To solve budget woes, Mayor Elorza will need City Council, General Assembly support

PROVIDENCE, R.I. (WPRI) – First he defined the problem. Then he laid out the possible solutions. Now comes the hard part for Providence Mayor Jorge Elorza:

Convincing elected officials throughout the city and state to support at least some of the proposals for solving the capital city’s financial woes included in a report issued Monday by the National Resources Network (NRN).

Elorza isn’t expected to include any of the plan’s most significant recommendations – such as the sale of major city assets and new taxes on parking, tickets to events and cigarettes – in his budget proposal Wednesday, but members of the City Council and the General Assembly are already buzzing about which policies they’ll consider and which ones are unlikely to see the light of day.

Among the most popular suggestions: securing more financial support from the city’s nonprofit colleges and hospitals.

“Every time the larger nonprofits expand, our argument has always been it shouldn’t be at the expense of the city’s tax base,” City Council President Luis Aponte told WPRI.com.

The NRN report showed that more than 40% of the city’s parcels are owned by tax-exempt institutions, but noted that the administration only expects to receive about $9 million in payments in lieu of taxes (PILOT) from those institutions in the current fiscal year.

In an interview Monday, Elorza said he wants to bring the major nonprofits – which include Lifespan, Care New England, Brown University, Providence College, Johnson & Wales and the Rhode Island School of Design – together to strike a “grand bargain” that would result in more revenue for the city. He said he’d like to craft a formula that would guarantee the city more income as the nonprofits expand.

Senate Majority Whip Maryellen Goodwin said payments from the nonprofits “need to be looked at in a more solid way,” singling out Lifespan, which isn’t expected to contribute any payments to the city in the current fiscal year.

“I appreciate the work Lifespan does, but they can give a lot more,” Goodwin said.

Both Aponte and Goodwin said recommendations to tack on a 12% tax to all garage receipts or add fees to ticketed events might face more of an uphill climb. The report also suggests Providence should receive more from the meal and beverage tax and implement a local tax on cigarettes. All of those changes would need to win support from the General Assembly.

Aponte said he’d like to “exhaust other possibilities” before asking for new taxes. Goodwin said she isn’t completely dismissing the idea, but “it’s going to be a heavy lift.”

Councilman David Salvatore, a Democrat who represents the Elmhurst and Wanskuck neighborhoods, was more direct.

“While I am interested in obtaining additional information relative to certain recommendations of the report, I cannot subscribe to imposing new taxes on Providence residents,” Salvatore said. “It is my hope that city leaders begin examining fiscal policy around tax predictability and growing our local economy.”

When asked if selling the Providence Water Supply Board is on the table, Aponte said it would likely take “legislative support.”

The NRN report pegs the value of water system at $372 million, but the law is murky about whether Providence could even move forward with a sale. 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).

Aponte said determining whether the city can sell the water system is only one hurdle for the city. A larger challenge may be convincing local lawmakers how to best use the proceeds from such a large one-time revenue source. (The report recommends using the money to help the city’s pension fund.)

“As you can imagine, there’s some skepticism and concern about the report,” Aponte 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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