Title 48, Territories and Insular PossessionsRelease 119-110

§2143 Effect of Finding of Noncompliance with Budget

Title 48 › CHAPTER 20 — PUERTO RICO OVERSIGHT, MANAGEMENT, AND ECONOMIC STABILITY › SUBCHAPTER II — RESPONSIBILITIES OF OVERSIGHT BOARD › § 2143

Last updated Sep 22, 2026|Official source

Summary

The Governor must send the Oversight Board a report no later than 15 days after each quarter ends, starting with the fiscal year the Oversight Board chooses. The report must show actual cash revenues, cash spending, and cash flow for the past quarter compared to the certified Budget projections. The Oversight Board can also ask for other information, like a balance sheet or separate details for each covered territorial instrumentality. If the Board finds the actual numbers do not match the certified Budget, it will ask the territorial government for more information and set deadlines. If the explanation is not reasonable or the problem is not fixed by the deadline, the Board will formally tell the President, the House Committee on Natural Resources, the Senate Committee on Energy and Natural Resources, the Governor, and the Legislature about the inconsistency and its size. The Board can then cut nondebt spending to make the Territory match the Budget. For covered territorial instrumentalities, the Board can cut spending or, at its choice, freeze hiring and bar new contracts unless the Board approves them. The Board must stop any cuts, freezes, or bans once it finds the government has started sufficient fixes.

Full Legal Text

Title 48, §2143

Territories and Insular Possessions, Source: USLM XML via OLRC

(a)Submission of reports

Not later than 15 days after the last day of each quarter of a fiscal year (beginning with the fiscal year determined by the Oversight Board), the Governor shall submit to the Oversight Board a report, in such form as the Oversight Board may require, describing—

(1)the actual cash revenues, cash expenditures, and cash flows of the territorial government for the preceding quarter, as compared to the projected revenues, expenditures, and cash flows contained in the certified Budget for such preceding quarter; and

(2)any other information requested by the Oversight Board, which may include a balance sheet or a requirement that the Governor provide information for each covered territorial instrumentality separately.

(b)Initial action by Oversight Board

(1)In general

If the Oversight Board determines, based on reports submitted by the Governor under subsection (a), independent audits, or such other information as the Oversight Board may obtain, that the actual quarterly revenues, expenditures, or cash flows of the territorial government are not consistent with the projected revenues, expenditures, or cash flows set forth in the certified Budget for such quarter, the Oversight Board shall—

(A)require the territorial government to provide such additional information as the Oversight Board determines to be necessary to explain the inconsistency; and

(B)if the additional information provided under subparagraph (A) does not provide an explanation for the inconsistency that the Oversight Board finds reasonable and appropriate, advise the territorial government to correct the inconsistency by implementing remedial action.

(2)Deadlines

The Oversight Board shall establish the deadlines by which the territorial government shall meet the requirements of subparagraphs (A) and (B) of paragraph (1).

(c)Certification

(1)Inconsistency

If the territorial government fails to provide additional information under subsection (b)(1)(A), or fails to correct an inconsistency under subsection (b)(1)(B), prior to the applicable deadline under subsection (b)(2), the Oversight Board shall certify to the President, the House of Representatives Committee on Natural Resources, the Senate Committee on Energy and Natural Resources, the Governor, and the Legislature that the territorial government is inconsistent with the applicable certified Budget, and shall describe the nature and amount of the inconsistency.

(2)Correction

If the Oversight Board determines that the territorial government has initiated such measures as the Oversight Board considers sufficient to correct an inconsistency certified under paragraph (1), the Oversight Board shall certify the correction to the President, the House of Representatives Committee on Natural Resources, the Senate Committee on Energy and Natural Resources, the Governor, and the Legislature.

(d)Budget reductions by Oversight Board

If the Oversight Board determines that the Governor, in the case of any then-applicable certified Instrumentality Budgets, and the Governor and the Legislature, in the case of the then-applicable certified Territory Budget, have failed to correct an inconsistency identified by the Oversight Board under subsection (c), the Oversight Board shall—

(1)with respect to the territorial government, other than covered territorial instrumentalities, make appropriate reductions in nondebt expenditures to ensure that the actual quarterly revenues and expenditures for the territorial government are in compliance with the applicable certified Territory Budget or, in the case of the fiscal year in which the Oversight Board is established, the budget adopted by the Governor and the Legislature; and

(2)with respect to covered territorial instrumentalities at the sole discretion of the Oversight Board—

(A)make reductions in nondebt expenditures to ensure that the actual quarterly revenues and expenses for the covered territorial instrumentality are in compliance with the applicable certified Budget or, in the case of the fiscal year in which the Oversight Board is established, the budget adopted by the Governor and the Legislature or the covered territorial instrumentality, as applicable; or

(B)(i)institute automatic hiring freezes at the covered territorial instrumentality; and

(ii)prohibit the covered territorial instrumentality from entering into any contract or engaging in any financial or other transactions, unless the contract or transaction was previously approved by the Oversight Board.

(e)Termination of Budget reductions

The Oversight Board shall cancel the reductions, hiring freezes, or prohibition on contracts and financial transactions under subsection (d) if the Oversight Board determines that the territorial government or covered territorial instrumentality, as applicable, has initiated appropriate measures to reduce expenditures or increase revenues to ensure that the territorial government or covered territorial instrumentality is in compliance with the applicable certified Budget or, in the case of the fiscal year in which the Oversight Board is established, the budget adopted by the Governor and the Legislature.

Reference

Citations & Metadata

Citation

48 U.S.C. § 2143

Title 48, Territories and Insular Possessions

Last Updated

Sep 22, 2026

Release point: 119-110