No tax increase but higher fees in Elorza’s budget

New mayor wants $696 million to run Providence government during 2015-16

Mayor Elorza addresses the City Council. (Photo by WPRI 12/Dan McGowan)

PROVIDENCE, R.I. (WPRI) – Following through on a campaign pledge, Providence Mayor Jorge Elorza proposed a budget Wednesday that holds the line on all city taxes while investing in the city’s public works department and launching new police and fire academies.

But the mayor’s $696.1-million tax-and-spending plan for Providence is dependent on several uncertain assumptions, including a request for additional state aid, a repeal of an already-approved tax break for rental property owners, and an expectation that the majority of the city’s workforce will not receive raises next year. The budget would cover the new fiscal year that starts July 1.

“This is a crucial time of transition for our city,” Elorza said in his budget address, his first since winning office last November.

“This is the new Providence and this budget is built to manage that transition,” he said. “It maintains faith with the taxpayer by not raising their taxes. It honors our obligations by making 100% of our pension payment. It invests in innovation so that we have a more efficient and responsive government. And it confronts our fiscal changes by refusing to rely on one-time budget fixes.”

The Democratic mayor’s budget would keep Providence’s owner-occupied property tax rate at $19.25 per $1,000 of assessed value and the non-owner-occupied rate at $33.75 per $1,000 of assessed value. The budget also holds the city’s commercial tax rate at $36.75 per $1,000 value for a fourth consecutive year. City car taxes will remain $60 per $1,000 with the first $1,000 exempt.

Increased fees, repealing a tax break

Avoiding a first-year tax increase means raising the cost of doing business with the city. Elorza proposed 10% increases in building permit and business license fees, cost hikes he says will be matched with a streamlined process to help business owners navigate city regulations. The mayor said he plans to create a “business concierge” in the city’s economic development office to work with businesses.

Elorza’s plan also calls for expanding the number of city parking meters. That would mean adding meters near the vacant I-195 land, on Federal Hill and parts of the East Side, generating an additional $2 million each year. He said the city is moving toward accepting credit cards at all meters. The city is also considering raising meter rates for special events in the city.

The mayor is also asking for an additional $5 million from the state through its payment in lieu of taxes (PILOT) program. That would mean state lawmakers would have to fully restore Gov. Gina Raimondo’s proposed $2.5-million cut in PILOT funding and add an additional $2.5 million on top of that. House Speaker Nicholas Mattiello said Wednesday he intends to restore the governor’s proposed cuts and pledged to review Elorza’s request. Any boost in PILOT funding for Providence would also generate more revenue for communities across the state.

“Balancing this budget without raising taxes was not easy, but it is necessary,” Elorza said.

Among the proposals that has caught the eye of the City Council, Elorza said he intends to repeal an ordinance that allows rental property owners to pay 160% of the city’s $19.25 per $1,000 of assessed value rate for owner-occupied homes beginning July 1, down from the 175% rate they currently pay. That ordinance was vetoed by former Mayor Angel Taveras, who said it would force the next mayor to raise taxes elsewhere. But the council overrode the veto.

City Council President Luis Aponte said Wednesday his colleagues still support the tax break, but indicated he is willing to discuss ways to phase in the ordinance over time rather than all at once. Keith Fernandes, president of the Providence Apartment Association, said he was disappointed with the mayor’s proposal, but signaled his group plans to work closely with the administration and council to address the ordinance.

Key investments

While Elorza acknowledged the city needs to “spend our resources more wisely,” he proposed a slew of strategic investments aimed at keeping residents safe and cleaning the streets faster following snowstorms.

The mayor set aside funding for 32 new police officers and 52 firefighters by June 30, 2016, part of an effort to avoid an oncoming string of retirement-age cops in the police department and to help reduce callback time in the fire department. He also said he intends to restore community policing and foot patrols in neighborhoods across the city.

Following a devastating winter that he has said “could become the new normal,” Elorza wants to see a 13% increase in the city’s snow budget. He said that would help the Department of Public Works purchase more equipment “to make sure we are ready for whatever lies ahead.”

The proposed $363-million school budget includes funding for additional teachers at the West Broadway Middle School and Providence’s two new high schools, as well as expanded career and technical education programs at all high schools and more Advanced Placement courses across the city.

When it comes to school buildings, the mayor said he wants to borrow $10 million to bring all schools up to fire code and make renovations and made it clear he wants state lawmakers to lift the moratorium on school construction aid, as Governor Raimondo has proposed doing. The mayor has also proposed repainting every school in the city over the next five years.

But the mayor’s plan doesn’t include funding for all high school students who live at least two miles from school to receive free bus passes or about $2.5 million in capital improvements, including significant technology upgrades across the city. School Board President Keith Oliveira voted against the plan when it appeared in front of his panel last week, arguing that it doesn’t “meets the needs of the school department.”

Elorza’s budget does not include raises for members of the Providence Teachers Union, whose contract expired last August. The two sides are currently in mediation. The mayor also didn’t include wage increases for municipal workers in Local 1033 of the Laborers’ International Union of North America, which has a contract that expires on June 30.

The city’s deal with its school clerical workers ends Aug. 31 and the police union has a wage reopener clause in its agreement that allows for it to negotiate a raise of up to 6% for the next fiscal year. But Elorza proposed no increases for those groups, either.

Elorza’s budget now heads to the City Council, which will vet the plan over the next two months. The mayor’s office will present its proposal to the council Finance Committee on Thursday evening.

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Dan McGowan ( ) covers politics, education and the city of Providence for Follow him on Facebook and Twitter: @danmcgowan

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