State of the City: Mayor Delivers Doom and Gloom Message
Tuesday, February 14, 2012
Providence Mayor Angel Taveras said Monday he intends to freeze all cost-of-living-adjustments (COLAs) and cap pensions for retirees as part of his efforts to keep the cash-strapped capital city from going broke.
Although Taveras did not mention the word "bankruptcy" – as he has several times in recent weeks – in his 20-minute State of the City address, the Mayor said that without help from retirees and $7.1 million in additional voluntary payments from the tax-exempt institutions, Providence could become "barely recognizable" thanks to devastating cuts that still wouldn't address the city's structural problems.
"Providence is in peril, and we must work together to save our city, our capital city," Taveras said to open his speech before explaining that the city still faces an approximately $22 million shortfall in the current fiscal year.
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Taveras inherited a massive $110 million structural deficit upon taking office last year, but because several assumptions in his budget did not come to fruition, he said he has been left with few options for closing the rest of the deficit this year. The Mayor placed much of the blame squarely on the retirees and the tax-exempts.
"We stare into that black hole because some have failed to sacrifice," Taveras said. "Our tax-exempt institutions and city retirees have yet to join the rest of our community in helping to save our city."
During the last legislative session, the General Assembly granted Providence the right to move retirees over the age of 65 to Medicare, but a Judge issued a preliminary injunction that stopped the city from shifting their coverage after police and fire retirees challenged the decision. The State Supreme Court said last week that it will not expedite the city's appeal or lift the injunction.
"The unsustainable promise of free health care for life continues, the burden on the taxpayer increases and the window of opportunity to pull our city out of the black hole grows increasingly smaller," Taveras said.
City to Meet with Tax-Exempts this Week
The Mayor reiterated that the city will run out of cash and be unable to make payroll by June without relief from both the retirees and the nonprofits. The city's cash shortfall is projected to balloon to $46 million in July, at least a month before the next tax collection period.
Taveras said the city is hopeful that it will announce an agreement to increase voluntary payments from Johnson & Wales University, the one nonprofit that has been viewed as ready and willing to up its contributions to Providence for months. Following the speech, city spokesman David Ortiz said the administration plans to meet with the CEOs of every hospital as well as Brown University this week.
But agreements with the rest of the nonprofits appear to be far off. Taveras said the hospitals, college and universities own nearly $3 billion of property in the city which would be worth $105 million in tax revenue. He said that while the city supports their continued growth, their expansion creates a heavy burden on taxpayers.
"It's a system that's unfair and simply unsustainable," Taveras said.
Taveras: Providence Can’t Become Central Falls
Taveras said he has reduced the city’s payroll by 200 employees and while further cuts are possible, they would force the city to make decisions that would damage quality-of-life for every resident, including reduced trash pickup, cuts in the parks department and the closure of pools, recreation centers and libraries.
The Mayor also said that a supplemental tax increase is still on the table despite City Council leadership saying they will not support another hike in property taxes. Taveras said an increase may be an "unavoidable necessity."
"Rhode Island cannot afford for Providence to follow the path of Central Falls," he said. "I will do all that I can to make sure we avoid that fate. However, without structural change, we will only delay the day of reckoning."
Taveras made it clear that with or without help from the courts or the legislature, he intends to move forward with going after retirees and the tax-exempts this year.
"This year, one way or another, we will address the broken pension and health care systems that are draining our city," he said. "We will address the problem of large tax-exempt institutions that are poised to expand their footprint dramatically in the coming years, but are still unwilling to compensate the city for the millions of dollars of services they receive."
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