San Juan, PR – May 7, 2026– The Financial Oversight and Management Board for Puerto Rico today issued the following statement:
Today, Governor Jenniffer González Colón formally introduces legislation to establish permanent fiscal safeguards for Puerto Rico’s budget — a budget stabilization fund, a capital fund, and a fiveyear financial plan. These are measures the Oversight Board has long advanced and that the Government and the Oversight Board have worked together to develop over many months. The Oversight Board supports this legislation and welcomes the cooperation that led to these important decisions.
The Oversight Board agrees with the Governor that the people of Puerto Rico deserve tax relief. The $554 million tax rebate authorized under Joint Resolution 6-2026 as submitted under PROMESA Section 204 is funded from two identified, non-recurring sources: funds initially set aside to cover potential revenue shortfalls under Act 52-2022 and that were not needed because Act 52 revenues exceeded projections, and reductions in prior-year extensions for planned spending that will not be executed. The rebate does not affect the budget for the current fiscal year 2026.
No existing reserves are being spent to fund this relief — to the contrary, building reserves is precisely what today’s legislation accomplishes for the first time. The Oversight Board and the Government spent months working through how relief could be provided responsibly. The solution reached signals to taxpayers, rating agencies, and capital markets that Puerto Rico has the fiscal discipline to do both: deliver meaningful relief today and build the reserves that protect Puerto Ricans tomorrow.
Responsible government is not only about what Puerto Rico does today. It is about building the permanent fiscal institutions that protect Puerto Ricans from the painful budget adjustments required when revenues decline, when disasters strike, and when economic conditions worsen and the government has not prepared.
When the Oversight Board began its work — and when Hurricane Maria hit — the Puerto Rico Government had no reserves to protect its people. One-time taxpayer relief without permanent structural safeguards would signal that Puerto Rico has not institutionalized the changes necessary to prevent a return to the practices that drove its fiscal crisis. Funding government priorities and reserve-building are not in conflict: every well managed state does both, and if this legislation is enacted Puerto Rico will show that it can do both too — particularly important at a time when the economic outlook is uncertain and revenues are declining.
Last month, the Oversight Board and the National Association of State Budget Officers (NASBO) convened a symposium in San Juan that brought together budget directors from five U.S. states to discuss the tools and practices that sustain fiscal stability across administrations: honest revenue forecasting, reserve-building, strategic capital investment, and transparent multi-year planning. The legislation the Governor formally introduces today reflects exactly those principles. These are not novel requirements — it is what responsible governments do, and Puerto Rico is now following those principles too.
Governor González Colón introduces legislation to:
- Establish a new statutory budget stabilization fund as part of the budget for the upcoming fiscal year 2027 that starts on July 1, 2026. This fund replaces the existing unfunded budget stabilization fund that has not been capitalized since 2008. It is funded with a target of 13.5% of General Fund budgeted expenditures, the level recommended in the Fiscal Plan for Puerto Rico and benchmarked to U.S. state rainy-day fund standards. Capitalization begins immediately with an initial deposit of $729 million in FY2026, followed by annual contributions of 1.4% of General Fund expenditures until the 13.5% target is reached by June 30, 2032. This accelerated schedule reflects the years of reserve-building foregone since 2022 and is consistent with the liquidity available today.
- Establish a dedicated capital fund to finance infrastructure and other capital projects. For the first time, capital investment will be structurally separated from General Fund operating expenditures — a standard practice in U.S. states that Puerto Rico has lacked. The fund will receive 35% of Puerto Rico Trust Fund revenues annually, providing a sustainable, recurring local funding stream for capital projects that require non-federal funds. A formal multi-year capital improvement master plan and capital financing plan will be developed jointly by the Government and the Oversight Board. No capital project shall be approved without a corresponding identified funding source within the capital fund or another designated funding mechanism.
- Adopt and maintain a credible, transparent five-year financial plan, beginning this fiscal year and updated annually, that aligns recurring revenues with recurring expenditures. The plan will be publicly disclosed with full methodology and assumptions, formatted to enable yearover-year comparison and accountability across administrations. It will include both a base case and a stress scenario calibrated to current flat and declining revenue trends. Beginning in FY2028, the plan will provide detailed revenue, expenditure, and cash flow projections by source for each year of the five-year period. The five-year plan must be certified consistent with the Fiscal Plan for Puerto Rico required under PROMESA.
Puerto Rico’s fiscal progress — controlled spending, structural surplus requirements, successful debt restructurings, and stable budgets — represents hard-won progress that took years of difficult work to achieve. Distributing available resources without simultaneously building the statutory fiscal architecture to protect future generations would impair Puerto Rico’s path back to capital market access and undermine the fiscal credibility that Puerto Rico is working to restore. Today’s legislation moves decisively in the right direction.
The Legislative Assembly of Puerto Rico now has the opportunity to review, debate, and strengthen them through the legislative process. The Oversight Board welcomes that engagement. These measures are also the beginning, not the end, of a broader budget reform agenda. The Oversight Board has been engaged with the Legislature on complementary reforms to strengthen transparency, accountability, and the budget process more comprehensively, and we look forward to continuing that work together.
The Oversight Board’s role under PROMESA is to ensure that governance decisions are consistent with the path to fiscal responsibility and market access. The Governor and the Legislature rightly want the Oversight Board to terminate. The Oversight Board wants Puerto Rico to succeed. It is the same goal. Today’s legislation is an important step toward achieving it.