The Board says the legislation would cause a revenue shortfall
The Financial Oversight and Management Board (FOMB) is urging Gov. Jenniffer González Colón not to sign into law House Bill 272, which would expand Puerto Rico’s back‑to‑school tax‑free holidays from two days to seven in both January and July.
In a letter dated July 13, the FOMB said the measure violates the certified Fiscal Plan and would create an unfunded revenue shortfall for the government and municipalities. Its review estimates the expanded holiday would reduce General Fund and municipal revenues by about $3.4 million annually and roughly $16.7 million over the next five fiscal years—without identifying recurring savings or new revenue sources to offset the loss.
HB 272, approved by the Legislature on June 22, would amend the Puerto Rico Internal Revenue Code to expand the tax holiday for school supplies, including notebooks, pencils, erasers, and school uniforms. The Board argues that any tax policy change must be revenue‑neutral or otherwise fiscally responsible under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) and the Fiscal Plan, which require that any tax reduction be accompanied by offsetting measures.
The Board also warned that the bill’s timing is problematic. The government and Legislature recently certified the Fiscal Year 2027 budget, and HB 272 was not incorporated into those calculations. Enacting the measure now, the Board said, would create an unfunded expenditure that jeopardizes Puerto Rico’s obligation to maintain a balanced, certified budget.
The letter further notes that Puerto Rico’s fiscal capacity remains constrained despite recent one‑time relief measures, including Joint Resolution 6‑2026, which allocated $554 million for economic assistance to roughly one million households. The Board said the non‑recurring nature of that aid underscores the risks of adopting additional recurring revenue reductions such as those contemplated in HB 272.
Beyond the budget impact, the FOMB cautioned that implementing the bill would likely require a reprogramming of funds. Because the Legislature cannot adopt a reprogramming without Oversight Board certification—and no such approval has been requested—the Board said enactment of HB 272 would violate federal law.
The FOMB urged the governor to work with lawmakers to identify recurring offsets before enacting the measure and asked for confirmation that the Executive Branch would not implement the law until the Board determines it complies with PROMESA. It also reserved the right to take action to prevent implementation if necessary.
