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Puerto Rico’s municipal fiscal health shows improvement

ABRE Puerto Rico’s eighth Municipal Fiscal Health Index reveals that 55% of Puerto Rico’s municipalities operated at a deficit in fiscal year 2021, a 5% decrease from the previous year, signaling an improvement in municipal finances across the island.

This index has been providing public access to a thorough analysis of the financial health of the island’s municipalities. Using 13 indicators from audited financial statements of the municipalities, the index includes details about the municipalities operating at a deficit, which raises concern about municipalities that did not submit their data, given the implications of not being able to gauge their financial management.

“Among the most notable findings of this eighth edition are that only 20% of the municipalities decreased their net assets, while in the previous publication 54% had decreased their financial assets. In addition, only 32% saw a decrease in their general fund, versus 46% who had decreased it according to the data from the last edition,” according to ABREPR. “What stands out most about the analysis of this edition is how the number of municipalities that depend on state funds to operate decreased, only 27%, the lowest number of municipalities since this index began eight years ago.”

However, the report also notes that four municipalities – Añasco, Corozal, Guánica and Morovis – did not submit their information and are not included in this edition, which the organization said deprives residents of these towns of the ability to assess their municipality’s financial state.

The index found Vega Alta, Culebra, Hatillo, Aibonito and San Sebastián as the municipalities with the best fiscal health. Vega Alta led the list for the first time since the index’s launch in 2015. Meanwhile, Maricao, Santa Isabel, Naranjito and Las Marías rank as the municipalities with the poorest fiscal health.

Significant improvements were seen in Carolina, Dorado and Aguada, while Comerio, Cabo Rojo, Luquillo and Moca experienced notable declines.

ABREPR also analyzed the grades of all municipalities over the last three editions of the index to identify those with the most consistent performance, both good and poor. Aibonito, Culebra, Fajardo and San Sebastián consistently scored well, while Gurabo, Patillas, Villalba and Las Marías consistently scored poorly.

The fiscal health index should be a tool for citizens to evaluate their municipality’s finances and their mayor’s performance, ABREPR said. 

“In the context of primaries and elections, it serves as an objective tool regarding a key function of municipal executives. Furthermore, it is a useful tool to drive important public discussions that should be had about the role of municipalities in this historical context,” the organization said.

ABREPR added that it hopes its index serves as a deterrent to poor financial management in municipalities.

Established as a nonprofit in 2013, ABRE Puerto Rico originated from a group of Puerto Ricans in the diaspora who wanted to contribute to the island’s public policy discussions through technology and data analysis.

The data from this edition of the index are available at www.abretumunicipio.org, where financial analyses and visualizations for the past 11 years can be found.

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