BREAKING: Mayor Signs $614 Million Budget Into Law
Monday, July 18, 2011
Minutes after the Providence City Council gave final approval on a $613.8 million budget, Mayor Angel Angel Taveras made it official by signing it in to law Monday evening.
The budget, which was unanimously supported by the Council, will eliminate a $110 million structural deficit as long as the city manages to achieve assumed savings with several city unions. The Mayor said the part of the budget he is most proud of is the agreements with both the fire and police unions, as well as Local 1033, the city’s largest public employee unions.
The Mayor said the passing and signage of the budget marks an important milestone for the city that pulls it back from the brink of financial collapse, but he warned that there was more work still to do.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"Providence’s fiscal storm is not over yet, but passage of a balanced budget is an important turning point for our City and I truly believe that brighter days are ahead," Taveras said.
Taxes On The Rise
Despite the optimistic outlook, the city could face push back when tax bills go out. Tax increases are a major part of the new spending plan, including a 4.99 percent increase in residential property taxes, a nine percent hike in commercial property rates and an expansion of the car tax that lowers the exemption from $6,000 to $1,000.
Mayor Taveras said he understands the potential impact on city residents, but made it clear that this was his only option.
“I say that we've done the very best that we can," Taveras said. “We've worked hard that we have made difficult decisions and this was a huge a problem. This was a nine figure problem and I always said that a tax increase would be our last resort and it was, but we simply could not do this without a tax raise.”
Taxes Can’t Be Frittered Away
Providence is not the only city raising property or car taxes. Moderate Party leader and former gubernatorial candidate Ken Block said politicians should be trying to hold the line on taxes and control spending in city and state governments.
Block said he has called car taxes a regressive tax. He said the income tax is the least regressive, but that Rhode Island’s income tax only recently became competitive with neighboring states. He said raising the income tax would have signaled instability to the outside world.
Block said both cities and the state need to prove tax revenues won’t be wasted.
“Both Providence and the State of Rhode Island (and a whole bunch of other towns as well) have not proven to be terrific stewards of the taxpayer’s money,” he wrote in an e-mail Monday. “Our state and local governments need to prove to the taxpayer that increased tax revenues won’t be frittered away. We are on a one way tax escalator right now – up.”
I’m Not Inflexible
The Mayor's original budget called for a 13.5 percent property tax increase and did not include a change to the car tax. At the time, he said the car tax relied on too many assumptions and the city need to recognize real revenue from a tax increase.
But after consulting with the Council and his Director of Administration Michael D’Amico, Taveras said he was able to confirm that the necessary revenue could be achieved. He said the administration came to realization that there were options better than such a large property tax and made it clear that he supports the changes made by the Council.
“I'm not so inflexible that I won’t change when someone comes up with a better idea,” Taveras said. “They did that and I’m happy to give them credit and say that I support their idea.”
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