Puerto Rico FY '22 revenues 24.5% higher than original projection

As collections continue to improve, Puerto Rico's fiscal 2022 general fund revenues came in 24.5% higher than the Puerto Rico Oversight Board's original projections.

The Puerto Rico Department of the Treasury said net revenues were $12.801 billion in the fiscal year, which ended June 30. In April 2021 the board projected those revenues would be $10.207 billion and revised the estimate to $11.328 billion in January, as "improved local revenue collections as a result of COVID-19 related income support programs led to higher-than-expected economic growth."
Revenues for the fiscal year came in 13% above the revised January projection.

The collection was also 14.4% above the $11.189 billion net revenue total for fiscal 2021.

General fund revenues were around $9.057 billion in fiscal years 2015 and 2016, before Hurricane Maria struck the island. Adjusted for inflation that would be about $11.32 billion in today's dollars. So last year's adjusted total was 13% higher.

After adjusting for inflation, fiscal 2022's total was a 6.7% increase from fiscal 2021.

June collections were up 14.8% from the projection made in January, according to the Department of the Treasury. However, it was down 2.9% compared to June 2021.

In explaining the decline compared to the previous year, Treasury Secretary Francisco Parés Alicea noted that collections on foreign corporations through the Act 154 excise tax were down by $81.8 million. He also said the island's sales and use tax collections were up only $1.2 million over those of June 2021 because consumers were responding to rising prices.

"The revenue projections in the certified fiscal plan are based on the most current economic data available at the time when the plan is updated in close cooperation with the Government of Puerto Rico," said board spokesman Matthias Rieker. "The outperformance of tax revenue in the fiscal year that ended on June 30, 2022, reflect broad economic trends after the end of the COVID-19 pandemic, including an increase in personal income tax filers and rising sales tax revenue because of changes in consumer behavior following the ease of pandemic restrictions and from higher inflation. The expanded application of sale taxes to an increasing number of online sellers was another driver of rising sale tax revenue."

The revenue categories that had the biggest haul in fiscal 2022 were individual income ($2.806 billion), sales and use ($2.686 billion), corporate income ($2.608 billion), Act 154 ($1.578 billion), and the other category ($1.324 billion).

The categories that most exceeded the board's January 2022 projections for the fiscal year were corporate income ($674 million) and individual income ($661 million).

Government revenues affect how Puerto Rico bonds trade in the secondary market. They also affect the ongoing Puerto Rico Electric Power Authority bonds negotiations by indicating the strength of the overall economy.