The executive director of the Financial Oversight and Management Board (FOMB), Robert F. Mujica, confirmed Wednesday that the federal agency is in the “last stage” of talks with the government on the proposed tax incentive for taxpayers.

Mujica said he expects to announce his decision on the one-time relief check by the end of this week, and made it clear that the discussion is not about whether the relief is meritorious, but about its fiscal sustainability.

The analysis, according to the executive director of the agency in charge of public finances, is part of a broader assessment of the government’s ability to meet its outstanding obligations and, at the same time, strengthen reserves.

“We will evaluate it in terms of whether we have a rainy day fund (a rainy day fund), whether it is funded, and what its funding level should be, which is basically a budget stabilization fund. Puerto Rico has one, but it has not been funded since 2008. We don’t have a capital projects fund. We should set aside a reserve fund for disaster emergencies. And, as we do the review, the question is whether that compromises the ability to do those things. That’s the conversation we’re having," Mujica said.

The statements were made after the fiftieth public meeting of the Fiscal Board.

The FOMB granted the Puerto Rico Fiscal Agency and Financial Advisory Authority (Aafaf) until February 27 to certify that the measure, which Governor Jenniffer González Colón signed last February 3, does not violate the fiscal plan.

The tax relief check is a remedy resorted to by the González Colón administration, while the amendments to the Internal Revenue Code, which were rejected by the FOMB, continue to be discussed in the Legislative Assembly.

Unlike tax credits approved in previous years, Mujica indicated that the current scenario is different, given that the projection is that there will be a decrease in collections vis-à-vis the performance of past years, when the excess was refunded to taxpayers.

According to the executive, the parties have also discussed what spending commitments could be sacrificed to make the incentive viable, but warned that the FOMB does not favor approving tax relief without simultaneously addressing the reserves.

“That’s why the (Fiscal) Board has always maintained that these types of decisions should be made as part of the budget process. Because when you are preparing the budget, you are considering all the revenues, you are evaluating all the spending priorities and you make the decisions within that context,” Mujica said.

In a letter from the FOMB circulated last Saturday, the agency estimated that the measure, which is expected to benefit between 600,000 and 700,000 taxpayers during the current fiscal year alone, would leave a deficit of close to $370 million.

Mujica framed the discussion of the incentive within a broader debate on structural tax reform, since, in his opinion, the proposed credit addresses an immediate urgency, but does not correct the underlying problems.

The discussion on the tax incentive is taking place at the same time that the tax return filing cycle is advancing. As of February 24, the Treasury Department had disbursed approximately $825.3 million in refunds corresponding to 364,587 tax returns filed.

Since the tax cycle began on February 9, a total of 467,016 planillas for individual income tax have been filed, Treasury Secretary Angel Pantoja Rodriguez announced on Tuesday.

During the public meeting, the budget issue for fiscal year 2027 was the focus of the discussion.

Elsa Guardiola, director of budget management at the FOMB, indicated that a budget reform should be implemented, which would include legislation to consolidate a permanent institutional model.

“The Fiscal Board and the government are together in the transition from a crisis budget to a more institutional and strategic budgeting model, founded on long-term planning, clear fiscal controls and transparent priorities,” Guardiola said.

In his presentation, Guardiola mentioned that the budget reform would establish a legal framework for financial administration subsequent to the PROMESA Act.

However, Mujica explained that the budget reform legislation has not yet been filed, as it is in the phase of internal work and coordination with the Executive before being formally presented.

“As for the budget reform legislation, this is comprehensive. We are working on it internally,” Mujica said in response to questions from the press. “We also want to work with the government on this.”

“These would be the institutional changes that would last after the (FOMB) board, so this is important,” he continued.

Mujica mentioned that a symposium will be held next April to discuss the budget issue, including how to implement a budget reform.

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This content was translated from Spanish to English using artificial intelligence and was reviewed by an editor before being published.