Elorza budget includes property tax increase, but cuts car tax

Photo by Dan McGowan/WPRI 12

PROVIDENCE, R.I. (WPRI) – Providence Mayor Jorge Elorza proposed a budget Wednesday that slightly reduces residential and commercial property tax rates but still results in an overall increase in actual taxes for most city residents, thanks to a large spike in property values.

Elorza’s $716.8-million tax-and-spending plan for the fiscal year that begins July 1 also increases the car tax exemption to $2,000, which will result in about 6,500 low-value vehicles coming off the tax rolls. All told, the mayor’s budget anticipates an additional $13.1 million in new revenue through taxes.

“This budget takes bold steps to address our fiscal challenges so that we can invest in economic growth, in strong neighborhoods, and in our schools,” Elorza said in his budget address. “This is a budget that will make Providence more resilient today and long into the future.”

The Democratic mayor’s budget would lower Providence’s owner-occupied property tax rate to $18.91 per $1,000 of assessed value and the non-owner-occupied rate to $32.76 per $1,000 of value. The budget also lowers the city’s commercial tax rate to $36.50 per $1,000 of value for a fifth consecutive year. City car taxes will remain $60 per $1,000, but the exemption goes from $1,000 to $2,000.

The majority of property owners will still see an overall increase in taxes because a recent property revaluation showed the average property value grew on average between 7% and 10%. State law requires cities and towns to conduct statistical property revaluations every three years and full revaluations every nine years.

The $13.1-million increase in overall taxes represents a 4% increase in the overall tax levy, the maximum increase allowed by state law.

60 new police officers, 80 new firefighters

Elorza’s budget also sets aside funding for a 60-member police academy and 80-member fire academy, with public safety workers hitting the streets early in 2017. The fire academy does not rely on a $15-million federal grant the city applied for in March, but administration officials say they are still seeking the extra money. The city budgeted for police and fire academies in the current fiscal year, but did not move forward with either training school

For the fire department, Elorza is proposing a $2-million overtime budget as well as a $5-million contingency budget that would be dedicated to any overages in overtime or set aside for a possible resolution to an ongoing dispute with firefighters over how much they should be paid for going from working an average of 42 hours per week to an average of 56 hours a week when the mayor overhauled the department last year.

The budget sets aside $500,000 to purchase more than 1,200 computers for the school department, a much-needed technological investment. The mayor’s proposed school budget would level fund the city’s appropriation to the school department at $124.9 million for a seventh consecutive year, but the overall school budget is expected to grow to $363.8 million, a $6.5-million increase in state education aid.

Raises for most city employees

The budget calls for a pay increase for nearly all of the city’s 1,900 employees – including a 2% raise for non-union workers, like the mayor’s staff – but total salaries are projected to be reduced by $1.1 million because the administration doesn’t plan to fill about 60 vacant positions.

Elorza’s proposal builds in a projected $5.3-million surplus in order to partially pay down Providence’s $13.4-million cumulative deficit that dates back to 2011. State law requires municipalities to pay cumulative deficits down over the course of five years. Paying down the deficit doesn’t mean that money is actually transferred to the state. The city is simply expected to run an operating surplus each year to offset the earlier red ink.

The budget does not include any additional expansion of parking meters, but street cutting fees – which typically come from utility companies – are growing from $75 to $300 to match the town of Smithfield for the highest fees in the state.

Missing from the mayor’s proposal were many of the big-ticket recommendations made in a report issued by the National Resources Network earlier this week, including the sale of the Providence Water Supply Board and new taxes on parking garages, ticketed events and cigarettes. Elorza has acknowledged those suggestions will be considered in the coming years as ways to address a projected structural deficit that could rise to $37 million over the next decade.

Elorza’s budget now heads to the City Council, which will vet the plan over the next six weeks. The mayor’s office will present its proposal to the council Finance Committee next week.

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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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