PROVIDENCE, R.I. (WPRI) – Providence should consider implementing new taxes, selling assets and closing fire stations as part of its effort to reduce a projected structural deficit that could balloon to $37 million over the next decade, according to a study released Monday by the Elorza administration.
The study, conducted by the federal National Resources Network (NRN), offers dozens of possible solutions for solving the city’s budgetary challenges, but administration officials have been mum on which options they’ll choose. The mayor is expected to unveil his proposed budget for the fiscal year that begins July 1 Wednesday night.
Here’s an overview of the recommendations from NRN. (Read the full report here.)
1. Sell the Water Supply Board.
If this sounds familiar, it’s because it is one of the first options mentioned whenever anyone discusses ways Providence could come up with an immediate infusion of cash. The NRN study recommends a one-time asset transfer worth at least $372 million – the value of the water supply’s assets in 2015 – or smaller annualized payments over time that could come as a result of a sale or lease. The study also recommends that the bulk of the proceeds from a sale should be deposited into the city’s pension fund. There will be challenges, however. During a trial involving a group of retirees and the city last week, former Mayor Angel Taveras testified that he didn’t believe the city could benefit from the sale of the water system because the proceeds would need to be returned to ratepayers (approximately 60% of the state’s population uses Providence Water). That means the city would likely need approval from the General Assembly to secure the proceeds from any sale.
2. Convince the colleges and hospitals to pony up more money.
As it stands now, more than 40% of the city’s land parcels are owned by tax-exempt institutions – which largely means Providence’s nonprofit colleges and hospitals – but the Elorza administration only expects to receive about $9 million in payments in lieu of taxes (PILOTs) from those institutions in the current fiscal year. On the college side alone, if the 264 tax-exempt properties owned by Brown University, Johnson & Wales, Providence College and the Rhode Island School of Design were fully taxable, the city would receive about $68.7 million a year, according to the study. NRN recommends the city “work more closely with anchor institutions to identify targeted investments” for more PILOT revenue rather than simply asking for money to plug budget holes.
3. Create new taxes on parking and admission to events.
This would take approval from the General Assembly, but NRN recommends the city should consider a parking tax that would help fund capital improvements as well as a tax on tickets for entertainment events to help pay for city services and infrastructure. For the parking tax, the city could generate at least $4.3 million a year if it implemented a 12% tax on all parking lot and garage receipts. Larger cities like New York City, Chicago, Miami and Washington D.C. all have some form of a parking tax. The admissions tax – potentially of 5% – would be tacked on to most ticketed entertainment in the city and could generate at least $2.8 million a year. (That estimate includes the assumption that there would be reduced demand as a result of increased ticket prices.) The study also suggests implementing a local tax on cigarettes – that would be on top of what the state already charges – as well as an increase in the meal and beverage tax. At the same time, NRN said the city should consider reducing commercial and car tax rates by 3% during the 2017-18 fiscal year.
4. Go after retirement benefits.
The study suggests Providence needs to enact pension reform that at least mirrors the changes made by the state during Governor Raimondo’s tenure as treasurer. That could include the further suspension of cost-of-living adjustments (COLAs) – under a 2013 settlement with unions and retirees, city COLAs were suspended for 10 years – as well as the closure of the defined benefit plan and conversion to a defined contribution plan for new employees. The study also recommends eliminating the family medical subsidy for pre-Medicare coverage. These changes would likely require the approval of the city’s unions and it is unclear how much they’ll be willing to budge after agreeing to the 2013 settlement. (If that deal is breached, the city and union are required to go to binding arbitration.)
5. Overhaul the fire department. Again.
Mayor Elorza has already moved the fire department from four platoons to three, a change that results in firefighters working an average of 56 hours per week. The NRN study suggests the city should consider eliminating four engine companies and two ladder companies as part of an effort to better align with the fire departments in Bridgeport and Hartford. The study also suggest lowering minimum manning, a provision in the firefighters’ union contract that requires at least 94 firefighters to be on duty at all times. (When a platoon falls below 94 firefighters, members of other platoons are called in and paid time-and-a-half.) Before making any changes, NRN suggests that the city conduct a comprehensive analysis of the entire fire department. The union’s contract with the city ends June 30, 2017. A dispute over how much to pay firefighters under the new platoon structure is currently making its way through the legal system.
6. Increase tax collection.
Providence currently posts a tax collection rate of around 93%, which is well below some of its peers in New England. For example, Stamford collects 98.8% of its taxes and New Haven collects at a 98% clip. Although the study does not recommend how Providence should increase its rate, it estimates that getting to 95% would generate an additional $2.5 million in the 2016-17 budget.
7. Implement a pay-as-you-throw trash program.
This was fairly controversial in Fall River, but it’s relatively common in other New England communities, including Worcester. According to the study, charging residents based on the amount of waste they throw away could generate $3 million a year for the city. (That’s $7 per garbage bin.)
8. Sell Triggs Memorial Golf Course.
The 70-acre, 18-hole public course located off Chalkstone Avenue is already managed by a private entity, but the study suggests Providence should consider selling it for around $22 million. If a sale is completed, NRN recommends the proceeds be used for an “invest in youth fund” that would support programming across the city.
9. Increase street cut fees and share sidewalk costs.
NRN recommends Providence increase its $75 street cutting fee – possibly to $300 – as a way to help properly staff inspections to review all street restoration work and search for unauthorized street cuts. (Street cuts are generally performed by utility companies.) The study also suggests Providence should impose a bond or deposit requirement that ensures that the city has the money to complete resurfacing work if needed. With Providence facing a backlog of 3,500 sidewalk repair applications, the study also recommends creating a 50/50 cost-sharing program that would allow residents to help pay for expedited improvements.
10. Transfer operations and maintenance of Roger Williams Park and zoo.
The 435-acre park is owned by the city, but the study recommends that the cost of operations and maintenance should gradually be transferred to the state or a nonprofit organization in the coming years. NRN suggests that creating that type of partnership could save nearly $27 million over the next decade. The study compares the transfer of the park and zoo to the state’s decision to transfer the Dunkin’ Donuts Center to the R.I. Convention Center Authority in 2005.
11. Alter employee health care and reduce paid holidays.
The study recommends that Providence phase in a 30% active and retired employee health contribution – current city employees contribute between 15% and 20% – while also providing a high-deductible health plan for city workers. The report also suggests moving from 13 paid holidays per year to 10 to align with the federal government.
12. Transfer city janitorial services to a prisoner reentry program.
With nearly 5,800 of the state’s probation and parole offenders living in Providence, NRN suggests outsourcing basic maintenance tasks to a prisoner reentry program would both help get ex-cons back on their feet and potentially save $219,000 a year beginning in the 2018-19 fiscal year. The study notes that seven city employees currently provide janitorial services to City Hall, the public safety complex or the police substations.