What is the budget?
It is a comprehensive and financial plan submitted to the governor aimed at achieving certain goals within a specific period of time, which includes an estimate of the resources required and the resources available to carry it out.
Why is the budget prepared?
The budget is prepared to distribute the available resources among the different agencies that make up the Commonwealth of Puerto Rico. This document facilitates the process of monitoring and controlling the economic resources allocated to agencies and their disbursements. In addition, the Office of Management and Budget prepares an annual budget document for the Governor of Puerto Rico to submit to the Legislature, since Article IV, Section 4 of the Constitution of Puerto Rico, assigns this responsibility to the Governor (a).
The Office of Management and Budget actively participates in this process because its organic law (Act No. 147 of June 18, 1980, as amended) assigns the OMB the functions of advisor to assist the Governor in the discharge of this function.
What agencies are included in the budget?
The budget includes recommendations for all agencies, departments, and public corporations of the Executive Branch. The Legislature, the Judiciary Branch, and the Office of the Comptroller are exempt from submitting budget requests, so they are assigned a budget for regular operating expenses equal to the one included in the current fiscal year budget . The Judicial Branch and the Office of the Comptroller are required to submit directly to the Legislature its own budget requests for regular operating expenses on or before November 30 of the year preceding the budget request. The Judicial Branch and the Office of the Comptroller shall, on this date, send to the OMB a copy of all the information submitted to the Legislature for the OMB to advise the Legislature with regard to the requests for resources for ordinary operating expenses of the two bodies.
What information does the budget contain?
The budget includes recommendations for all agencies, departments, and public corporations of the Executive Branch with the exception of the Center for Municipal Revenue Collection (CRIM), or the Teachers Retirement Board and the Retirement System Administration of the Commonwealth of Puerto Rico.
The Judicial Branch and the Legislative Assembly and attached agencies are exempt from submitting budget requests to the OMB. The Judicial Branch receives its budget under a formula provided by law, while the Office of the Comptroller submits budget requests directly to the Legislature.
What are the stages of the budget process and when do they occur?
The budget process includes three main phases:
Budget preparation starts approximately 10 months in advance of each fiscal year. The Office of Management and Budget prepares fiscal and programmatic general standards to guide agencies in preparing their budget requests. The budget process involves the participation of all agencies and departments of the Commonwealth of Puerto Rico, with the exception of those mentioned above.
Agencies submit their budget requests to the OMB in which they establish priority areas for each fiscal year. The OMB exercises its advisory role regarding the most efficient use of public resources; holds executive meetings with heads of agencies to discuss their requests; and prepares and discusses the budget recommendations with the Governor.
The process is completed with the Governor addressing the Legislature to provide information about the Budget and presenting to the Legislative Assembly the Budget Document at the beginning of the first regular session, as established in the Constitution of Puerto Rico.
Legislative approval of the budget
The Committee on Appropriations and Budget of the House of Representatives and the Committee on Finance of the Senate of Puerto Rico review in detail the budget submitted by the Governor to the Legislature.
The OMB appears at the request of both Committees to explain the budget in terms of the overall objectives and the tax base used for budgetary recommendations. The Treasury Department and the Government Development Bank also appear to explain the prognosis of General Fund revenues, to provide information on the lending margin, and to present the payment of the public debt, respectively. The heads of agencies and departments appear before the Legislature to explain their plan for the implementation of the programs the agencies will establish during the fiscal year for which they are requesting resources from the General Fund. The OMB staff also appears to explain the recommendations made for each agency included in the budget document.
The Legislature finally adopts the spending plan with suitable modifications they consider necessary by adopting the Joint Resolution of the General Fund. They also approve the laws of allocations for special programs and measures that authorize the issuance of bonds. This phase is completed with the Governor signing the laws for budget allocation.
When does the fiscal year start?
The fiscal year begins on July 1 of each year until June 30 of next year.
- Budget - Comprehensive Plan expressed in financial terms by which an operational program is carried out within a given period of time in order to meet the needs of its customers.
- Government Consolidated Budget - Set of responsibilities and resources of the Commonwealth of Puerto Rico that includes: all operational and capital improvements under the General Fund, Contributions of the Government of the United States, Public Improvement Fund, State Special Funds and the net budget of public corporations, including the contributions and compensation that are provided by the Central Government. By definition, the municipal budgets are excluded.
- Central Government Budget - General Fund allocations provided by the Joint Resolution of the General Budget for ordinary operating expenses, Special Appropriations General Fund operating expenses and capital improvements, the Public Improvement Fund, and State and Federal Special Funds for operating expenses and improvements, Revenues and Other Sources.
- Budget Public Corporations - Operating costs and services or obligations, investments in permanent improvements of public corporations under the Joint Resolution General Fund and Special Assignments of General Fund Revenues, their own revenues, their loans and Bond Issues, Contributions from the Government of the United States, and other resources.
- General Fund - is the fund to which the monies collected by the Department of the Treasury are entered, which then the Legislature allocates to cover the various service programs and public investments for each fiscal year. These resources originate from the imposition of taxes, primarily on property, income, estate, and gift, excise taxes on alcoholic beverages and items for use and consumption, such as cigarettes, petroleum products, motor vehicles and accessories, electrical effects or gas, and others. Also as sources of government revenue are contributions levied on motor vehicle licenses and other licenses; General Fund surplus; Fund transfers from Interest on Investments; rights, fines and forfeitures; income from the Lottery, customs duties and excise taxes on shipments.
- Public Improvements Fund - consists of proceeds from the sale of bonds authorized by the Legislature through laws to that effect. These resources are used to finance capital improvements programs and cannot be used to cover agency operating expenses.
- State Special Funds - Funds where enter certain resources are deposited for specific purposes in accordance with the legislation in force. They come from tax revenues, fees and licenses, fees for services, contributions and donations from private individuals and other specific entities and some government agencies with independent revenues. The expenditure from these state special funds do not require annual legislative action, because disbursements are authorized by legislation passed earlier, which remain in effect until the Legislature takes new action regarding these.
- Budgetary Fund - nourished annually by an amount not less than one (1.0) percent of total net revenues of the fiscal year. In addition, it is ordered that as of fiscal year 1999-2000, all revenues that do not constitute net revenues to the General Fund which are intended by law for a particular purpose enter the Budgetary Fund. The maximum balance of such Fund shall not exceed six (6) percent of the funds in the Joint Resolution Budget in the year that it was assigned. It is used to cover appropriations approved for any fiscal year when revenue available for the year is insufficient to cover them, to honor the payment of the public debt. It can also be used to address emergencies. This fund was created by Law No. 147 of June 18, 1980, amended by Law No. 89 of 18 August 1994 and Law No. 93 of August 20, 1997.
- Emergency Fund - Gathers resources to meet public needs caused by natural disasters such as hurricanes, earthquakes, floods, droughts, and others. It draws from annual allocations of an amount not less than (1.0) percent of total revenues of the previous fiscal year. The balance of this fund shall not exceed five (5) percent of the funds allocated for that year. This fund was created through Act 91 of June 21, 1966, amended by Law No. 89 of August 18, 1994 and Law No. 93 of August 20, 1997.
- Debt Service - Total disbursements directed at paying the public and management debt of of agencies. Public debt is the amount of money owed upon the issue of bonds and notes in general obligations where the credit and good faith of the Commonwealth of Puerto Rico have been bound, whose payments are paid from the General Fund and Special State Fund. Managerial debt is the amount of money owed by the administration of a public instrumentality, whether for services received or loans which do not involve the credit and good faith of the Commonwealth of Puerto Rico, which are covered by contributions from, the Fund General. The debts of public corporations are funded with their own income.
What was the amount approved this fiscal year for the Puerto Rico budget?
The budget approved by the governor and the Legislature for this Fiscal year 2014-2015 was $9,565,000,000. This implied a reduction from last fiscal year 2013-2014, which was $ 9,770,000,000 budget.
Why is it said that the budget for this fiscal 2014-2015 was a balanced budget?
It is said to be a balanced budget because it includes operating expenses for the agencies of the Commonwealth and the payment of the debt. It is also a budget without deficit financing or refinancing of bonds.
What transactions require the approval of the OMB?
- Transfers from the Joint Resolution General Fund affecting personal items, debt, utilities, and insurance payments
- Transfers from Public Improvement Fund
- Transfers Special Assignments
- Requests for Emergency Funds allocations, Budget or Special Maintenance Fund
- Extensions of terms for Special Appropriations from the General Fund, the Public Improvement Fund, the Emergency Fund, the Budget or Special Maintenance Fund
- Creation of accounts in Special Appropriations General Fund, Public Improvement Fund, Emergency Fund, Budget or Special Maintenance Fund
- Creation and elimination of regular jobs or positions of trust
- Transfer of positions that affect the configuration of a primary unit or division, once the OMB has assessed the main organizational structure
- Reclassifications, individual increases (steps), differentials or single salary improvements
- Creation of regular positions within career services and positions of trust
- Occupation of regular and temporary positions and others, charged to the General Fund
- Classification and Compensation Plans
- Creation of non-recurring bonus systems for all staff or groups of employees
- Calculation of Formula Act 45
- Contracts for professional services and advisory service contracts against the General Fund
- Purchases of motor vehicles
- Commercial Leases
- Finance leases
- Request to process credit line with GDB
- Creation and elimination of primary units
- Merger or integration of primary units or divisions of different primary units
- Transfer activities from a primary unit to another primary unit
The OMB shall notify each government agency the result of the evaluation of their applications and proposals in a period between five (5) to fifteen (15) working days from the date of receipt in the OMB. The response time varies depending on the type of transaction and the Agency having submitted all the required information in the Guide and any other information that is required by the officials of the Agency.
In the case of incomplete applications, the response period shall begin on receipt of the additional information requested by the OMB. Once the OMB requests additional information from the Agency, the Agency shall have seven (7) working days to send it. If it is not received within that period, the application or petition will be rescinded and the agency must submit a new request with all the information when deemed appropriate..
Where can I find the Budgets by Agencies?
The budget of each agency is available on the budget website http://www2.pr.gov/presupuestos/Presupuesto2014-2015/Pages/PRESUPUESTO-POR-AGENCIA.aspx. A printed version is available in the library of the Office of Management and Budget. There are links to the budgets for agencies that consume about 80% of the annual budget of the Commonwealth of Puerto Rico, these are:
• Department of Education
• Police of Puerto Rico
• Department of Health
• Secretariat of the Department of Family
• Department of Corrections and Rehabilitation
• Department of Finance
Where can I get past budgets?
Previous budgets on page Budget of the Commonwealth, accessing www.presupuesto.pr.gov under section Previous Budgets.