Puerto Rico towns show fiscal strength, ABRE finds
Puerto Rico’s municipalities are showing their best financial performance in more than a decade, maintaining positive asset balances and reducing dependence on central government funding, according to the 2023 Municipal Fiscal Health Index published by ABRE Puerto Rico, a nonprofit research organization.
The 11th edition of the index, which evaluates 72 municipalities using 13 indicators drawn from audited financial statements, found steady gains in fiscal discipline, income growth and local autonomy.
“Since this analysis began, Puerto Rico’s municipalities have reached their best overall fiscal health to date,” said ABRE Executive Director Ángel J. Sierra-Alemán.
The findings for fiscal year 2023 show a marked improvement across several categories. For the first time, fewer than half of municipalities reported general fund deficits or excess expenses — only 39% posted a shortfall — compared with more than half in prior years. Only 1% reported a decline in net assets, down sharply from 22% in 2022 and 32% in 2021.
The report also noted that 17% of municipalities ended 2023 with a negative general fund balance, 6% allocated more than 15% of their revenues to debt payments, and only 7% received more than 40% of their income from the central government — a sign of growing fiscal self-sufficiency.
ABRE attributed the improvement to two main factors: tighter fiscal management and federal funding, particularly from the Federal Emergency Management Agency, which has helped stabilize municipal finances.
“Municipalities have demonstrated greater fiscal discipline, driven by reduced state funding and limited debt capacity,” Sierra-Alemán said. “This has forced local governments to manage their resources more carefully and responsibly.”
Since last year, ABRE has classified municipalities using descriptive categories rather than letter grades. Each is now ranked as Solid (A), Healthy (B), Stable (C), Vulnerable (D) or In Crisis (F) — a change meant to encourage collaboration.
“We want the results to be viewed as a tool for action, not a final judgment,” Sierra-Alemán said. “By using descriptive terms, we aim to foster deeper discussions and help municipalities identify areas where improvement is possible.”
The top-performing municipalities for 2023 were Aibonito, Culebra, Utuado, Comerío, Vega Alta, Barceloneta and Aguada, all earning Solid (A) ratings. The lowest-ranked were Toa Baja, Sabana Grande, Ciales, Gurabo and Maunabo, categorized as In Crisis (F).
Overall, 15 municipalities — or 21% of those evaluated — improved their fiscal standing. Aguadilla, Guayanilla and San Germán advanced from In Crisis (F) to Stable (C), while Utuado and Aibonito rose to Solid (A). Others showing gains included Barceloneta, Salinas, Comerío, Ceiba, Aguada, Las Marías, Florida, Jayuya, Vieques and Yabucoa.
Thirty-four municipalities, or 47%, maintained their classification, and 23 (32%) saw downgrades, though some were slight. Orocovis, San Sebastián and Lares, for instance, moved from Solid (A) to Healthy (B), a change ABRE said reflected normal year-to-year variation rather than financial distress.
Six municipalities — Camuy, Guánica, Loíza, Morovis, Santa Isabel and Villalba — were excluded from the analysis because they had not yet submitted their 2023 financial statements.
ABRE’s Municipal Fiscal Health Index, published annually since 2015, is intended to promote transparency and accountability in public finance. The organization’s website offers open-access data and interactive tools allowing residents to track municipal performance dating back to 2010.
