Board submits a $10 billion General Fund budget for FY2021

The Financial Oversight Board submitted to the Legislature a General Fund budget of $10 billion for fiscal year 2021, according to executive director Natalie Jaresko. The proposal reflects COVID-19: it postpones most fiscal adjustments for a year, proposes health and infrastructure investments, largely keeps the payroll freeze and suggests milestone budgeting.

Jaresko said General Fund spending would rise from $9.6 billion in fiscal year 2020 — including $500 million from the March 2020 Emergency Measures Support Package — to $10 billion in FY2021, due to investments in technology and public hospitals and to reclassifying special-revenue spending as General Fund spending.

Because of the COVID-19 crisis, she estimated a General Fund revenue drop of more than 12%: from $11.6 billion originally projected for FY2020 to $10.2 billion in FY2021. FY2021 revenues would be 5% lower than the $10.7 billion post-COVID projection for FY2020.

The budget includes $675 million in investments: $450 million in technology infrastructure (broadband in underserved areas) and $225 million in health (public hospitals, IT systems and a scholarship for UPR medical graduates who serve in rural areas). It sets aside $83 million in incremental funds releasable upon meeting milestones. It excludes about $170 million from the budget the government had presented, including WIPR funds that the certified fiscal plan requires transferring to a nonprofit.

The Board would work with the Legislature through June 24; the FY2021 budget would be certified before June 30 and would include special and federal funds, estimated at a total of $22.2 billion in central-government spending. Proposed is not certified or disbursed.