The Asociación de Alcaldes de Puerto Rico met this week to discuss construction excise taxes (arbitrios) on projects funded with federal money. The mayors agreed to join as amicus curiae a planned appeal of a lawsuit filed by Román Electric Contractors against the municipality of Aguada in January 2025, which sought payment exemption from construction excise taxes.
The company argued that a tax exemption under Section 22(a) of Law No. 83 of May 2, 1941 should apply to its contract with the Puerto Rico Electric Power Authority (AEE) for replacing poles and lighting fixtures owned by AEE within Aguada. Judge Miguel Deynes Vargas ruled against the municipality, prompting Aguada Mayor Christian E. Cortés Feliciano to pursue an appeal.
Jorge 'Georgie' González Otero, president of the mayors' association and mayor of Jayuya, said construction projects pay excise taxes that fund municipal services including health, safety, solid waste management, and road repairs, warning that if the Fiscal Oversight Board (JSF) pushes to eliminate these taxes, municipalities could be forced to close, hurting the neediest residents most. The mayors defended arbitrios revenue as legitimate under the 1996 Autonomous Municipalities Law, now the Municipal Code.