City Budget Seeks To “Broaden Tax Base”
Tuesday, July 12, 2011
The Providence City Council Finance Committee unanimously approved a $614 million budget Monday evening that includes a significantly lower-than-expected property tax hike but will also cut the car tax exemption from $6,000 to $1,000.
The budget, which now heads to a full Council vote, represents a $3 million decrease from Mayor Taveras’ proposal. Roughly $2.2 million in line item reductions, the defunding of ten vacant city jobs and two additional furlough days for all non-union and non-bargaining employees (including the Police and Fire Chiefs) helped create the additional savings, according to a memo produced by Internal Auditor Matthew Clarkin.
“This budget makes significant progress on addressing Providence’s structural deficit,” Council President Michael A. Solomon said. “Despite the City facing a $110 million structural deficit the Council and Administration worked together to minimize the effects of a tax increase on property owners. Working side by side, we have produced a budget that maximizes savings and will make City government leaner and more efficient.”
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Mayor Taveras’ original proposal called for 13.5 percent residential property tax increase but did not include any changes to the car tax. The new budget, which Director of Administration Michael D’Amico said the city supports, reduces the tax hike to just under five percent while broadening the tax base to make up for the difference.
Under the revised plan, property owners will pay $31.89 on every $1,000 of assessed value on their home. However, nearly every registered car in the city is likely to be taxed to make up for the reduced property taxes. The car tax rate will actually drop by $16.00 per $1,000 in assessed value, but because only cars valued at under $1,000 will be exempt, the city is likely to cash in.
Police Layoffs Still Possible
Emphasizing that budget adoption is only the first step in the process, D’Amico said “this is clearly a step in the right direction.”
Still, questions remain regarding assumptions made in the budget, particularly with the unions. With the Police contract, for example, 40 officers would need to retire for the city to realize $6 million in savings during the 2012 fiscal year.
D’Amico said that if 40 officers do no retire, the contract allows for layoffs to occur, but the FOP would first be allowed to attempt to find the savings elsewhere.
1033 And PILOT Questions
Clarkin’s memo said the majority of the $1.4 million in savings from Local 1033’s contract also remains uncertain because the city is waiting for employees to declare whether they will take advantage of an early retirement incentive. The deadline to accept the incentive is August 1.
The other question mark in the budget comes from the PILOT program that involves the colleges, universities and hospitals. Currently, only $2 million of the roughly $9 million the city needs is certain, according to Clarkin’s memo.
But D’Amico said the city is “very close” to an agreement with two colleges. He said the $7 million gap represents just one percent of the total budget and he believes the city will be able to achieve the full funding as well as the savings needed from every union contract.
Praise For Partnership
During the meeting, Committee Members each took time to acknowledge the strong working relationship between the Council and the Administration. Councilman Terry Hassett said he hasn’t seen the Executive and Legislative branches work so closely in his more than decade-long stint on the Council.
Finance Chairman John Igliozzi blamed the previous administration for the city’s current fiscal crisis, but said the relationship with the Taveras administration has been “unprecedented.”
“Everyone has come together to tighten our belts and look internally for savings and ways to be more efficient,” Igliozzi said. “The steps the Committee on Finance took today will improve the long-term stability and economic viability of Providence.”
