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5 RI Cities Depend on State Aid for One Third of Their Budgets

Thursday, August 13, 2015

 

Five cities and towns depend on state aid for about a third of their spending, according to a GoLocalProv analysis of local and state documents.

Those communities are in order: Woonsocket, Pawtucket, Warren, Providence, and Burrillville.

Of course, that’s not counting Central Falls, where the state has been funding most of the school district long before the city went bankrupt. As of 2014, the year for which most recent statewide figures were available, the state paid for 71.7 percent of local spending in Central Falls.

A breakdown for all 39 cities and towns is listed in the below slides.

Most of state aid is for education. But municipal aid was included and weighed against all local spending too to get a sense of the whole picture. After Central Falls, was Woonsocket, which up until recently had its finances under the control of state authorities and counted on state aid for 37.3 percent of its budget in 2014.

‘Municipal finance is broken’

One policy expert said the list indicates that municipal finances were in shambles.

“Municipal finance is broken,” said Sam Bell, the state coordinator for the Progressive Democrats of America.

“There’s a wide variation in the wealth of various cities and towns. This puts poor cities and towns in a vice. For a city grappling with poverty, the costs are huge. More must be spent on police, fire, education, and general services, yet far less money is available to spend. Policymakers cope the only way they can—by raising property taxes sky high. But high property taxes exact a very real burden on working families and small businesses. The only way out of this trap is for the state to step in to keep poor cities and towns from going bankrupt. But state aid is far too stingy,” Bell said.

Some communities are still feeling the sting from cuts to state aid made under former Gov. Don Carcieri. Those cuts have been blamed in the past for some of the financial struggles of communities like Providence and Woonsocket.

But Gary Sasse, who served as administration and revenue director under Carcieri, said the state had little choice. “During the recession there was no option,” Sasse said. He ticked off the non-options: raising taxes, breaking union contracts, and cutting Medicaid, one of the largest areas of spending but off-bounds from cuts due to federal restrictions.

“I think those cuts, given the circumstances, were unavoidable,” Sasse said.

Sasse, now the founding director of the Hassenfeld Institute for Public Leadership at Bryant University, also noted that the Carcieri administration had pushed for a legislative package that would have allowed cities and towns flexibility to absorb the cuts. 

Sasse maintains the current system of aid is working, since the neediest communities—such as Woonsocket and Pawtucket—are receiving more state aid. But he said the system can still be improved, especially by alleviating the burden of the car tax.

A spokeswoman for the Rhode Island Taxpayers group said that instead of giving more the state needs to grow its economy. “Would the state have to distribute so much local aid—funded by taxpayers around the state!—if the General Assembly focused on Job One: improvement of Rhode Island’s business and tax climate?” said Monique Chartier. “The ripple effect of the good jobs created by desirable businesses extends, importantly, to a broadening of the state and local tax base, which would lessen the need for state aid and reduce the tax burden on everyone.”

Capital city one of most dependent

Providence ranked as the fifth most state-dependent, with 33.15 percent of local spending being funded through state coffers. 

“Making this problem worse, our central city is one of our poorest. Providence’s median income is slightly below Mississippi’s, and Mississippi is the poorest state in America,” Bell said.

Providence received about a quarter of a billion dollars in total staid in 2014. Slightly over half of what it spent on education—$402.5 million—was state money.

As the largest city and the largest school district, it should be no surprise that Providence receives the most. But there’s a downside to that that arises when cuts in state aid are made, according to Luis Aponte, the president of the Providence City Council. “In the same vein, Providence gets the hardest hit,” he said.

But take out the $206.8 million it receives in education aid and one gains a better sense of how much it’s really getting from the state, according to Aponte.

Minus education aid, Providence received $40.9 million from the state to help it spend $345.2 million on everything from police to potholes. The state share of municipal non-school spending in Providence is 11.8 percent, just a few points ahead of one of the state’s wealthiest communities, Block Island, where it’s 8.9 percent.

Aponte said the city needs more PILOT aid from the state. (PILOT stands for Payment in Lieu of Taxes, to cover the taxes that would be paid by nonprofits.) As nonprofit hospitals and universities continue to expand, the tax base in Providence continues to shrink. Meanwhile, state revenues from income taxes increase as those nonprofits add jobs, Aponte said. As a result, state aid needs to be re-balanced, he concluded.

Is the state ‘redistributing’ wealth?

But some worry that the state may be tending too far towards redistribution of wealth.

“It’s clear that some interests want state tax-and-spend policies essentially to be redistributive, to make wealthier people in the suburbs pay for the local services of the cities. The telling thing is that the difference comes largely from education, which is a good marker of the success of teachers’ unions in moving their interests out of the hands of local voters into the hands of the Statehouse, where the central organization of a labor union can influence policies in a way that unorganized taxpayers cannot counter,” said Justin Katz, the research director for the Rhode Island Center for Freedom and Prosperity.

But increasing state funding for Providence would not necessarily be redistributive, according to Aponte and Bell.

As the state center for commerce, education, and recreation, all residents benefit from what Providence offers, Aponte noted. That’s especially the case for the nonprofit hospitals, which serve a statewide population, and the nonprofit colleges and universities, which also benefit the entire state, according to Aponte.

“If Providence were able to tax the income of wealthy commuters who live in the suburbs, we could eliminate or drastically reduce property taxes and solve Providence’s fiscal nightmare overnight. This is the policy solution many other states take to this challenge, but the General Assembly will not allow Providence to implement it. And so our central city crumbles—plagued by poverty, a shrunken police and fire force, struggling schools, brutally high taxes, and fundamentally impossible math,” Bell added.

State aid: hurting or helping the financially struggling?

To some it makes sense that the most financially distressed communities get the most in state aid. But Chartier wonders if state aid might actually be hurting rather than helping them.

“It’s impossible not to question whether state aid enables, to a certain extent, bad budgeting practices on the local level. Are local officials shielded from making tough spending decisions because of this money that painlessly ‘falls out of the sky’ (a.k.a., from the state coffers) and into local budgets?” Chartier wrote in an e-mail.

Chartier offered the examples of local firefighter overtime and teacher pay.

The question is particularly acute in Woonsocket where one city councilman told GoLocalProv that the city was tasked with absorbing a $17 million reduction in state aid. City authorities tried and could not make the cuts said Councilman Roger Jalette. That led to the state-appointed budget commission taking control of city finances.

The state just relinquished control earlier this year, leaving city leaders with “manageable” books. But they also left something else: a community in which a lot of people could no longer afford to live because of high property taxes. Some had to sell their homes. Others had to seek housing aid, further exacerbating the problem of how to raise enough funds for public services, according to Jalette.

In Jalette’s view, it’s not city authorities, but some in the local population that are dependent on government assistance. The city needs more middle-income residents and people with disposable income. Instead, it’s attracting a different population: “We’re gaining people who enjoy the luxuries of freebies,” Jalette said.

He said public housing projects are putting an especially heavy burden on local services. “The cost of schooling children from these housing projects is astronomical,” Jalette said.

And, the state aid meant to cover those costs isn’t, he added. “The fair funding formula turned out to be not as fair as it was supposed to be,” he said.

That formula is being changed and Woonsocket is once again due for more state aid, but in the meantime it still must shoulder the costs of educating students today, Jalette said. 

 

Related Slideshow: Total State Aid to Cities and Towns

The below slides show how much cities and towns spend and how much they receive in state aid. Two types of state aid are shown. General municipal aid here includes PILOT payments, distressed community aid, motor vehicle tax reimbursements, state library aid, and municipal incentive aid. Pass through municipal aid refers to some forms of revenue sharing that still occur, such as for the hotel tax and the meals and beverage tax.

Since so much of state aid and local spending is for education, those figures are broken out separately. Data is for fiscal year 2014, the most recent year for which statewide data on local spending is available, in the annual audits. Note that local spending does not include business-type activities like water and sewer which are funded through user fees. State aid figures are from official state records.

NOTE: Available state records do not break down education aid by community for regional school districts. In those instances, education aid was divided according to each community’s proportional share of the regional district’s budget using 2014 figures or the most recently available before then. There was one exception to this method: Bristol-Warren, in which the actual revenue in state aid was disclosed in Bristol’s 2014 audit. 

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#39

Charlestown

General Municipal Aid: $125,294

Pass Through Municipal Aid: $229,134

State Education Aid: $274,193

State Aid Grand Total: $628,621

Local Education Spending: $14,645,357

Other Local Spending: $16,176,045

Total Local Spending: $30,821,402

State Aid % of Local Budget: 2.04%

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#38

Little Compton

General Municipal Aid: $70,419

Pass Through Municipal Aid: $86,294

State Education Aid: $365,270

State Aid Grand Total: $521,983

Local Education Spending: $16,132,117

Other Local Spending: $5,272,237

Total Local Spending: $21,404,354

State Aid % of Local Budget: 2.44%

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#37

Hopkinton

General Municipal Aid: $134,678

Pass Through Municipal Aid: $151,481

State Education Aid: $347,762

State Aid Grand Total: $633,921

Local Education Spending: $18,524,639

Other Local Spending: $6,344,248

Total Local Spending: $24,868,887

State Aid % of Local Budget: 2.55%

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#36

Richmond

General Municipal Aid: $120,634

Pass Through Municipal Aid: $220,724

State Education Aid: $13,666,504

State Aid Grand Total: $14,007,862

Local Education Spending: $18,300,639

Other Local Spending: $5,824,023

Total Local Spending: $24,124,662

State Aid % of Local Budget: 58.06%

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#35

Jamestown

General Municipal Aid: $141,881

Pass Through Municipal Aid: $162,146

State Education Aid: $361,936

State Aid Grand Total:$665,963

Local Education Spending: $12,395,173

Other Local Spending: $11,039,113

Total Local Spending: $23,434,286

State Aid % of Local Budget: 2.84%

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#34

Narragansett

General Municipal Aid: $295,057 

Pass Through Municipal Aid: $834,031

State Education Aid: $1,805,079

State Aid Grand Total: $2,934,167

Local Education Spending: $30,396,974

Other Local Spending: $30,793,464

Total Local Spending: $61,190,438

State Aid as % of Local Budget: 4.80%

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#33

East Greenwich

General Municipal Aid: $511,287

Pass Through Municipal Aid: $649,942

State Education Aid: $2,297,840

State Aid Grant Total: $3,459,069

Local Education Spending: $37,299,099

Other Local Spending: $27,944,215

Total Local Spending: $65,243,314

State Aid % of Local Budget: 5.30%

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#32

New Shoreham

General Municipal Aid: $89,961

Pass Through Municipal Aid: $509,135

State Education Aid: $81,762

State Aid Grand Total: $680,858

Local Education Spending: $5,156,175

Other Local Spending: $6,694,807

Total Local Spending: $11,850,982

State Aid % of Local Budget: 5.75%

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#31

Barrington

General Municipal Aid: $669,384

Pass Through Municipal Aid: $346,356

State Education Aid: $3,936,151

State Aid Grand Total: $4,951,891

Local Education Spending: $48,752,935

Other Local Spending: $17,025,409

Total Local Spending: $65,778,344

State Aid % of Local Budget: 7.53%

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#30

Portsmouth

General Municipal Aid: $290,276

Pass Through Municipal Aid: $404,485

State Education Aid: $5,128,661

State Aid Grand Total: $5,823,422

Local Education Spending: $38,316,994

Other Local Spending: $23,147,888

Total Local Spending: $61,464,882

State Aid % of Local Budget: 9.47%

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#29

Westerly

General Municipal Aid: $717,186

Pass Through Municipal Aid: $1,348,554

State Education Aid: $7,164,219

State Aid Grand Total: $9,229,959

Local Education Spending: $66,614,560

Other Local Spending: $21,509,821

Total Local Spending: $88,124,381 

State Aid % of Local Budget: 10.47%

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#28

Smithfield

General Municipal Aid: $1,188,323

Pass Through Municipal Aid: $978,076

State Education Aid: $4,938,651

State Aid Grand Total: $7,105,050

Local Education Spending: $35,866,336

Other Local Spending: $31,118,108

Total Local Spending: $66,984,444

State Aid % of Local Budget: 10.61%

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#27

South Kingstown

General Municipal Aid: $674,000

Pass Through Municipal Aid: $1,152,714

State Education Aid: $8,106,421

State Aid Grand Total: $9,933,135

Local Education Spending: $61,662,756

Other Local Spending: $24,885,124

Total Local Spending: $86,547,880

State Aid % of Local Budget: 11.48%

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#26

Johnston

General Municipal Aid: $633,363

Pass Through Municipal Aid: $848,209

State Education Aid: $11,778,991

State Aid Grand Total: $13,260,563

Local Education Spending: $53,939,204

Other Local Spending: $59,544,146

Total Local Spending: $113,483,350

State Aid % of Local Budget: 11.69%

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#25

North Kingstown

General Municipal Aid: $617,697

Pass Through Municipal Aid: $877,664

State Education Aid: $10,796,604

State Aid Grand Total: $12,291,965

Local Education Spending: $63,685,372

Other Local Spending: $35,533,093

Total Local Spending: $99,218,465

State Aid % of Local Budget: 12.39%

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#24

Scituate

General Municipal Aid: $268,461

Pass Through Municipal Aid: $195,708

State Education Aid: $3,690,198

State Aid Grand Total: $4,154,367

Local Education Spending: $23,229,463

Other Local Spending: $9,934,632

Total Local Spending: $33,164,095

State Aid % of Local Budget: 12.53%

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#23

Tiverton

General Municipal Aid: $275,948

Pass Through Municipal Aid: $392,937

State Education Aid: $5,775,390

State Aid Grand Total: $6,444,275

Local Education Spending: $31,811,259

Other Local Spending: $18,067,476

Total Local Spending: $49,878,735

State Aid % of Local Budget: 12.92%

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#22

Warwick

General Municipal Aid: $3,358,606

Pass Through Municipal Aid: $4,343,732

State Education Aid: $35,164,250

State Aid Grand Total: $42,866,588

Local Education Spending: $173,500,902

Other Local Spending: $148,288,495

Total Local Spending: $321,789,397

State Aid % of Local Budget: 13.32%

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#21

Lincoln

General Municipal Aid: $529,595

Pass Through Municipal Aid: $1,060,253

State Education Aid: $8,983,032

State Aid Grand Total: $10,572,880

Local Education Spending: $55,597,261

Other Local Spending: $20,226,248

Total Local Spending: $75,823,509

State Aid % of Local Budget: 13.94%

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#20

North Smithfield

General Municipal Aid: $296,523

Pass Through Municipal Aid: $339,478

State Education Aid: $5,374,850

State Aid Grand Total: $6,010,851

Local Education Spending: $26,848,161

Other Local Spending: $12,997,606

Total Local Spending: $39,845,767 

State Aid % of Local Budget: 15.09%

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#19

Newport

General Municipal Aid: $1,730,647

Pass Through Municipal Aid: $3,936,960

State Education Aid: $10,656,332

State Aid Grand Total: $16,323,939

Local Education Spending: $40,053,778

Other Local Spending: $58,404,031

Total Local Spending: $98,457,809

State Aid % of Local Budget: 16.58% 

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#18

Middletown

General Municipal Aid: $297,263

Pass Through Municipal Aid: $1,447,066

State Education Aid: $9,109,276

State Aid Grand Total: $10,853,605

Local Education Spending: $39,136,282

Other Local Spending: $25,012,408

Total Local Spending: $64,148,690

State Aid % of Local Budget: 16.92%

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#17

Cumberland

General Municipal Aid: $649,531

Pass Through Municipal Aid: $809,113

State Education Aid: $14,635,553

State Aid Grand Total: $16,094,197

Local Education Spending: $60,715,289

Other Local Spending: $27,023,773

Total Local Spending: $87,739,062

State Aid % of Local Budget: 18.34%

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#16

North Providence

General Municipal Aid: $2,063,985

Pass Through Municipal Aid: $748,762

State Education Aid: $14,996,162

State Aid Grand Total: $17,808,909

Local Education Spending: $52,857,701

Other Local Spending: $42,047,768

Total Local Spending: $94,905,469

State Aid % of Local Budget: 18.76%

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#15

Coventry

General Municipal Aid: $434,882

Pass Through Municipal Aid: $881,882

State Education Aid: $20,333,806

State Aid Grand Total: $21,650,570

Local Education Spending: $72,187,006

Other Local Spending: $38,907,423

Total Local Spending: $111,094,429

State Aid % of Local Budget: 19.49%

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#14

Cranston

General Municipal Aid: $9,382,732

Pass Through Municipal Aid: $2,535,839

State Education Aid: $43,025,736

State Aid Grand Total: $54,944,307

Local Education Spending: $136,900,000

Other Local Spending: $123,600,000

Total Local Spending: $260,500,000

State Aid % of Local Budget: 21.09%

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#13

West Greenwich

General Municipal Aid: $114,749

Pass Through Municipal Aid: $261,583

State Education Aid: $3,538,479

State Aid Grand Total: $3,914,811

Local Education Spending: $12,658,862

Other Local Spending: $5,684,962

Total Local Spending: $18,343,824

State Aid % of Local Budget: 21.34%

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#12

East Providence

General Municipal Aid: $1,380,235

Pass Through Municipal Aid: $1,446,125

State Education Aid: $28,076,190

State Aid Grand Total: $30,902,550

Local Education Spending: $82,026,462

Other Local Spending: $59,707,995

Total Local Spending: $141,734,457

State Aid % of Local Budget: 21.80%

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#11

Foster

General Municipal Aid: $120,862

Pass Through Municipal Aid: $72,032

State Education Aid: $2,819,707

State Aid Grand Total: $3,012,601

Local Education Spending: $8,957,305

Other Local Spending: $3,892,665

Total Local Spending: $12,849,970

State Aid % of Local Budget: 23.44%

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#10

West Warwick

General Municipal Aid: $1,180,999

Pass Through Municipal Aid: $779,091

State Education Aid: $20,277,799

State Aid Grand Total: $22,237,889

Local Education Spending: $54,098,197

Other Local Spending: $40,441,999

Total Local Spending: $94,540,196

State Aid % of Local Budget: 23.52%

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#9

Bristol

General Municipal Aid: $1,048,495

Pass Through Municipal Aid: $672,981

State Education Aid: $9,194,028

State Aid Grand Total: $10,915,504

Local Education Spending: $22,039,552

Other Local Spending: $24,261,583

Total Local Spending: $46,301,135

State Aid % of Local Budget: 23.58%

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#8

Exeter

General Municipal Aid: $154,855

Pass Through Municipal Aid: $157,809

State Education Aid: $2,955,334

State Aid Grand Total: $3,267,998

Local Education Spending: $10,581,200

Other Local Spending: $3,087,627

Total Local Spending: $13,668,827

State Aid % of Local Budget: 23.91%

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#7

Glocester

General Municipal Aid: $211,092

Pass Through Municipal Aid: $197,014

State Education Aid: $6,240,831

State Aid Grand Total: $6,648,937

Local Education Spending: $18,814,922

Other Local Spending: $8,614,598

Total Local Spending: $27,429,520

State Aid % of Local Budget: 24.24%

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#6

Burrillville

General Municipal Aid: $526,788

Pass Through Municipal Aid: $376,174

State Education Aid: $13,054,183

State Aid Grand Total: $13,957,145

Local Education Spending: $33,423,100

Other Local Spending: $12,796,194

Total Local Spending: $46,219,294

State Aid % of Local Budget: 30.20%

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#5

Providence

General Municipal Aid: $32,396,850

Pass Through Municipal Aid: $8,586,672

State Education Aid: $206,888,489

State Aid Grand Total: $247,872,011

Local Education Spending: $402,539,000

Other Local Spending: $345,226,000

Total Local Spending: $747,765,000

State Aid % of Local Budget: 33.15%

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#4

Warren

General Municipal Aid: $186,246

Pass Through Municipal Aid: $385,412

State Education Aid: $7,831,949

State Aid Grand Total: $8,403,607

Local Education Spending: $11,647,407

Other Local Spending: $12,975,820

Total Local Spending: $24,623,227

State Aid % of Local Budget: 34.13%

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#3

Pawtucket

General Municipal Aid: $3,049,875

Pass Through Municipal Aid: $1,633,185

State Education Aid: $71,459,692

State Aid Grand Total: $76,142,752

Local Education Spending: $123,524,630

Other Local Spending: $91,910,011

Total Local Spending: 215,434,641

State Aid % of Local Budget: 35.34%

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#2

Woonsocket

General Municipal Aid: $1,669,106

Pass Through Municipal Aid: $1,092,171

State Education Aid: $48,155,191

State Aid Grand Total: $50,916,468

Local Education Spending: $78,901,007

Other Local Spending: $57,595,232

Total Local Spending: $136,496,239

State Aid % of Local Budget: 37.30%

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#1

Central Falls

General Municipal Aid: $389,387

Pass Through Municipal Aid: $346,641

State Education Aid: $38,410,636

State Aid Grand Total: $39,146,664

Local Education Spending: $1,344,835

Other Local Spending: $53,256,556

Total Local Spending: $54,601,391

State Aid % of Local Budget: 71.70%

 
 

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