Puerto Rico’s fiscal year 2021 general fund net revenues exceeded Oversight Board projections, made early in the COVID-19 pandemic, by 33%.
In the fiscal plan approved in May 2020, the board projected revenues of $9.28 billion, but annual revenues totaled $12.39 billion, according to an email from the board on Monday.
The underestimate, a board spokesman said, resulted from the size federal stimulus to Puerto Rico and to the U.S. economic recovery. “No one in May 2020 thought the economy would rebound so fast.”
The projections were revised in early July 2020 to $10.2 billion, and then to $11.89 billion early this calendar year, the spokesman said, although no public announcement of the last revision was made.
The actual revenue total was 4.2% higher than the last projection.
The Puerto Rico Department of Treasury announced revenues were $11.68 billion, exceeding its projection of $11.08 billion by 5.5%.
“The Puerto Rico Treasury Department (Hacienda) reported only a portion of certified fiscal plan general fund revenues for fiscal year 2021 on a cash basis rather than in accordance with modified accrual accounting standards,” the board said in a statement to The Bond Buyer. “The Hacienda report can therefore not be compared to the projections in the certified fiscal plan for Puerto Rico.”
The board has been urging the Treasury to switch to modified accrual accounting rather than cash accounting for years without success.
According to the board, “The main difference between Hacienda and certified fiscal plan are:
- The cash revenue Hacienda reported includes fiscal year 2020 deferred tax income of about $480 million that under modified accrual accounting standards belongs in fiscal year 2020 financial results ....
- Further, Hacienda’s report does not include $1.19 billion of revenues that prior to Puerto Rico Oversight Management and Economic Stability Act the commonwealth appropriated to certain instrumentalities, including the tax on a barrel of oil known as CRUDITA and certain revenue of the Highway and Transportation Authority. Those revenue streams are included in the certified fiscal plan as general fund revenues.”
CreditSights Senior Municipals Analyst John Ceffalio said, “It is encouraging to see Puerto Rico’s strong FY2021 revenues. This largely reflects an economic boost from federal aid. First, from federal COVID-related stimulus grants to individuals, and second, the massive federal reconstruction funds appropriated after Hurricane Maria, which are now being spent.
“Bondholders shouldn’t confuse this growth with island-generated, sustainable, long-term economic growth,” he said.
According to Puerto Rico Treasury figures, the categories of individual income tax, sales and use tax, and foreign excise tax, exceeded projections the most, by $101.5 million, $125.3 million, and $123.4 million, respectively.
The Treasury said net revenues for June were $880.9 million, or 55.6% more than its projection for the month.
Treasury Secretary Francisco Parés Alicea said the individual income tax of $195.3 million in June exceeded the board’s projection of $68.3 million, adding, “the collections from corporate income tax totaled $361.5 million, exceeding by $268.8 million those collected in June of last year, which totaled $92.7 million. We also exceeded the projection for the month by about $28.4 million.”
In other Puerto Rico fiscal news, the Economic Development Bank for Puerto Rico said Friday the island’s Economic Activity Index was down 0.5% in June from May, but up 8% from June 2020.
