Chairman Igliozzi (R) and Councilman Hassett (L) are in the foreground as members of the Mayor's staff can be seen conferring outside the Finance Committee meeting on Monday.
The Providence City Council Finance Committee announced Monday night that it adjusted the levy in the upcoming budget to provide greater tax relief to Providence homeowners and renters, but the Elorza Administration — and at least one council member — objected to the manner in which it was done.
Following the Finance Committee’s public hearing in council chambers, the meeting that followed saw the city’s Internal Auditor Matt Clarkin and City Treasurer and City Council Advisor Jim Lombardi unveil an amended budget for Fiscal Year 2017 from the committee that decreased the total tax levy from what the Elorza Administration proposed -- by $1.8 million dollars.
This was made possible by decreasing the tax rate on owner-occupied residential from Elorza’s proposed $18.91 to $18.77, and non-owner occupied residential from $32.76 to $31.91, but due to the increase in preliminary assessments this past year, the overall levy is due to increase across all five categories (plus commercial, tangible, and motor vehicle tax) by over $12 million in the next fiscal year.
"At a time when the city is facing a $13 million cumulative deficit, the Council's proposal to change taxes without telling residents how their money will be spent is alarming," said Elorza on Monday. "My administration will only evaluate this proposal as a complete budget and will only enact that budget if it is a fair deal for taxpayer."
Finance Committee Chairman John Igliozzi lauded the move on Monday, touting the council’s version which called for a slight increase over Elorza’s proposed commercial tax rate (from $36.50 to $36.65), which is still lower than FY16 ($36.75).
“We’ve amended the proposed levy increase with a 13.5% decrease,” said Igliozzi.
Opposition
City Councilman Sam Zurier voiced his opposition to the decrease in the landlord tax rate, as the residential rate levy is poised to increase over $5 million from 2016 to 2017 while the total landlord levy will increase less than $4 million.
“Did landlords lobby to get their tax rate lowered? I attended every one of these hearings, I haven’t heard from landlords at these meetings,” said Zurier. “From a process standpoint I’d say this came out of nowhere. And the change is being made now?”
Igliozzi shot back at Zurier.
“Our overall theme has been to lower taxes in all categories,” said Igliozzi. “If you want to make them higher, make a motion to do so at the appropriate time.”
Elorza’s Chief Operating Officer Brett Smiley took issue with the change to the levy without knowing where the $1.8 million shortfall would come from, as the Finance Committee is slated to take up the spending side of the budget on Thursday.
“There appears to be a shortfall of $1.8 million dollars — so in order to submit a balanced budget, I would hope and expect we see where those cuts are coming from,” said Smiley. “How do we know the recreation centers aren’t being cut, how do we know snow budget’s not being cut, public safety professionals [aren’t] being cut? Please consider passing this levy on Thursday when the spending bill is considered.”
The committee ultimately voted out the new version of the tax-side of the budget for Fiscal Year 2017.
Igliozzi mentioned an additional, unspecified $1.5 million of revenue coming in which would make the shortfall only $300,000.
Related Slideshow: 10 Biggest Issues Facing Providence in 2016
The battle that started last year spills over into 2016. After Mayor Elorza announced he was going to reorganize the Fire Department from four platoons to three with a condensed shift schedule, the firefighters took the battle to court — and callback costs soared with injured firefighters out on leave. Elorza said the change could save the city “as much sat $5 million” in the next fiscal year (FY17) -- but the city is currently seeing red. "Through the middle of December, fire fighter "call back" expense has been $4.7 million, which represents almost all of the $5.05 million budgeted for the entire fiscal year," reported Councilman Sam Zurier on Sunday. "Should this trend continue, the cost of this line item could exceed the budget by $5 million by the end of the year."
Now it all rides on the outcome in the courts. If it ends in a negotiated settlement, the crisis could be averted. If not, firefighter union head Paul Doughty has said that Elorza can “hand over the keys to the city" for bankruptcy.
From the West Side to the East Side, residents across the city in 2015 were organized and mobilized to demand action from the Elorza Administration on crime in the city. GoLocal reported at the end of 2015 that over half of the police department is eligible to retire — and the city still needs to get a new class of officers underway as budgeted. Tensions were high following a Dunkin’ Donuts worker writing #blacklivesmatter on a police officer’s cup (and the Black Major Movement continuing to call for a black major in the department).
Councilman Seth Yurdin announced this week that he is introducing a resolution to establish a special commission to review relations between the Providence Police Department and the community it serves. The Special Commission on Community-Police Relations will review current public safety practices and create opportunity for public input.
It’s been a mild winter so far, so perhaps at least one of the two scourges of the city will be mitigated this coming year. But addressing the conditions of the roads continues to be an issue for Providence. Last year, Mayor Elorza made a public display of commitment to addressing problematic potholes, and also pledged to respond to the rampant graffiti issue in the city that has seen the property destruction spread to private houses.
City Councilman Michael Correia recently put up a $1000 reward to find who was tagging properties in his district. Residents of the city want to feel safe, and that includes driving on roads that won’t inflict damage on their cars (or take out runners and bikers) and that their personal property won’t be destroyed. Graffiti continues to crop up, and it needs to be addressed quickly when it does.
The city’s commercial tax rate might be frozen — for now — but there are a lot of moving pieces. The $36.75 per $1000 rate on commercial properties is among the highest in the country -- a point well-known in RI circles.
“Providence has a problem with the commercial tax rate,” said developer Colin Kane. “With new construction or significant rehab -- the costs aren't supported by current rent.” The property revaluations expected shortly will shed some light how the city will move forward addressing tax rates, but in the meantime, the TSA extensions before the Council are the 600 pound elephant in the room. “The City Council is looking for nickels in the couch cushions because of the fiscal challenges facing the city,” said Kane. “And they weren't caused by this council or mayor, but by the fact that they were kicked down the road. And now we want to malign people like Buff Chace who made the city what it is?”
The owner occupied residential tax rate could be in the crosshairs as the city looks to address revenue issues in the coming year. “Everything’s on the table,” Aponte told GoLocal. And with the revaluation, things could be in flux for the current owner-occupied rate of $19.25 per $1000 .
“Suppose you had a city where there was a wild appreciation of real estate values — that used to happen here, Providence has seen 10% before. State law says you can only increase the levy unilaterally by 4 and a quarter,” said City Counciman Sam Zurier. “So supposed you have a situation where your values go up 10% and you want to collect 4 — you have to reduce the rate by 6%. "
"If values go up enough — even 5% - then the city will get additional money without raising the rate. During a [revaluation] year - you have to get into tax bills versus rates. And when you factor in commercial and non-owner occupied values and rates, it’s tricky.
Providence Schools face a tall order ahead of them. The search is on for a new superintendent following the departure of Dr. Susan Lusi. The current School Board President is stepping down at the end of the month. Providence High Schools scored among the worst in the state following the release of the first year of PARCC test scores. Current School Board member Nick Hemond is slated replace outgoing President Keith Oliveira, but question remains for the choice of the new super. Council President Aponte told GoLocal this week that stability in leadership in the school department is one of the greatest challenges facing the city moving forward. Can that be achieved in 2016?
Lights have been spotted on recently in the Superman Building - i.e. Industrial National Bank Builcing — but the fact remains that the city’s iconic skyscraper remains vacant, which former Mayor Joseph Paolino called one of the biggest issues facing the city (stating that the fact that it remains empty cost him a mortgage from a top bank for an adjacent property).
Citizens Bank is eyeing a new corporate campus somewhere in Rhode Island, and while indications point to one most likely going in the suburbs, a number of business and community leaders are hoping Superman isn’t ruled out completely. Previous efforts to get state support to turn the building into apartments fell flat, and Providence residents are gun-shy about any project looking for public support. But the fact remains that the empty anchor is an eyesore for the city, and getting a tenant — or tenants — in should be a top priority in 2016.
Providence needs more cranes. The city has seen its first one in a while by the Jewelry District with developments at Johnson and Wales, which is a good sign — but the city needs more.
“Owners and property developers want to be treated fairly and play on a level field. Providence does not have a business friendly reputation. This is why there are few cranes in the sky in Providence and very few new businesses coming to the city or planning to expand in the city,” URI Distinguished Professor of Business Edward Mazze told GoLocal earlier. So in order to get the construction equipment in — Providence has to figure out how best to lure businesses here in the first place.
Providence needs a win — or a least a path to victory. Whether that be getting a tenant in Superman, bringing in a notable business, or articulating a concrete plan to move Providence forward, residents want to feel that the city is on the right track.
The City Council recently announced that it received the results of its cluster analysis study to identify where opportunities lie — and now we need to see results. The Mayor made multiple trips abroad in 2015. He campaigned on a promise of doubling exports from Providence in five years. What results will we see from those overseas meetings? Providence wants a concrete vision moving forward.
“Absolutely not,” said City Council President Luis Aponte, as to whether the city could go into receivership in light of its current precarious financial condition.
“If the city loses, Elorza can hand over the keys, because the city will go bankrupt,” has said firefighter union head Paul Doughty regarding the firefighters legal battle over the Mayor’s platoon reduction.
Financial advisor and GoLocal MINDSETTER Michael Riley said receivership is almost a certainty.
“Essentially Providence is bankrupt and insolvent. It is only by illegally borrowing from the pension fund the last 10 to 15 years that have saved them from being sued by creditors, and the lies continue,” said Riley. “Until Providence goes into receivership nothing else can happen — no railroads, no Superman, they are sunk. I consider everything else irrelevant.”
