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Providence Budget Still Undecided

Thursday, July 07, 2011

 

One week into the new fiscal year, Providence Mayor Angel Taveras has reached most of the milestones he needed to in order to close a $110 million deficit, but he has yet to clear some significant hurdles.

The city has yet to finalize a deal with tax-exempt nonprofit colleges, universities, and hospitals for payments in lieu of taxes. City officials have estimated that they need a total of $7 million from the tax-exempt institutions. The City Council also has yet to approve what is effectively a 13 percent increase in property taxes, which would bring in an additional $15 million in revenue.

By law, the city has until July 31 to set the new tax levy.

Asked where things stand with the nonprofits, spokeswoman Melissa Withers would only say that negotiations are “ongoing.” The city also is still in negotiations with the Providence Teachers Union—even as it has moved forward with school closures and layoffs.

But otherwise most of the major goals Taveras set out have been reached. “We have made significant progress since the budget was submitted in April. Successful negotiations with Local 1033 and the police and fire unions were an important part of the budget proposal, as was support from the General Assembly,” Withers said.

‘Still much work to be done’

As a result of those agreements, the city was able to save $6 million in the fire and police budgets and $4.6 million across city departments through the Local 1033 contract—all without resorting to layoffs in those unions. Taveras has also closed five schools and outlined a process for laying off teachers—saving $28 million.

“There is still much work to be done, but these steps forward are important building blocks to restoring fiscal stability in our Capital City,” Withers said.

The city received a boost from the General Assembly as it wound up its business for the session last week. In all, state lawmakers helped the city save or cut an additional $18 million from its budget for the new fiscal year, according to the Mayor’s office. Cost-cutting measures included the following, according to a news release issued yesterday:

■ Retiree health care: The new state budget has an article allowing the city to shift retirees onto to Medicare. Estimated savings: $11.6 million a year.
■ State aid: The budget also allocates an additional $3.9 million in state aid.
■ Fire hydrant costs: The General Assembly approved legislation shifting the costs of fire hydrants from taxpayers onto ratepayers. Estimated savings: $1.2 million.
■ Fire alarm fees: A new user fee on fire alarms will generate an additional $1 million in new revenue.

General Assembly leaves colleges, hospitals off the hook

But the news release left unmentioned one key defeat for the city: legislation that would have allowed it to tax nonprofits at 25 percent of their value. The measure would have poured an additional $24 million into the city’s coffers and eliminated the need to negotiate on one-on-one basis with tax-exempt institutions.

General Assembly records show the bill never made it out of either the House or Senate Finance committees.

Overall, Taveras hailed the session as a big win for Providence in a statement issued yesterday.

“I commend the General Assembly for recognizing Rhode Island’s need for a strong, stable Capital City, and for delivering Providence the support it requires during this difficult time,” Taveras said. “Providence is closer to emerging from its Category 5 financial hurricane because of the commitment of the General Assembly leadership, the Governor, the City’s legislative delegation and all lawmakers at the General Assembly.”

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