Puerto Rico Treasury: Revenue increased in 1st quarter of fiscal year ’24
In his update on Puerto Rico’s finances, Treasury Secretary Francisco Parés-Alicea, who is also the government’s chief financial officer, said general fund revenue for July amounted to $810.8 million, or 17.4%, higher than the $690.4 million projected by the island’s federally established fiscal board.
“The revenues for the month of July exceed the projection set by the Financial Oversight and Management Board,” said Parés-Alicea. “In addition, the total revenue figure for the month of July 2023 surpasses what was collected in July of the previous year by $112.9 million, or 16.2%. These results are positive indicators as we begin fiscal year 2024.”
He noted that preliminary numbers for August and September, when analyzed, show that revenues for the first quarter of this fiscal year total $2.69 billion, exceeding the previous fiscal year’s revenues for the same period by $316.5 million, or 13.3%. Additionally, the revenue level achieved in the quarter surpassed the oversight board’s estimate by $441.7 million, or 19.7%.
“Clearly, revenues continue to outpace expenditures, and we anticipate that the government’s finances will remain stable with healthy coffers to meet government obligations,” he added. “We continue to update our finances, developing a responsible, transparent and effective government in managing public funds.”
In the fiscal plan presented in April, the board certified net revenues to the general fund for fiscal year 2024 at $11.62 billion, a figure comparable to revenue components considered in recent historical periods. In fiscal year 2023, revenue totaled $12.6 billion, with board projections estimating a revenue decrease of $976.2 million, or 7.7%, for the current fiscal year. The fiscal entity projects an average negative growth of -0.4% for fiscal years 2025 to 2028.
In compliance with Act 53-2021, or the Puerto Rico Bankruptcy Ending Act, starting in fiscal year 2024, certain revenues that were previously accounted for in other special funds will be transferred to the general fund. These include: revenues from excise taxes on petroleum-derived “crudita” products, vehicle license fees and deposits corresponding to the redemption fund. The FOMB’s projection for these new items for fiscal year 2024 is $730.6 million.
In compliance with Act 53 of 2021, known as the Law to End the Bankruptcy of Puerto Rico, starting in fiscal year 2024, revenue previously accounted for in special funds will now be transferred to the general fund, including revenue from excise taxes on petroleum-derived “crudita” products, vehicle license fees and deposits corresponding to the redemption fund. The board’s projection for these new items for fiscal year 2024 is $730.6 million.
After accounting for the changes in revenue under Act 53-2021, total projected revenue to the general fund amounted to $12.35 billion. When considering the additional $730.6 million in revenue transferred to the general fund this year, the final projection of about $12.35 billion represents a 2% reduction, or $246 million less, compared with the revenue in fiscal year 2023, which was nearly $12.6 billion.
The board expects lower performance in main tax categories than the previous fiscal year: individuals ($280 million less, or -10%), motor vehicle excise taxes ($159 million less, or -24%), Sales and Use Tax ($87 million less, or -3%), and corporations ($47 million less, or -2%), which corresponds to the “other corporations” not related to the income received by entities under the new regime of Act 52 of 2022 for foreign entities, previously under Act 154 of 2010.
However, revenue components projected by the board to perform better than in fiscal year 2023 include Act 52 corporations ($330 million more, or 98%), Act 52 retained by nonresidents ($262 million more, or 133%), and excise taxes on rum shipments ($39 million more, or 23% more).
The growth related to Act 52 is primarily because the law was implemented in February of fiscal year 2023, so revenue only covers five months. In conclusion, the board estimates a reduction of a little more than $1.24 billion compared to the fiscal year 2023 base and an increase of $655 million, resulting in a net negative balance between periods of $246 million.