Mayor-elect Elorza promises no tax increase next year

PROVIDENCE, R.I. (WPRI) – Providence Mayor-elect Jorge Elorza said Friday he will not seek to raise taxes in order to cover a projected shortfall when he begins to craft his first budget early next year.

The incoming mayor said he’s heard the budget gap for the 2015-16 fiscal year could be between $15 million and $24 million, but indicated he won’t know the true figure until his administration conducts a full review of the budget.

“I’ve said continuously that raising taxes is not an option,” Elorza said during a taping of WPRI 12’s Newsmakers. “There are many other steps that we can take, but raising taxes is not an option.”

Elorza’s no-tax-increase pledge came 10 days after the 37-year-old Democrat defeated independent Vincent A. “Buddy” Cianci Jr. in the race for mayor. This week, Elorza unveiled the co-chairs of his transition team and said former mayoral candidate Brett Smiley will be the city’s chief operating officer beginning in January.

Elorza credited outgoing Mayor Angel Taveras for helping make the “transition as smooth as possible” in the days following his victory. He said the two haven’t spoken specifically about how much of a shortfall the city will face next year, but indicated Taveras has been “extremely transparent and forthcoming” about the budget process.

“I think the responsible thing to do is as soon as you come into City Hall, you have to do a comprehensive review of the budget,” Elorza said. “You have to go through it line by line and figure out where exactly the city stands.”

Where the city stands depends on who you ask.

The chairman and vice-chairman of the City Council Ways and Means Committee said last month they believe Providence could face a budget gap of between $15 million and $24 million for the 2015-16 fiscal year, which starts July 1, 2015.

Councilman David Salvatore, who chairs the committee, said he is expecting a $17 million shortfall because of two factors: an increase in pension and medical obligations, both of which are tied to union contracts, and the absence of roughly $7 million in one-time revenue sources used to balance this year’s city budget.

On top of that, an additional projected hole of $6.6 million was created in the budget when the City Council recently passed an ordinance to reduce the tax rate on rental property owners starting in 2015-16. Salvatore said that ordinance, which was vetoed by Taveras but overridden by the council, could create a $23.6-million gap.

A spokeswoman for Taveras said Friday that the city will face a $7-million shortfall because of the landlord tax break, but she indicated the administration does not agree with the council’s other projections.

Last spring, before the rental property ordinance was approved, the Taveras administration said the city’s budget shortfall was expected to be only $2.2 million in 2015-16. At the time, a Taveras spokeswoman said the deficit projection amounted to “essentially a balanced budget as it represents less than 0.5% of the budget.”

Elorza will enter office in January, six months through a $678.4-million budget approved by Taveras and the current council. Taveras’ final budget included no tax increases, but he later warned that the landlord tax ordinance would force the next mayor to raise taxes.

On the campaign trail, Elorza said he opposed the ordinance because it “doesn’t clearly identify a method of payment,” but argued that the current non-owner-occupied tax rate gives a “strong disincentive to invest in our housing stock.”

In a statement this week, Elorza spokesperson Marisa O’Gara was noncommittal about whether the new mayor will seek to repeal the ordinance.

“Mayor-elect Elorza is focused on his transition, and he and his team will be closely analyzing and considering all aspects of the budget and city finances as the incoming administration prepares to lead,” she said.

Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan

Tim White ( twhite@wpri.com ) is the Target 12 investigative reporter for WPRI 12 and Fox Providence. Follow him on Twitter: @white_tim

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