Puerto Rico’s territorial division of 78 municipalities is untenable, which is why city halls have been forced to embark on plans to reorganize and streamline their administrative structures to face the intensification of the fiscal crisis and a declining population.
We acknowledge that city halls are taking some first steps to austerity to face the drop in funds from the central and federal governments. These measures prove that, when they put their mind to it, municipalities are capable of finding more economic ways to deliver services to citizens. The willingness to adjust the work week, reduce donations, eliminate celebrations, begin charging for services and outsource activities are alternatives that some municipal executives have put on the table to survive the painful fiscal hardship.
Despite such initiatives, the warning by the president of the Federation of Municipalities, Carlos Molina is worth lending an ear to: municipalities, seen as a whole, will barely manage to substitute 60 percent of the $350 million in subsidies they will no longer receive from the central Government over a two year period, starting July 1.
When taken to the local level, the situation turns worse for 40 municipal governments that, according to the mayor of Ciales, Luis Maldonado Rodríguez, have budgets that depend by up to 98 percent from the State subsidy. Add to that the elimination of federal funds that come from initiatives such as the Community Development Block Grant (CDBG), announced by the administration of Donald Trump, and the cut of.5% in the VUT by means of special laws.
What’s left is an immense vacuum of funds and 78 local governments to feed. As administrative divisions, the smallest and closest to the people of a State, many of these municipalities are no longer viable. They are in debt, have their finances in the red and, on top of that, they are quickly becoming uninhabited, so that their perspectives for recovery look quite dim.
In Lares, Guánica, Peñuelas, Fajardo, Mayagüez, Las Marías, Yauco, Ponce, Ceiba, and San Juan, for instance, the population has fallen between 12 and 13 percent since 2010, according to data from the United States Census Bureau. Said loss, in turn, reduces the tax base of both municipalities and the Country’s, which has been in a recession for over decade.
As recent as 2015, there were 38 municipalities where expenses exceeded their income. There are 33 whose budgets depend on the central government by up to 40 percent, according to the Center for Integrity in Public Policy responsible for the platform ABRE Puerto Rico.
The data clearly points to the structural insolvency of many municipalities and their impossibility to maintain themselves. It’s a situation that has dragged on for years and one which now becomes fully visible, given the bankruptcy of a central Government that no longer can afford to maintain them.
That is why the fiscal measures initiated by some mayors, while laudable and well-intended, will not suffice, if structural changes are not made that result in rational economies that adjust to real possibilities in terms of revenues and expenses of municipalities.
The review must also consider the grouping of municipal functions, the adjustment and elimination on non-essential contracts and, above all, administrative rigor.
The regionalization of services has proven to be a good alternative, with examples such as the permits’ issuance office shared by Barranquitas, Comerío, and Aibonito, together with its annual cost of $200,000.
But, faced with the magnitude of the problems to raise funds and the unrelenting demand for services, the Legislative Assembly and the very municipal executives have to ask themselves, with honesty and love for country, if the organization into 78 municipalities is appropriate to represent the interests of its citizens.
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