Providence Taxes Could Be Going Even Higher
Monday, May 30, 2011
If Providence fails to get more help from unions, tax-exempt institutions and the General Assembly, an even higher tax hike or "very drastic reductions to or the elimination of city services" could be the next step Mayor Angel Taveras takes in his attempt to restore financial stability to the capital city, a city spokeswoman has confirmed.
TIMELINE
Taveras has already taken a number of steps toward shaving away at a $110 million structural deficit in the next fiscal year, including cutting his office budget by 13 percent; eliminating 113 non-union management positions; restructuring the contract with Local 1033, the city's largest union; and saving $28 million in the school budget by closing schools and terminating teachers. But Communication Director Melissa Withers said more needs to happen for the city to avoid being completely cash-strapped shortly after the fiscal year, which ends on June 30.
"Essentially, we need to pass a balanced budget by the end of the fiscal year to avoid cash flow issues that could begin as early as late summer," Withers said. "Given the dire nature of the situation, nothing - including additional increases in taxes - can be uniformly excluded, although no one is looking at that as a realistic solution."
City Still Waiting On A Lot Of Help
Withers said the city would not rule out closing libraries, recreation centers (one has already been closed), and/or parks and pools, as well as cutting funding for arts and cultural programs and community organizations. Residents witnessed firsthand how serious Providence's fiscal situation is when the city announced it would be laying off between 60-80 police officers last week.
The layoffs in the police department came after Mayor Taveras asked both the police and fire department for $6 million in reductions in their respective contracts in his budget address earlier this month. While the city chose to move forward with cuts in the police department, Withers would only say negotiations are ongoing with the firefighters.
In addition to needing a combined $12 million from police and fire, Taveras' budget also assumes $18 million from a 10 percent reduction in the teachers' contract, $7.1 million in increased contributions from the tax-exempt institutions, and $18 million from the passage of four pieces of state legislation, including $11.6 million from amending the retiree health care benefits system.
Withers said the $18 million needed from the General Assembly does not include a piece of legislation sponsored by State Rep. John Carnevale that would levy a 25 percent service fee on tax-exempt institutions. The city supports the bill, but isn't assuming it will pass.
Council Leadership: We Need All Parties At The Table
Because so much of the budget is still in flux, the City Council announced a June 1 deadline for finalizing stakeholder agreements with the city. Council President Michael Solomon (at left) said he expects to pass a balanced budget.
Council Majority Leader Seth Yurdin (Ward 1) said he isn't concerned about the city's assumption-filled budget, and that the Council and the administration are working together like never before to help solve the city's fiscal problems.
"Obviously, there are still several unrealized savings and revenues in this year’s budget, but what is equally important to realize is that in an unprecedented period of cooperation, the administration and Council are working to bring all involved parties to the negotiating table," Yurdin said. "Furthermore, the Council and administration will have several contingency plans ready to go if these groups fail to share in the burden of fixing our city."
Not A Fun Spot To Be In
Neither the administration nor the Council were able to provide in-depth alternatives to Taveras' proposed budget, choosing instead to point out how essential it is for the city to get all the help it is requesting. Councilman David Salvatore (Ward 14) said the effects could be devastating if the budget assumptions don't come to fruition.
"This isn't an easy or fun spot to be in, but the fact is taxpayers are relying on us to make decisions that are in the best interest of our communities and, ultimately, future generations in Providence," Salvatore said. "The mayor's legislative package is a critical component of next year's budget, and the General Assembly has been asked to take a hard-line approach in addressing the tax-exempt issue."
Governor Supports Providence
If there is one shining light for the city, it's that Governor Lincoln Chafee has continued to express his support for Taveras. In a statement to GoLocalProv, Chafee spokesman Christian Vareika said the governor is working closely with the mayor.
“Situations such as the recent police layoffs in Providence are a result of the deep cuts to cities and towns that took place under the previous administration," Vareika said. "Layoffs such as these are among the ramifications of those years of cuts. Governor Chafee’s proposed budget reverses that trend in an effort to put the state’s cities and towns back on solid financial footing."
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