BREAKING: Providence to Run Out of Money by June
Saturday, January 28, 2012
The city of Providence will run out of cash by June, according to a memo obtained by GoLocalProv.
Citing a combination of revenue shortfalls (including $7 million from the nonprofits), $5 million in over-expenditures in the public safety departments and the failure to achieve $8 million in savings from transferring retirees to Medicare, the memo says the city is facing an $11 million shortfall and will run out of money at least seven weeks before the next tax collection period in August.
A similar memo went out to members of the City Council last spring, but the new memo, issued by internal auditor Matthew Clarkin and city treasurer James Lombardi and addressed to City Council finance committee chairman John Igliozzi, suggests the city’s problems are more dire.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTLast year, the city was able to pass a budget earlier than normal (which moved the due date for taxes up by one month) and it used about $8 million from a Port of Providence bond to cover expenses. The memo suggests those extra funds will not be available this year.
A city spokesman did not respond to a request for comment.
Providence isn’t the only city facing cash-flow issues. This week, state lawmakers agreed to allow Pawtucket to borrow $12.6 million in tax anticipation notes to help pay bills after March. This is the second consecutive year the city has to borrow money. Earlier this month, Governor Chafee signed off on legislation that gave East Providence a $12.6 million advance it its state education aid to help the city from running out of money.
