Legislative Review Process
The legislative review process of the Financial Oversight and Management Board for Puerto Rico is an important component of its mission to help Puerto Rico achieve and sustain fiscal responsibility.
PROMESA requires the Governor to submit each enacted law to the Oversight Board with a formal estimate of the impact, if any, that the law will have on expenditures and revenues, as well as a certification finding that the law is or is not significantly inconsistent with the applicable certified fiscal plan. PROMESA also allows the Legislature to seek a non-binding preliminary review from the Oversight Board regarding pending legislation to determine whether legislative bills are consistent with the applicable certified fiscal plan.
The Oversight Board’s review of legislation is pursuant of Section 204(a) of PROMESA. The Oversight Board also reviews rules, regulations, and executive orders pursuant to Section 204(b) of PROMESA. For the policy, click here.
Legislative Review: Acts
Section 204(a) of PROMESA requires the Governor of Puerto Rico to submit any new law to the Oversight Board for review within seven business days of the law’s enactment.
The Governor’s submission must include a formal estimate of the impact, if any, that the new law will have on expenditures and revenues. This estimate must be prepared by an appropriate entity of the Government of Puerto Rico with expertise in budgets and financial management.
The same government entity must also certify whether the law under review is or is not significantly inconsistent with the applicable certified fiscal plan. PROMESA Section 204(a)(2) outlines this process in detail.
Act 37 amends Act 107-2020, known as the “Municipal Code of Puerto Rico” to exempt housing properties operating under the U.S. Department of Agriculture Rural Development Program and Section 8 of the federal Housing and Community Development Act from paying real property taxes to the Municipal Revenue Collection Center (CRIM). Act 37 also exempts certain housing properties administered by the Puerto Rico Department of Housing from paying past-due real property taxes to CRIM.
The Government’s analysis in its PROMESA Section 204(a) submission found that Act 37 could result in revenue losses between $33.5 million and $35.7 million per year for fiscal years 2025–2028 and does not include any offsetting measures. Accordingly, the Oversight Board said that Act 37 violates the Commonwealth and CRIM Fiscal Plans, and PROMESA. The Oversight Board called on the Government not to implement Act 37 until the Oversight Board agrees it complies with PROMESA.
Act 141 amends Act 107-2020, also known as the “Municipal Code of Puerto Rico,” to raise the threshold of holding a public auction or competitive bid process for any construction or public improvement project from $200,000 to $500,000.
In a letter to the Puerto Rico Government dated January 21, 2025, the Oversight Board found that Act 141 directly contravenes procurement best practices and undermines market competition. As such, Act 141 impairs or defeats the purposes of PROMESA.
The Oversight Board said it understands the importance of facilitating the procurement of construction projects and public improvements, particularly during times of emergency, and is willing to discuss alternatives to amend the Act. Regardless, Act 141 cannot be implemented unless and until the Board agrees it complies with PROMESA.
Act 99 would transfer central government funds to financial cooperatives as a result of losses due to the default of Puerto Rico Government Bonds.
In a letter dated Aug. 23, 2024, to the Puerto Rico Government, the Oversight Board outlined its position on Act 99, agreeing with the Government’s assessment that Act 99 is inconsistent with the Puerto Rico and COSSEC Fiscal Plans. The Oversight Board also determined that Act 99 violates the Commonwealth Plan of Adjustment.
Lastly, the letter notified the Government that on August 16, 2024, the Oversight Board adopted a resolution determining that Act 99 impairs or defeats PROMESA’s purposes.
Following its April 10, 2024, letter, the Oversight Board reaffirmed its concerns to the Government of Puerto Rico that Act 10 reflects a departure from the policy that the Puerto Rico Energy Bureau (PREB) be overseen by an independent regulator. Act 10 prohibits PREB from conducting a net metering and energy distribution study until January 2030, and further prohibits PREB from making any changes to the current net metering program until after it completes this delayed study. The Oversight Board again urged the Government to repeal or amend Act 10 to restore PREB’s full statutory oversight over Puerto Rico’s energy system.
Act 10 prevents the Puerto Rico Energy Bureau (PREB) from making any changes to the Commonwealth’s current net metering and energy distribution policy until at least 2031. In its April 10, 2024, letter, the Oversight Board noted that Act 10 violates PROMESA and the Fiscal Plans for Puerto Rico and the Puerto Rico Electric Power Authority. As such, the Oversight Board urged the Government to take immediate action to repeal or amend Act 10.
Act 96 grants regular status to eligible transitory employees who provide services for a fixed term to certain governmental instrumentalities. The Oversight Board, on a non-precedential basis, said it will not prevent the implementation of the Act, considering the Government’s collaboration and commitment to the Civil Service Reform.
Other Acts
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Legislative Review: Bills
The Puerto Rico Legislature can also seek preliminary review from the Oversight Board regarding pending legislation and its consistency with the applicable certified fiscal plan, as outlined in PROMESA Section 204(a)(6).
During the review process, the Oversight Board determines whether the legislation, as proposed, is or is not consistent with the applicable certified fiscal plan. If it finds the proposed law is not consistent with the applicable certified fiscal plan, or determines the law would violate other provisions of PROMESA, the Oversight Board will explain its determination to the requesting legislator and, where appropriate, offer to collaborate with the legislator on reforming the measure to make it consistent with the certified fiscal plan.
Recognizing the review of pending legislation is preliminary, and bills may change prior to passage, PROMESA provides that preliminary review determinations are not binding and, if bills eventually are enacted into law, the Governor is still required to comply with the process for submitting newly enacted laws for review discussed above and in PROMESA Section 204(a)(1)-(5).
Senate Bill 130 seeks to amend Act No. 127 of June 27, 1958, known as the “Pensions for Disability or Death in the Line of Duty Act,” to expand death and disability benefits to eligible public employees to include disability or death resulting from a disease that is the source of a declared pandemic by the President of the United States. In addition, the bill proposes to extend the death and disability benefits under Act 127-1958 to certain categories of public employees and their beneficiaries.
In its May 12, 2025, letter, the Oversight Board noted that Senate Bill 130 violates the Commonwealth’s Plan of Adjustment, PROMESA and Puerto Rico’s Certified Fiscal Plan. The Oversight Board also expressed concerns that the bill was passed without sufficient analysis. The Oversight Board urged legislators not to approve Senate Bill 130 in any form that expands pension benefits, and refrain from sending such a measure to the Governor for enactment.
In its April 7, 2025, letter to the Governor and legislative leaders, the Oversight Board said it became aware that nine bills had been submitted by the administration that proposed to change current tax laws and are now currently under the Oversight Board’s review. The fiscal and budgetary impacts of these nine bills have not been fully evaluated, nor has any public analysis been made available.
However, the Oversight Board agrees with the Government that tax reform is necessary and is ready to work with the Government and Legislature on responsible reforms to simplify the Puerto Rico tax code, along with those bills that are not inconsistent with the Fiscal Plan and the budget process.
Senate Bill (SB) 132 would amend Act 107-2020, also known as the “Municipal Code of Puerto Rico,” to establish a base salary of $3,000 a month for municipal police officers.
In a letter dated March 18, 2025, to Senate Majority Leader Gregorio Matías Rosario, the Oversight Board concluded that SB 132 as currently drafted, could adversely affect municipal finances, as a recurring source of funds is not identified to cover its costs.
The Oversight Board also asked the Senate Majority Leader to submit a draft of SB 132 to the Legislative Assembly’s Budget Office (OPAL) for an assessment of its fiscal impact.
HJR 231 seeks to mandate the Puerto Rico Electric Power Authority (PREPA), LUMA Energy LLC, and Genera PR to provide credits to customers who claim their appliances or equipment were damaged by power outages or brownouts. However, the Legislative Assembly did not identify how PREPA would pay for this customer credit without an increase in electricity rates. It also mandates a credit program that would impair the Puerto Rico Energy Bureau’s oversight of PREPA. The Oversight Board determined that HJR 231 is inconsistent with the Fiscal Plans for Puerto Rico and the PREPA Fiscal Plan, and the urged the Legislative Assembly not to send the Bill to the Governor and the Governor not to sign the Bill into law.
The Oversight Board gave a preliminary review of recently enacted legislation with major fiscal impacts in Fiscal Year 2025, including Senate Bill 644 (on Commonwealth funds to cooperatives) and House Bill 2038 (on increasing pensions payments). The potential aggregate cost of these bills is up to $852 million for fiscal year 2025, and at least $6 billion over the next 20 years. Such costs could unbalance the Government’s budgets and compromise the Commonwealth’s fiscal stability. As such, the Oversight Board looks forward to discussing alternatives to address the fiscal impact of these bills and agreeing on permanent reforms to the budget process to ensure fiscal responsibility.
Other Bills
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