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.