Providence council gives first approval to $696M budget with no tax increase

The Providence City Council discusses the city budget. (photo by Dan McGowan/WPRI)

PROVIDENCE, R.I. (WPRI) – They’ve got one vote down and one to go.

The Providence City Council voted 11-3 Monday to approve a $696.1-million budget for the fiscal year that begins July 1, passing a tax-and-spending plan that includes no broad-based tax increases, but raises fees for building permits and business licenses by 10%.

Only Ward 1 Councilman Seth Yurdin, Ward 2 Councilman Sam Zurier and Ward 14 Councilman David Salvatore voted against the budget, which will be voted on again Wednesday night before heading to Mayor Jorge Elorza’s desk for his signature.

The budget for the 2015-16 fiscal year keeps Providence’s owner-occupied property tax rate at $19.25 per $1,000 of assessed value, the commercial tax rate at $36.75 per $1,000 of value for a fourth consecutive year, and city car taxes at $60 per $1,000 of value with the first $1,000 exempt.

Real estate property owners will see their property tax rate decrease to $33.10 per $1,000 – a reduction of 65 cents – partially fulfilling a promise the council made to landlords last year. Council President Luis Aponte has said he wants a larger tax cut phased in over the next several years, but Mayor Jorge Elorza has declined to make that commitment.

In order to avoid a tax increase in the mayor’s first budget, the council agreed to impose 10% increases in building permit and business license fees, cost hikes officials say will be matched with a streamlined process to help business owners navigate city regulations. The budget includes funding for a “business concierge” in the city’s economic development office to work with businesses.

The city also expects to raise close to $2 million in additional revenue by adding about 700 parking meters near the vacant I-195 land, on Federal Hill and parts of the East Side. The parking meter plan would raise rates during special events, such as concerts or basketball games at the Dunkin’ Donuts Center. All meters will be outfitted to accept credits cards this year.

The budget approved by the Finance Committee asks state lawmakers to set aside an additional $5 million through its payment in lieu of taxes (PILOT) program, restoring a proposed cut in funding in Gov. Gina Raimondo’s budget and adding $2.5 million on top. The House of Representatives is expected to unveil its proposed state budget Tuesday

The key investments in the budget include funding for a 32-member police academy, part of an effort to offset an expected spike in retirements in the police budget. Elorza originally proposed a 52-member firefighter academy, but he has since backed off the plan and called for reducing the number of fire platoons from four to three, part of an effort to slash callback costs.

The budget also calls for a 13% increase in the city’s snow budget and includes about $680,000 to provide bus passes to high school students who live at least two miles from school.

The plan includes a $71.6-million payment to the city’s pension fund, a contribution city officials have said they will attempt to make as close to June 30, 2016 as possible in order to avoid paying additional interest to the pension system. Over the last decade, the city has routinely made its annual required contribution to the pension fund in October following the end of the fiscal year, a policy its new actuary has said it should try to avoid.

On the school side, the council voted to level fund the city’s appropriation to the school department at $124.9 million for a sixth consecutive year. Overall, the school budget is growing to $353.5 million thanks to a $7 million increase in state aid. When the Finance Committee was vetting the city budget, Providence School Board President Keith Oliveira told the group that per-pupil expenditures in the district have fallen from $16,916 in the 2009-10 fiscal year to $16,736 for the current year.

Thursday’s 90-minute meeting included three amendments from Salvatore, Yurdin and Zurier, all of which failed to win passage.

Salvatore proposed eliminating the $1.2 million set aside to fund the slight tax break for landlords in favor of providing additional money to the police department, school department, recreation centers, community libraries and the city’s reserve fund to pay down its cumulative deficit. Yurdin also suggested getting rid of the rental property tax cut in order to reduce car taxes by $2 per $1,000.

Zurier questioned why the budget for the City Council grew by 13% to $4.6 million late last week, arguing that council leaders were playing “hide and go seek” with taxpayers dollars. Majority Leader Kevin Jackson and Finance Committee Chairman John Igliozzi said the increase will help hire a bilingual city clerk and another aide for constituent affairs.

“We did this without raising taxes, I’ll remind you,” Igliozzi said.

But Salvatore said he considers the 10% increase in building permits and business licenses a tax increase.

“We did raise taxes,” he said. “We just don’t call them taxes. We call them fees.”

Without singling out any of his colleagues, Igliozzi pushed back against the dissident council members, chastising them for not participating in the budget process. He said they waited “until 10:00 on the last night” to call for changes.

“That was their decision to do a disservice to their constituents,” he said.

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

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