Politics

Taxpayer Groups Ask FEMA to Pause Puerto Rico Funds Over Municipal Construction Taxes

Published Oct 16, 2026, 7:35 AM ASTvia NotiUno

At a glance

  • Frontiers of Freedom, NTU, and Taxpayers Protection Alliance asked FEMA to declare construction taxes on FEMA-funded projects in Puerto Rico as 'non-allowable' federal costs
  • The groups claim that these taxes are being used to fund non-essential expenses such as festivals
  • The Junta de Supervisión Fiscal has warned that this practice may violate federal law

Why this matters: For Puerto Rico’s 3.2 million US citizens, the alleged misuse of FEMA funds for non-essential expenses could delay the restoration of essential services and divert federal money away from critical recovery projects

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Recovery tracker: FEMA money committed and paid out, town by town

Three U.S. groups, Frontiers of Freedom, the National Taxpayers Union (NTU) and Taxpayers Protection Alliance, asked FEMA Administrator Cameron Hamilton in an October 13, 2026 letter to declare "unallowable" federal costs the construction taxes Puerto Rico’s towns charge contractors on hurricane Irma and María recovery projects funded by FEMA. They also ask that FEMA pause funding to the island until what they call a discriminatory practice ends.

The letter says the Commonwealth and its towns have diverted FEMA funds into municipal general funds, which it calls illegal under the Code of Federal Regulations, and that the taxes inflate project costs and delay restoration of essential services to 3.2 million Americans in Puerto Rico. It says the Financial Oversight and Management Board (FOMB) and Congress share that understanding, and cites an October 1 communication from FOMB executive director Mujica to Hamilton.

The dispute dates to Law 215-2024, signed September 17, 2024 by then-Governor Pedro Pierluisi, which let towns tax contractors on projects for exempt entities, including public and federal ones. The Board repeatedly warned mayors not to implement it, and on June 1, 2026 demanded confirmation by June 22. The Board says 22 of the 78 towns charge higher rates, often 10%, on government or federally funded projects.

Analyst Cate Long alleged on X that mayors use the money for festivals and non-essential expenses.

In context

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Our coverage

Recovery tracker: FEMA money committed and paid out, town by town

  1. · Microjuris al DíaOversight Board Asks FEMA to Rule on 22 Towns’ Higher Construction Taxes on Federally Funded Contractors
  2. · El Nuevo DíaMayors’ Federation to Seek Meeting with FEMA Over Municipal Construction Excise Taxes