EXCLUSIVE: Fixing Providence Deficit Could Take Two Years
Friday, March 11, 2011
A top city official has told GoLocalProv that it could take up to two fiscal years to fix the massive structural budget deficit Providence is facing.
Director of Administration Michael D’Amico said he has every intention of eliminating the deficit in the budget the mayor proposes for fiscal year 2012—but, in an exclusive interview with GoLocalProv, he said it’s possible it could take longer.
“My goal is to eliminate it in this budget we submit, but I can’t guarantee that we’ll meet that goal,” D’Amico said.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTA recent report of the Municipal Finances Review Panel revealed that the city has a $70 million structural deficit in the current year and is facing a $110 million deficit next year. “It is such a large number that we may not be able to do it, but the goal is to eliminate it in this budget—and, if not this one, then certainly the next one,” D’Amico said.
A structural deficit, in its simplest terms, is the gap between how much is coming in revenues and how much the city is spending. At the end of the year, the city can eliminate the deficit by a short-term fix, such as borrowing money—but that does not address the long-term structural issues that will return in the ensuring year.
In the interview, D’Amico declined to elaborate on whether the city was ready to borrow money to deal with the deficit in the short term. “I don’t really want to get into options. There are a lot of options,” D’Amico said. “I mean, as you can see, we’ve had structural deficits for a couple of years, so there are a couple of things we can do.”
‘I’ve been through difficult financial situations before’
D’Amico, a Rhode Island native and a childhood friend of Mayor Angel Taveras, has arrived at his City Hall post after nearly 20 years in the business world. “I didn’t know what to expect but I will say that I knew it was going to be a challenge. I knew it was going to be a lot of work,” D’Amico said. “It has been a challenge. It has been a lot of work. So that met my expectations.”
Most recently, D’Amico was an executive and General Manager of the U.S. division of Johnson Matthey Emission Control Technologies, an international corporation headquartered in Pennsylvania. Before that he was at Ametek, company that manufactures electric motors and electronic instruments.
Now, as the Director of Administration, D’Amico is tasked with helping steer the city through financial challenges it hasn’t seen in decades.
But, in a way, D’Amico says he’s been through this before.
“When the economy really hit a rough patch in 2008 and then into 2009, the division I worked for was primarily involved in the automotive industry and that industry was in tremendous upheaval,” D’Amico said. “It’s not dissimilar.”
One of his company’s biggest customers, Chrysler filed for modified bankruptcy and did not put in any orders during the two months that its factories were shut down. D’Amico said the situation had a “tremendous impact” on the operations of his company, leading to substantial layoffs.
“I’ve been through difficult financial situations before and they’re hard on everybody and you have to be very careful to make the choice—the best choice you can—to limit the impact on as many people as possible,” D’Amico said.
‘Painful decisions for everybody’
As Director of Administration, there is perhaps no other single person in the city administration—except for the Mayor himself—responsible for assembling the proposed budget for each year.
The budget for fiscal year 2012—which begins in July—is due before the City Council by the end of April and D’Amico said he’s confident that deadline will be met.
“We’re going to have to make some difficult decisions. There’s going to have to be shared sacrifices,” D’Amico said. “There are likely to be painful decisions for everybody, but we are going to do what we have to do to balance the budget and put the city on firm financial footing.”
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