The League of Puerto Rican Cities Calls for Action on the Root Causes of the Municipal Fiscal Crisis

(August 26, 2026 – San Juan) The League of Puerto Rican Cities argued that the discussion regarding the fiscal situation of municipalities must be analyzed in light of the reduction in resources that municipal governments have faced, thus going beyond individual performance ratings.

The call comes following the publication of ABRE Puerto Rico’s Municipal Fiscal Health Index, which classified 22 municipalities as having poor fiscal performance and another ten as unsustainable during fiscal year 2024.

The organization’s executive director, Cristina Miranda Palacios, emphasized that these results are not the product of isolated mismanagement but rather the direct consequence of the elimination of the Equalization Fund and the centralization of resources by the central government.

“Given the context our municipalities are facing, we must spark a much deeper discussion and ask ourselves why an increasing number of municipal governments are facing fiscal difficulties and what decisions have contributed to this reality. It is contradictory to expect them to do more and more for their communities while the resources to do so are increasingly limited,” said Miranda Palacios.

Prior to the elimination of the Equalization Fund, the organization had warned about the consequences that the loss of those resources would have for dozens of municipalities.

“To talk about municipal insolvency without discussing how resources are distributed is to tell only part of the story. Municipalities are called upon to manage, but they also need the resources to fulfill the responsibilities demanded of them and to provide the services they offer our people every day,” added the executive director.

The League noted that municipalities are the level of government closest to the communities and that a reduction in their resources has a direct impact on essential services and the quality of life of their residents.

Furthermore, the executive director emphasized that “Puerto Rico needs a serious discussion about how to strengthen our local governments. We cannot continue to cut their resources and then be surprised when the indicators reflect the consequences.”

The organization reiterated its call to advance a municipalist agenda that promotes a more equitable distribution of resources and strengthens municipalities’ capacity to meet the needs of their communities.

“Behind every ‘unsustainable’ rating are vulnerable communities. We cannot talk about fiscal health without acknowledging that in these municipalities, 51% of the population lives below the poverty line. The country must decide whether it wants a model that centralizes resources or one that empowers local governments to guarantee essential services such as health care, public safety, and care for the elderly,” concluded Miranda Palacios.