10 key points from the governor's second State and Budget address

What's happening? Gov. Jenniffer González delivered her second State of the Budget address on Thursday, presenting a consolidated budget of $33,570 million for fiscal year 2026-2027, including $13,180 million from the General Fund, and said the Island is on track for its second balanced budget certified by the Fiscal Oversight and Management Board (FOMB).

Why does it matter? The PROMESA Act requires four consecutive balanced budgets to allow for the FOMB's exit, and the governor is seeking to present this budget as evidence of fiscal discipline, economic stability and the government's capacity to retake control of its finances.

Here are 10 key points from the governor's address, organized by topic:

1️⃣ Budget

Balanced budget certified by the Board: "Last year's budget was the first balanced budget certified by the Fiscal Oversight Board itself since it arrived in Puerto Rico 10 years ago. And I want us to repeat that achievement. Puerto Rico is on track to have its SECOND balanced budget certified by the Board at the close of this legislative session."

OGP leads the budget: "For the first time, the OGP (Office of Management and Budget) set the budget targets for agencies, something the Board previously did without the government's input.

According to the governor, the OGP analyzed three years of financial data by agency and compared real-time execution for Fiscal Year 2026 against certified and adjusted budgets, using the Data Intelligence System (SID). The OGP director shared these and other steps in the budget process at the Board's public hearing 51 yesterday.

The SID: a tool for monitoring public spending and revenues, taking historical data into account.

Accounting standards: For the first time, the Board and the government aligned their guidelines for preparing the budget according to "modified accrual" accounting standards, a requirement under Section 209 of PROMESA. Under that method, revenues and expenditures are recorded when they are known to be incoming or owed, not only when money changes hands.

2️⃣ Fiscal affairs and public finances

$904.2 million in government contract savings: "For fiscal year 2024, $5.8 billion in contracts were recorded in the Government of Puerto Rico, while for fiscal year 2026, in my first budget as governor, we reduced that figure to $4.9 billion, representing a reduction of $904.2 million, thereby setting a new standard of efficiency and transparency under my administration."

To strengthen fiscal stability: She introduced legislation to create:

• a Budget Stabilization Reserve Fund, to strengthen fiscal resilience against economic fluctuations.

• a Public Capital Projects Fund, to plan public investment and separate it from operating expenditures.

3️⃣ Tax Reform

Filing and savings: "In January I introduced the Second Phase of Tax Reform to, for the first time since 2011, reduce tax rates for the middle class. Currently, households earning more than $61,500 a year are subject to a rate of 33%, the highest in the entire nation. With this Second Phase of the Reform, these households would now pay an effective rate of 24% and, finally, get the tax relief they deserve."

• No possible approval date for the tax reform was given, but ahead of the address, House Speaker Carlos "Johnny" Méndez said they are evaluating whether it will be possible to pass it, since they do not know whether the money is in the budget. "The tax reform is being evaluated in the budget. We need to see if we have the $550 million in the budget, who we are going to affect, in order to determine and make a final decision on whether it will be approved or not," Méndez said.

4️⃣ Permits Reform

He is pushing for passage this summer: "I want to sign the Planning and Permits Code this summer to help our business owners open their businesses, to see the streamlining of our Island's economic development, and to promote the prosperity and economic freedom we all want…"

"That is why I am calling on the Legislative Assembly to approve this legislation before the regular session ends (Tuesday, June 30), so we can implement it and see these good results this same year."

5️⃣ Education

Federal monitor's departure: "This year, the Department of Education (DE) completed 99% of the Comprehensive Corrective Action Plan, with more than 120 initiatives aimed at strengthening the system's fiscal controls. As a result of this work, we have secured the federal Department of Education's approval for the federal monitor's departure in November 2026."

• The announcement is not new. In March, the federal government acknowledged progress in DE's administrative and fiscal controls and laid out a path for gradually withdrawing the federal monitor. According to the U.S. Department of Education (USDE), the decision reflects DE's progress on its Comprehensive Corrective Action Plan (CCAP), which covers areas such as payroll internal controls, human resources, procurement, contracting and grants management.

6️⃣ Safety and Justice

Pay raise for police officers this summer: "After months of hard work and negotiations with the Board, the pay raise for Puerto Rico's police officers is here. We will increase all pay scales starting July 1."

• "The impact of these new pay scales amounts to $46 million annually, and we have allocated that amount in the fiscal year 2027 budget to guarantee its implementation."

7️⃣ Infrastructure and Housing

Projects under construction: "We increased the affordable housing inventory with the development of 300 housing units in Naguabo, Humacao, Barceloneta and Guayama, and we began delivering the first housing units to dozens of families who had dreamed of having their own home. Today there are 15 multifamily projects under construction thanks to federal funds that will represent 2,856 housing units."

Results of homebuying and loan initiatives: "I promised to help our young professionals acquire their first home, and through Pronto Pa' Tu Casa, an initiative we implemented through the Department of Housing, they can receive a maximum of $60,000 to cover the down payment and closing costs. In 4 months we received more than 1,400 applications and assisted 157 families with disbursements totaling $7.1 million. Added to this is the Vivienda Joven program, which has helped 145 families reach the dream of homeownership. Also, under the Direct Buyer Assistance program, more than 4,000 families have benefited from disbursements of over $182 million."

New projects under "Construyendo el 2026": "Through the Department of Housing we have launched the "Construyendo el 2026" initiative: a portfolio of 844 projects under CDBG funds on track to begin construction this same year. These projects include 80 historic downtown revitalizations with an investment of $250 million and the construction of 700 housing units with an investment of $175 million."

Repairs in Public Housing: "When we entered the administration we had a total of 7 active projects, and today, thanks to the effort of the Public Housing team, we have 74 active projects, of which 42 are in their construction phase, and this year we will be holding 40 bids for roof sealing and painting of public housing developments."

🏡 Our Housing coverage

8️⃣ Health

Improvements at Centro Médico: "The Centro Médico trauma hospital currently holds a Level 3 national classification, and in the Government Program we promised to raise it to Level 1. With an investment of $140 million, Puerto Rico will have, for the first time in its history, a trauma hospital designed to treat trauma conditions comprehensively. The finished building will have more than 7 floors and 100 rooms. We have already met about 70% of the requirements for Level 1 accreditation."

Regional hospitals:

• Vieques: "The Dialysis Center at the new Health Center has been operating with all certifications since October 2025. The emergency room, outpatient clinics, infusion centers, behavioral health, helipad, and spaces for WIC, Medicaid, Demographic Registry and Environmental Health were fully delivered in December 2025… The helipad is already FAA-accredited; the equipment still needed for it to operate at full capacity, though delayed at the General Services Administration, is now in the procurement process; and the steps toward an operating license are underway."

• San Lorenzo: "The plans were completed and most of the endorsements were received to build the new San Lorenzo emergency room."

• Vega Baja: "We are in the final process of opening the emergency room at the CDT in Vega Baja."

• Ceiba: "We are conducting the necessary studies for a new CDT in Ceiba."

• Maunabo: "The CDT project in Maunabo is 58% complete."

Physician program: "Studies show that 36% of those who graduate from medical residencies in Puerto Rico leave. For that reason, for the next academic year we identified funding for 136 new positions, integrated into a Graduate Medical Program totaling 859 positions with a total investment of $44.98 million (an increase of $5.85 million over the previous year)."

9️⃣ Water and power

Increase in electricity generation: "I am pleased to report that we have increased electricity generation even further, with 1,667 megawatts of generation added to the system following the return of critical units Palo Seco 3, Mayagüez 4, and Cambalache 3. That is, we had already achieved an increase to 1,200 megawatts, and we have now increased to 1,667 megawatts of additional generation. As a result, the blackouts that so many predicted would occur last summer and this one did not happen, because we solved the generation problem on the electrical grid."

More energy generation: "The bidding process to install 3,000 megawatts of new power generation is underway and should be awarded by the end of this summer. The contract award to add 600 to 800 megawatts of temporary generation was already approved by the Fiscal Oversight Board on May 8."

• "In the coming months we will add 937 additional megawatts to our generation system from units currently in active repair and modernization processes at the San Juan, Palo Seco, Aguirre, Cambalache and Mayagüez power plants."

• "100 MW of generation represents power for 60,000 families."

Possible reduction in electricity costs: "The Energy Bureau approved the conversion to natural gas of several units at the San Juan and Palo Seco power plants. Why does this matter? Because these units previously ran on diesel or bunker C, which is more expensive; they will now be able to operate on natural gas, which is cheaper. That translates into lowering your bill with savings of $95 million a year."

Efforts to prevent blackouts: "We have already begun installing Tesla batteries with an investment of more than $700 million in federal funds. These large-scale batteries will reduce load-shedding blackouts by 90% through the storage of a total of 430 MW."

LUMA contract cancellation: "The cancellation of the LUMA contract is already under way and we are in talks with new candidates to bring in a new operator with experience in a power system like ours."

• "LUMA is an abusive contract. I promised it during the campaign, I said it a year ago and I repeat it today. This time, with concrete action: we filed two lawsuits aimed at canceling the LUMA contract."

• "We brought in the U.S. Army Corps of Engineers for the vegetation clearing and removal projects on the transmission lines."

Capital improvements to aqueducts: "We have $806 million in 42 projects in planning; $2,951 million in 63 projects in design; $975 million in 47 projects in bidding; $2,097 million in 100 projects under construction and $711 million in 99 completed projects, including the dredging of the Carraízo reservoir after 28 years without dredging. This is a total of $7,540 million in 351 water projects."

🔟 Statehood

New legislation to recognize statehood: "And I remind you that we have to go to Congress to ask for handouts as second-class citizens, instead of receiving what would automatically be ours if we were a state. That is why I will call for us to go to D.C. again to introduce new legislation so that the 2024 electoral results in favor of statehood are recognized."

Cover photo: Gov. Jenniffer González during her second State and Budget address in the House chamber, on May 21. (Provided)

This content was translated with the assistance of Artificial Intelligence (AI).