The city government of Toa Baja, Puerto Rico, shut down Monday due to lack of money, a path a municipal expert said other Puerto Rico municipalities are likely to follow in the next 12 months.
Toa Baja is a city of about 80,000 in the western suburbs of San Juan. The Associated Press and El Nuevo Día reported the closure of its government.
Toa Baja has $33 million in outstanding debt, according to abrepr.org.
Since 2010 Toa Baja's financial situation has consistently been ranked in the bottom 10 cities out of 78, said Arnaldo Cruz, co-founder and board member at the Center for Integrity and Public Policy. The center has been rating and ranking Puerto Rico cities' finances since then.
Other Puerto Rico municipalities also may shut down in the coming year amid the island's debt crisis, Cruz said. One that may experience a financial crisis is Ponce, he said. Ponce, located on the south central coast, is Puerto Rico's second largest city with 164,000.
According to press accounts, Toa Baja mayor Jorge Ortiz said he was forced to close the government by the actions of the Internal Revenue Service and the Government Development Bank for Puerto Rico. The IRS froze $1.5 million that the city owed to the IRS. The GDB has declined to release over $1 million in city deposits at the bank.
The GDB is undergoing its own financial crisis and has placed restrictions on municipal withdrawals since the spring.
The closure of the government has led some to question the wisdom of its former mayor being the chief electoral commissioner for one of Puerto Rico's two major parties.
Anibal Vega Borges was mayor of Toa Baja from 2005 to June 30. Vega Borges resigned his position in the aftermath of Puerto Rico's primary, where he lost to his challenger in the New Progressive Party.
Since then New Progressive Party gubernatorial candidate Ricardo Rossell- hired Vega Borges to be his party's electoral commissioner. Rossell- is heavily favored to be elected as Puerto Rico's next governor on Tuesday.
Vega Borges "is speaking all over the media. He is a big shot," one San Juan-based observer said.
In Toa Baja the police showed up for work today, but don't know if they will be paid. Mayor Ortiz hasn't said when the government will reopen.
The central government gives more than $500 million a year in grants to the islands' municipalities, Cruz said. To promote better financial behavior the central government needs to condition these grants on this behavior, he said.
In another development affecting Puerto Rico municipalities, Gov. Alejandro García Padilla said Monday he was distributing some of the central government's permitting responsibilities to four municipal governments. He signed an agreement with them to take over permitting for their residents. He said the switch will lead to more efficient delivery of services.
