Puerto Rico General Fund revenues off by 10%

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Puerto Rico General Fund revenues were 10% below projections through April 24, as a result of the COVID-19 epidemic and the governor’s lockdown on the island.

Through April 24 the Puerto Rico General Fund had $7.62 billion in revenue, compared to the $8.47 billion anticipated in Puerto Rico’s liquidity plan. The Puerto Rico Treasury reported the figures in a posting to the Electronic Municipal Marketplace Access website on Thursday.

Castillo San Felipe del Morro in San Juan, Puerto Rico. The commonwealth reported weak revenue figures in the wake of COVID-19.

On Sunday the Puerto Rico Fiscal Agency and Financial Advisory Authority submitted a proposed fiscal plan to the Puerto Rico Oversight Board that discussed the impact of the virus on the government’s primary bank account, the Treasury Single Account.

It said the account “balance has declined from $8.8 billion (as of March 20, 2020) to $8.1 billion (as of April 17, 2020) mostly as a result of the COVID-19 pandemic and the governor’s shelter-in-place order that has been in effect since March 15, 2020 and will continue until May 25, 2020 (subject to potential extensions and modifications).”

By comparison, the current year General Fund budget is $9.05 billion.

Thursday’s release reported the account balance improved to $8.3 billion as of April 24. Puerto Rico’s General Fund collections were $850 million below plan and the central government’s overall own fund collections (excluding federal receipts) were $1.04 billion below plan.

Thursday’s Treasury release said that the lag in state collection compared to the plan “is largely due to operational delays, as a result of the pandemic, in sweeping cash from the collection account into the Treasury Single Account. Additional underperformance is driven by reduced economic activity as a result of the pandemic and imposed lockdown.”

Thursday’s release said the biggest shortfalls in General Fund revenues came from individual income tax revenues ($489 million or 23% below projections), the Act 154 excise tax on non-Puerto Rico corporate subsidiaries ($440 million or 30% below projections), and non-resident withholdings ($222 million or 45% below projections).

While non-resident withholding has been lagging significantly behind projections since at least October, Act 154 and individual tax receipts were near projection until February or March.

Corporate income tax revenues were ahead of expectations but started to decline rapidly in mid-March, when the governor instituted a virus-related lockdown. These were 1% behind projection for the fiscal year as of April 24.

According to Thursday’s release, regarding non-General Fund collections “prior to the COVID-19 outbreak, total revenues were generally consistent with forecast. ... However, since the outbreak and government response, total revenues have fallen below forecast.” These are collections for the Highways and Transportation Authority and other central government entities outside the General Fund.

Puerto Rico’s submitted fiscal plan said, beyond the General Fund, “other government entities such as the Puerto Rico Ports Authority, the Tourism Company and the Puerto Rico Electric Power Authority, to name a few, are already suffering from reduced revenues due to the direct impact of the virus.”

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