Providence City Council seeks lower tax rates, cuts to Elorza’s budget

PROVIDENCE, R.I. (WPRI) – The Providence City Council knows how much revenue the city needs from taxpayers to run the government. It just isn’t ready to say how the money should be spent.

The council Finance Committee unanimously approved a $363.9-million tax levy Monday night without passing a corresponding spending plan, making marginal reductions to Mayor Jorge Elorza’s proposed tax rates on owner-occupied homes and rental properties.

The levy, which only covers the amount the city expects to generate in tax revenue, is about $1.8 million less than the mayor requested, which means the committee must now find matching cuts on the spending side of the proposed budget in order to have it balanced when the fiscal year begins July 1.

Under the levy approved Monday, Providence’s owner-occupied property tax rate would drop to $18.77 per $1,000 of assessed value and the non-owner-occupied rate to $31.91 per $1,000 of value. The budget also lowers the city’s commercial tax rate to $36.65 per $1,000, which is actually 15 cents higher than the mayor proposed but still lower than the current year’s rate. City car taxes would remain $60 per $1,000, but the exemption goes from $1,000 to $2,000.

Even with lower rates, the average homeowner in the city is still expected to see a tax increase because property values have increased by nearly 10% on average throughout Providence, according to the city’s recent property revaluation.

“By the end of the week, everything will be squared away almost two months before we are legally obligated to,” Finance Committee Chairman John Igliozzi said.

Igliozzi said the Finance Committee plans to meet again Thursday evening with the goal of approving a spending plan, but he declined to say how it will go about cutting $1.8 million from the mayor’s proposed budget. He said the administration knowingly left about $1.5 million in expected payments in lieu of taxes (PILOTs) out of its proposed budget and suggested that money could cover the bulk of the gap.

The full City Council must approve both the levy and the spending plan twice before sending them to the mayor’s desk for his signature.

Igliozzi said the decision to approve the levy without a budget fully in tact came as a response to the Elorza administration’s repeated requests to quickly approve a tax-and-spending plan for the fiscal year that begins July 1 so that tax bills can be sent out as soon as possible.

The city is required to give taxpayers 30 days’ notice about their tax due date and it typically takes just over two weeks to prepare and send bills. Although the city charter doesn’t require a levy to be in place until July 31, recent administrations have set a goal to have first-quarter tax payments come in around July 24 so the city can avoid cash-flow problems.

But Brett Smiley, the city’s chief operating officer, urged the committee to hold off on approving the levy until Thursday. He said “best budget practices” suggest the levy and the spending bill be approved concurrently.

“I would encourage you to consider the consequences of passing just the levy, which is universally regarded as a reckless and irresponsible budget practice that has already flagged the concern of state authorities,” Smiley told the committee.

In a statement, Mayor Elorza vowed to only consider the levy and the spending plan together.

“At a time when the city is facing a $13-million cumulative deficit, the council’s proposal to change taxes without telling residents how their money will be spent is alarming,” Elorza said.

Monday’s vote came less than a half-hour after the Finance Committee held a public hearing on the mayor’s proposed tax levy. In a city of 178,000 residents, only Dan Baudouin of the Providence Foundation testified. One other member of the public signed up to testify but did not attend the hearing.

More than an hour after the meeting was complete, administrations officials and members of the council remained in City Hall. Smiley, Tony Simon, the mayor’s chief of staff, city finance director Larry Mancini and communications director Evan England were all seen pacing around the second floor, repeatedly entering and exiting the mayor’s office. It was unclear if Elorza was present.

Meanwhile, Council President Luis Aponte and Majority Leader Bryan Principe joined several members of the Finance Committee in the council offices on the third floor. Aponte and Igliozzi left City Hall around 8:20 p.m.

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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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