Fiscal Oversight Board Claims Control Over $20 Million the Legislature Allocated to Municipalities

The Financial Oversight and Management Board (FOMB) sent a letter to legislative leaders demanding full control over the distribution of $20 million allocated to municipal projects in the revised fiscal year 2026 budget, a move that reignites the tension between the elected government and the unelected federal body overseeing Puerto Rico's finances ¹.

FOMB Executive Director Robert Mujica addressed the communication to Senate President Thomas Rivera Schatz and House Speaker Carlos "Johnny" Méndez, reminding them that the allocation for permanent municipal improvements is subject to the agency's approval under the PROMESA Act ¹.

The numbers

The $20 million is included in Section 15 of the revised fiscal year 2025-2026 budget to fund projects related to economic development, critical infrastructure, health, and public safety across municipalities ¹².

The distribution is split in two halves: $10 million designated by the Senate and $10 million by the House. From the Senate's portion, an initial list was submitted on July 7 that includes ²:

• 17 municipalities will receive $500,000 each: Aguas Buenas, Aibonito, Cabo Rojo, Camuy, Canóvanas, Cidra, Corozal, Florida, Lajas, Las Marías, Las Piedras, Peñuelas, San Germán, Toa Baja, Trujillo Alto, Vega Alta, and Vieques.
• Guayanilla would receive $1 million, Patillas $300,000, and Naranjito $200,000.

A detail that did not go unnoticed: of the 20 municipalities on the Senate list, 19 have mayors from the New Progressive Party (PNP). Only Trujillo Alto has a Popular Democratic Party (PPD) mayor ².

The Board's conditions

The FOMB established strict requirements before authorizing any disbursement ¹:

1. Each project must include the municipality name, a work description, the estimated cost, and all supporting documentation.
2. Priority must be given to 36 municipalities that received no funds in previous fiscal year 2025 distributions or prior permanent improvement allocations.
3. The Legislature has until August 31, 2026 to submit the complete project list.

Although the budget language provides that requests will be presented by the Legislative Assembly, it also stipulates that disbursement is "subject to the approval of the Oversight Board" ¹.

The broader context

This episode is not isolated. In May, the Federation of Mayors, led by Gabriel Hernández Rodríguez, mayor of Camuy, requested $175.5 million for fiscal year 2026-2027 -- nearly double the $89 million municipalities currently receive ³. The mayors argued that towns "cannot continue absorbing unfunded mandates, revenue reductions, and emergency costs without corresponding budgetary support" ³.

Among the most urgent needs: Municipal Police salaries averaging just $1,257 per month (mayors want to raise them to $2,500), $25 million in matching funds for post-hurricane reconstruction, and $6 million to complete all 78 land-use plans before the 2029 deadline ³.

What this means for you

If you live in one of Puerto Rico's 78 municipalities -- and we all do -- this bureaucratic fight between San Juan and the Board directly affects the services you receive. The $20 million may seem modest compared to a general budget exceeding $13 billion, but for a small town, $500,000 can mean the difference between repairing a deteriorated bridge or waiting another year.

The Board's requirement to approve each project also means that proposals from your mayor or legislator will pass through an additional filter not controlled by elected officials. Decisions about what gets built in your community are ultimately made by people no one in Puerto Rico voted for.

How to act / Checklist

1. Check if your municipality is on the list. Verify whether your town appears among the 20 receiving Senate-designated funds or is one of the 36 the Board wants to prioritize in the next round.
2. Contact your House representative. The House's $10 million list has not been submitted yet. Now is the time to reach out to your representative and request that community projects be included.
3. Attend municipal public hearings. Many mayors hold hearings to collect resident proposals for infrastructure projects. Call your municipal hall to ask when the next one is scheduled.
4. Watch the August 31 deadline. That is the cutoff for the Legislature to submit the complete list to the Board. If your municipality does not appear before that date, it is left out of this round of funding.

What's next

The House of Representatives has not yet submitted its $10 million list, leaving half the funds in limbo. After August 31, the Board will evaluate whether the proposed projects meet its criteria before authorizing disbursements. Meanwhile, the Federation of Mayors continues pushing for a significantly larger municipal allocation in next fiscal year's budget, promising another round of tension with the FOMB.

At its core, this dispute reflects a question Puerto Rico has been asking for decades: who really governs the island -- especially today, July 25, on the 74th anniversary of the Commonwealth's founding.

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Sources

¹ Metro Puerto Rico, "Junta Fiscal reclama control sobre asignación legislativa de $20 millones para municipios," July 20, 2026. ² El Vocero, "Municipios recibirán $20 millones para obras de infraestructura," July 2026. ³ NotiCel, "Alcaldes reclaman $175.5 millones a la Junta Fiscal para servicios municipales," May 23, 2026.