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this Finance Supervision Committee (JSF) To clarify, the new “Redemption Fund” For the municipality, it does not need approval from the entity created under the PROMESA federal law, but transactions related to it do require approval.
Then The Board received a letter from the Municipal Financing Corporation (COFIM)asking for your opinion on creating this project “Redemption Fund” The Company and its compliance with the Municipal Financing Corporation Law No. 107-2020 and the PROMESA Law, the Executive Director of the Board of Directors, Robert Mujica In a written response, the Fund stated that it had not authorized the issuance or any other similar transaction related to the debt, and therefore Not subject to PROMESA.
The “Redemption Fund” is a fund designed under Law No. 107-2020 toCollect a portion of municipal sales and use tax revenuewith the purpose of supporting and guaranteeing the payment of debts associated with bonds and other financial obligations issued by the company on behalf of municipalities across the island.
“However, any transaction proposed by the Fund relating to debt securities of the government or its instruments will be subject to Article 207 of PROMESA and to the review and approval of the Supervisory Board in accordance with that policy,” Mujica continued, referring to the “Contract Review Policy” which states that such debt transactions will be void and no debt may be incurred without the prior express written approval of the Board.
Mujica also explained that after the board approves any funding request, it will consider “The amount, terms, conditions, intended use of funds, purpose of the transaction, impact on applicable fiscal plans and budgets, possible alternative transactions, and any other relevant factors.”
This happened after Balanced Fund ended at the end of the previous financial yearand judicially confirmed the repeal of Law No. 29 of 2019, retaining the obligation to pay retirees’ pensions and employee health plans. It eliminates municipalities’ obligations to reimburse retiree pension costs to public revenue and relieves them of paying for employee health plans.
The regulation has been in effect for nearly a year, but the committee requested legal action to declare it invalid because it is not in line with the government’s fiscal plan and the Puerto Rico Economic Stabilization, Management and Oversight Act.
Boston’s First Circuit Court of Appeals dismisses case challenging repeal of Municipal Administrative Burden Reduction Act, affirming federal district judge’s ruling Laura Taylor Swain.
The fiscal entity estimates that municipalities retained $197.3 million under the law but must return it.
Mayors decried that promised funds for municipalities have not yet arrived
On Tuesday, after leaving a meeting of the Fiscal Oversight Committee (JSF), the president of the Puerto Rico Association of Mayors, Luis Javier Hernández Ortiz, expressed concerns about the distribution of funds allocated to municipalities following the approval of the government budget for the 2024-2025 fiscal year.
Hernandez Ortiz said that although various funds, such as the Basic Services Fund and the Fund for Hiring Caregivers, were included in the budget, municipalities have not yet received any financial allocations.
“All the lines allocated to the municipalities are conditional on the allocation of funds by the board. To date we have not received a penny for any of the projects allocated (…) and we are worried about the timing because the municipalities have prepared our budget based on some resources,” said Mayor Villalba.
“Let the country know that we have not received a single cent. If they do not act in concert, months may pass and we will not receive it,” he reiterated.
For her part, Loíza Mayor Julia Nazario Fuentes explained that “the budget is on paper,” but the allocation of funds has not yet begun.
Questions and dissatisfaction with exclusive budget allocations
The president of the Association of Mayors took the opportunity to point out the “dubious allocation” in the government budget, which includes only four municipalities currently governed by the New Progressive Party (PNP): Camuy, Ciales, Corozal and Patilas.
“There is one allocation that worries us as only four municipalities received funds for a particular project, which was supposedly negotiated by some senators,” the first municipal official added.
He added: “In my entire time as president of the association, this is the first time when budget issues have been discussed that resources have been allocated exclusively to four towns and 74 towns have been left out.”
Several projects are detailed in the “Federal Municipal Match” section of the government’s certified budget for fiscal year 2024-2025.
These include $1 million for the rehabilitation of the Daniel “Cobra” Jiménez Center in Camuy; $800,000 for the Raúl Tinajón Feliciano Stadium in Ciales; $800,000 for the Angelita Linda Municipal Stadium in Patillas; and $1.2 million for the construction of a pedestrian bridge in Corozal; all subject to approval by the Central Office of Recovery, Reconstruction and Rehabilitation (COR3).
Additionally, the budget allocates $2 million to support canal cleaning and dredging of the Inabón River in Ponce.
“They (the board) did not give us an answer that comforted us or satisfied us. So we agreed that there would be a proportional balance between the projects. If these cities received the project funds, then the other cities would also be entitled to receive them,” Hernandez Ortiz stipulated.
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