & use tax [IVU by its Spanish acronym] and in the tax on foreign corporations,” Maldonado explained in a written statement.
The secretary shared these details at a public hearing with the House Treasury, Budget & Promesa Committee, chaired by Rep. Antonio Soto, to analyze public agencies’ expenses and budget throughout the first six months of fiscal 2018.
However, Maldonado maintained that according to his projections, the Treasury Department will close the fiscal year with a balanced budget. He indicated that the original budget approved for fiscal 2018 amounted to $303 million and that as of Dec. 31, he received additional transfers of budgetary allocations for $2.2 million for the payment of units and deductive adjustment in the allocation corresponding to the reconciliation under the fiscal plan for $ 90 million.
He said this represents an $87.7 million decrease in budget allocations corresponding to the general fund, for a total of $215.3 million.
Maldonado mentioned that in only one year, and despite less revenue after hurricanes Irma and Maria, Treasury has faced several challenges, thus new measures are being established as part of the [2018-2012] strategic plan to dramatically improve the island’s tax system.
“[Treasury’s] Internal Revenue area established a series of strategic goals and objectives focused on improving tax collection, oversight and capture rate. One of the main goals is to transform the tax administration with a modern and vanguard technological system. The current system [known as Pritas (Puerto Rico Income Tax Administration System)], is antiquated and lacks the capability to adapt to the challenges of the economic and fiscal realities we are facing,” the official said.
During the hearing, the official said his agency received $2 million from Fund 289, known as the Emergency Fund overseen by the Office of Management & Budget.
As for the movable and immovable property damages claimed so far, he reported they amount to $3.6 million.
“We hope to recover the excess spending over revenue with the claim filed with the department’s insurance…for the business interruption caused by Hurricane Maria,” the secretary added.
“I understand the importance of Treasury, and we have wanted to collaborate, not only from a budgetary standpoint, but also in the dialogue and exchange of ideas and information,” Chairman Soto said. “We have been rowing in the same direction to benefit the people.”