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.
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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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