Mayor Elorza: New budget shows Providence’s finances are improving

Mayor Elorza signs his third budget into law. (photo by Dan McGowan/WPRI 12)

PROVIDENCE, R.I. (WPRI) – Minutes after signing a budget into law that includes no tax increase and boosts funding for the school department, Providence Mayor Jorge Elorza declared the city’s finances “haven’t been this solid” in at least 10 years.

Elorza said the $736.7-million tax-and-spending plan for the fiscal year that begins July 1 that was approved by the City Council this week shows Providence has overcome most of the short-term financial challenges it has faced in recent years and is ready to make crucial investments in education and infrastructure.

“Providence would get laughed out of court if we ever filed for bankruptcy,” Elorza, a first-term Democrat who has said he intends to run for reelection next year, told reporters. “That’s how strong of a position we are in right now in terms of our short-term finances.”

Elorza’s comments came after he held a press conference on the front steps of Nathan Bishop Middle School on the East Side to sign the budget into law. The mayor was flanked by several members of the City Council, his administration and about two dozen students.

The press conference was held at a school to highlight the city’s plan to increase its appropriation to the school department for the first time since 2011. The city gave the school district an additional $3.65 million, bringing its annual contribution to $128.5 million. The department is also expected to get about $242 million in state aid through the education funding formula.

The extra funding will support hiring more staff to improve outcomes at seven city middle schools, a newcomer school for refugees and recent immigrants, and expected raises for teachers and administrators.

The city budget also includes $500,000 for the highly regarded Providence Talks program for young children, five new recreation camps, more Chromebooks for students and a consultant to craft an infrastructure plan for the district’s crumbling school buildings. Elorza also said his goal to ensure every child in the city lives within walking distance of a 3D printer.

Elorza said the school funding and other investments in infrastructure programs aren’t “signs of a city in decline.” He noted that property values are on the rise, construction projects are moving forward and the city has seen its bond rating increase over the last year.

The mayor acknowledged there is still more work to do to address the city’s long-term challenges, including an unfunded pension liability that is approaching $1 billion in a system that was only 25% funded as of June 30, 2016.

But Elorza said the current budget will give Providence its first rainy day fund in several years, referring to the colloquial term used for the city’s cumulative surplus. Rainy day funds are considered important to ratings agencies because they are a sign the city is building up its reserves.

“In terms of the fiscal foundation that we’re building, we haven’t been this solid in terms of our finances in at least a decade,” Elorza said.

The budget also keeps Providence’s owner-occupied property tax rate at $18.80 per $1,000 of assessed value, with the non-owner-occupied rate also staying put at $31.96 per $1,000. The city’s commercial tax rate will be $36.70 per $1,000, and car taxes will remain $60 per $1,000 with a $2,000 exemption.

Aside from earmarking raises for Providence teachers – whose union contract expires Aug. 31 – the budget also includes small, contractually-mandated pay increases for police officers, firefighters, school clerical workers and members of Local 1033, the municipal employees union. The budget also factors in a 2.75% raise for non-union employees.

The budget also includes funding for a 40-member police academy as well as a 70-member fire academy that will begin in 2018. (Both the police and fire departments have separate academies that are already underway.)

The budget does set aside $370,000 for additional staff, training and technology associated with the Providence Community-Police Relation Act (PCPRA), the far-reaching police reform ordinance that was approved by the council earlier this month. The budget also calls for $317,000 to fund the Providence External Review Authority, a nine-member panel appointed by the mayor and the council that the PCPRA would empower.

The budget signed by the mayor is about $2.5 million greater than the one he proposed in April, due in large part to an increase in anticipated tax revenue. The city’s line item for fines and forfeitures also grew by $270,000 due to a council-led initiative that will place police details in neighborhood “traffic hot spots” where speeding is common.

The council also set aside $1.5 million for its neighborhood improvement program, an initiative first created last year that helps address minor infrastructure problems across the city. The council allocated $200,000 for a blight removal program that will seek to demolish properties that have been vacant for several years. In addition, the council and the mayor’s office agreed to earmark $250,000 in the budget for PVDFest, the popular summer festival Elorza created in 2015.

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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