Providence Fiscal Crisis: Leaders React to State of the City
Tuesday, February 14, 2012
The capital city is "on the edge and staring into a black hole" that could lead to reduced trash pickup, cuts in the parks department and the closure of pools, recreation centers and libraries if it cannot close its $22.5 million deficit this year and make structural changes that will prevent the city from going broke, Mayor Angel Taveras said Monday during his first State of the City address.
Singling out the tax-exempt institutions who have yet to agree to make an additional $7.1 million in voluntary payments to the city and retirees who cost the city millions every year in pension and free health care benefits, Taveras said he intends to make changes this year "one way or another."
GoLocalProv asked several City Council members, state lawmakers and a former head of the local GOP what they thought of the Mayor's speech.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTCouncil President: No Tax Increase
Council President Michael Solomon said he was "on board" with the Mayor calling for the freezing of cost-of-living-adjustments (COLAs) for all retirees and asking the tax-exempts to pay more, but he again ruled out the possibility of a supplemental tax hike as a way to solve the city's fiscal woes.
During his speech, Taveras said that while he understands the Council's opposition to a tax increase, it might be an "unavoidable necessity."
"Right now, a supplemental tax increase is off the table," Solomon said. "We have a fiscal crisis. We need the tax-exempts and we need the pension reform."
Majority Leader: Problem Not Solved with Taxes
Majority Leader Seth Yurdin echoed Solomon's sentiments. He said that a tax increase will not solve the city's structural problems. He said the way to address the city's long-term issues is through pension reform.
"The problem is not solved with taxes," Yurdin said.
When asked what makes him believe the courts would ever rule in favor of Providence if and when retirees end up suing, Yurdin said the question is whether the city has established that it cannot afford to make payments any longer.
Councilman Principe: Go After the Big Fish
In his speech, Taveras indicated that he intends to freeze all COLAs and cap pensions for retirees. Councilman Bryan Principe said he would like to see the city attempt to address the approximately 600 retirees earning five and six percent COLAs before going after every retiree. While he wouldn't go as far as to completely rule out a tax hike, he said he considers both raising taxes and bankruptcy a last resort.
"I'd say that [bankruptcy] is one of the last options coupled with the tax increase," Principe said. "I'm fundamentally against a tax increase. I am looking at all other options first. Cutting spending, going after the retirees. I think we need to go after the big fish first."
Principe said he is happy the state is showing more of a commitment to helping cities and towns.
"I am heartened to see that the Governor was in attendance tonight because I think what we're seeing is a better collaboration between the city and the state," he said. "We're going to work through this."
Hassett: Correct an Injustice
Councilman Terry Hassett said he believes retirees do deserve pay increases, but he said the city needs to create a more effective system. He also said it cannot afford to keep doling out five and six percent compounded COLAs to retirees.
"I think the COLAs have to be tied a national economic index. To have five a six percent COLAs, regardless of the economic condition or fiscal stability of the city, I find to be not proper. But I do think they should get increases," he said.
The bigger issue for Hassett is the tax-exempt institutions. He has long called for the nonprofits to pay more to the city and he said he believes that legislation that would require nonprofits to pay 25 percent of the taxes they would owe if they weren’t tax-exempt could pass the legislature this year. He said he has made this recommendation for nearly a decade.
"I chaired the commission eight years ago and now you have more tax-exempt property. We’ll sit here and shake our head and go home or we'll step up to the plate and take effective, deliberate action to correct an injustice," Hassett said. "That's the issue. That 25 percent rule should have been done eight years ago."
Former GOP head: Go Even Further
Former local GOP chairman Dave Talan said he supports the Mayor's efforts to save the city so far, but he thinks more should be done to curb spending.
"He's heading in the right direction, absolutely," Talan said. "I'm just proposing he should go even further. Freezing the cost-of-living-adjustments is absolutely the right thing to do."
Talan said he believes the city can save $8 to $10 million on bussing: "We need to stop playing musical chairs and bring back neighborhood schools like when I was a kid."
He said the universities should do more than just "fork over" money to the city. He suggested looking into whether Johnson & Wales could take over the cafeteria system in Providence schools. He also called on Brown University to open private schools to educate students in the city.
State Rep. Reacts
State Rep. Scott Slater said he would vote in favor of legislation that would require the tax-exempts to pay 25 percent of the taxes they would normally owe the city. He said he would also vote to give the city the tools to freeze COLAs for retirees.
Slater said Taveras is the doing the best he can under the circumstances.
"I think the Mayor is putting his best effort forward to save Providence," Slater said. "I support the city's legislative package."
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