Oversight board assures property tax reform would offset government subsidy reduction
SAN JUAN – Puerto Rico's Financial Oversight and Management Board announced Friday that it has certified the fiscal plan for the Municipal Revenue Collection Center (CRIM by its Spanish acronym), adding it will help the entity to maximize property tax revenue and guarantee the effective distribution of these funds among the 78 municipalities.
The board said the fiscal plan is a “road map to a fairer, more efficient property tax system that will provide municipalities with more stable income.”
It includes 11 measures aimed at increasing tax revenue, “without having to increase the tax rate; broaden the base by adding properties on which no tax had previously been paid; update appraisals to reflect property improvements ”; and simplifies the payment of property taxes, the board said.
“Municipalities are at the heart of life for all Puerto Rico residents. The Fiscal Plan, which adopts mainly measures CRIM proposed, will provide municipalities with the fiscal stability they need to provide the services their residents need and deserve, ”said the board’s executive director, Natalie Jaresko. “We have to make sure all residents pay their fair share of property taxes, and that CRIM is able to collect that fair share of property taxes.”
The board listed the following measures proposed by the fiscal plan:
• The sale of the portfolio of account receivables from property taxes past due with an estimated value of about $ 400 million
• Update incorrect mailing addresses to collect property taxes.
• Identification and appraisal of new properties: CRIM identified more than 230,000 of new properties whose owners have not paid taxes.
• Improvement in the property tax collection rates: CRIM targets to increase property tax collection rate from 68% to 76%.
• Adjust the value of more than 500,000 homes that made improvement not currently reflected on the tax rolls.
• Collect $ 45 million in tax revenue from homeowners who did not pay taxes in fiscal year 2019.
• Appraisals of more than 17,000 currently not appraised properties.
• Update CRIM’s data base with almost 26,000 swimming pools that would add about $ 100 of additional tax per pool.
• Improve personal property self-reporting compliance by working closely with the Treasury. This will increase transparency and accountability.
• Operational and organizational development initiatives: critical systems improvements. For example, data warehouse, billing system update, replacing appraisal system, improving employee performance.
• Implement commonwealth agency efficiencies, including payroll freeze, elimination of Christmas bonus, and healthcare standardization, to align with the certified Commonwealth Fiscal Plan.
“These measures would add approximately $ 514 million to CRIM's revenue in the coming fiscal year 2021 alone, and more than $ 1.5 billion over the Fiscal Plan's forecasting period between fiscal year 2021 and 2025. Without implementing the measures, CRIM's revenue would decline from projected $ 1.2 billion in the current fiscal year of 2020 to $ 1.1 billion by fiscal year 2025, ”the board assured.