A History Lesson on Smiley’s Budget Mess in Providence
Analysis
A History Lesson on Smiley’s Budget Mess in Providence
On Wednesday, Smiley announced a budget for FY26 that includes many false assumptions and places much of the financial burden for the financial mess on homeowners and, especially, renters.
Two of the most egregious false assumptions are that the bankrupt CharterCARE is going to continue to pay $5.9 million a year, when it is clear that that is not going to happen, and not to plan for federal cuts under the Trump administration (more on both of those below).
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTTo balance the budget, there is little cost-cutting—a few vacant positions and a promise to control overtime. On the $624 million budget, Smiley is only proposing $9 million in cuts, just 1.44%.
The balance of the shortfall will hit renters. The thousands who live in two—to five-unit properties will realize a proposed 16% tax increase. That increased cost will be passed on to the tenants.
This is Smiley’s second tax increase in three years in office.
And, most disturbing about Smiley’s tenure as Mayor is that on November 1, 2024, he sent out a press release claiming that the city’s finances were being well-managed.
For more than a decade, Smiley has run for mayor, served as the top administrator for the previous mayor, served as the chief-of-staff to the governor, served as the state’s director of administration, and now as mayor.
He owns the condition of the schools and the city’s budget. No one has had more input and influence, and the results have been dismal.
It is critical to understand the timeline, the history, and why we are here:
In 2014, Brett Smiley dropped out of the Mayor’s race and endorsed Jorge Elorza. He said it was not a quid pro quo, but after the election, Elorza provided Smiley with a job as the city's Chief Operating Officer, and Smiley's separate for-profit political consulting business received hundreds of thousands of dollars from Elorza over the next few years.
As Chief Operating Officer, Smiley had direct oversight of the city’s budget, negotiating union contracts, and was the lead to the Providence School Department.
In July of 2016, Smiley jumped from Providence to serve as then-Governor Gina Raimondo's chief of staff. And simultaneously, running an undisclosed political consulting group.
"When Providence Mayor Jorge Elorza needs funding from the State of Rhode Island, Brett Smiley is the point person to see in Governor Raimondo’s office. Smiley, the Chief of Staff, is the go-to staffer for the Governor, however GoLocal has learned that while Smiley is negotiating with the City of Providence, his company also getting paid by Elorza’s campaign. Smiley formerly served as Elorza's Chief Operating Officer.
Smiley’s firm CFO Consulting Group, LLC (he also started compliance and lobbying firms) has been paid more than $80,000 by Elorza’s campaign during the past two years and including payments made during the period of time that Smiley has served as Raimondo’s top staffer this year."
In September 2021, Smiley Hit With Ethics Commission Fine
Smiley was hit with a major fine by the Rhode Island Ethics Commission for improper fundraising from state contractors.
Smiley, at the time of the violations, was the Rhode Island Director of Administration under Raimondo, and agreed to pay $4500 in a settlement agreement with the commission over campaign donations from state contractors.
Smiley admitted in February 2021 that he improperly received nearly $9,000 from state contractors as Raimondo’s Director of Administration — and returned them.
At the time, Rhode Island GOP Chairwoman Sue Cienki told GoLocal following the decision that the party — which had filed the complaint — was pleased.
“We’re delighted they took this seriously enough and fined him,” said Cienki. “That’s a high fine for the ethics commission.”
On November 1, 2024, Smiley released a statement on a Fitch bond rating upgrade: “We have worked diligently to balance our financial operations while making strategic investments in our city’s future. Our recent rating upgrades are a testament to our responsible fiscal management, positioning our city for long-term success and lower interest costs,” said Smiley. “We will continue to focus on making responsible investments that strengthen our financial position and benefit all Providence community members, ensuring a stable and prosperous future for our city.” He continued:
"Fitch’s rating upgrade reflects the City’s strong financial management and consistent improvement in finances and reserve levels. In its report, Fitch highlights that “reserve levels have improved from negative levels in fiscal 2016 to 5.3% of spending for fiscal year-end 2023,” a goal the City achieved ahead of its planned deficit reduction schedule through diligent financial practices. Additionally, Fitch notes that “the City’s recent negotiation of payment-in-lieu-of-tax agreements with various tax-exempt institutions within the city will support new revenue growth, helping to offset future increases in the operating budget.”
November 20, 2024, Smiley Announced a Financial Crisis
Just weeks later, Smiley held a hastily scheduled press conference to announce that the City of Providence, Providence Public Schools, and the Rhode Island Department of Education reached an agreement in principle to settle the dispute over the city’s funding of the schools.
Smiley refused to release the terms of the agreement but said, “We think a tax increase is inevitable."
Smiley's Budget Does Not Anticipate Any Federal Cuts
Before Donald Trump was sworn into office, the City of Providence was already in a fiscal crisis.
The majority of the federal funding to Providence is for education. A big unknown is the implication of President Trump’s promise to eliminate the U.S. Department of Education and what will happen to those federal funds that have historically come to prop up the Providence Schools.
When asked on Wednesday if the Smiley administration had planned for the reduction of federal funding in the FY26 budget, the answer was “no.”
Smiley’s Chief-of Staff Emily Crowell told GoLocal News Editor Kate Nagle, "We have no reason to believe that there will be federal funding [cuts] that we’d have to make up for in the city budget.”
For the Smiley administration not to plan for federal cuts in this environment seems to be budgeting malpractice.
When asked, “Will Providence Police assist ICE in the arrest and deportation?” Smiley’s office told GoLocal, “The Providence Police Department will not and should not be immigration officers. Providence remains committed to being a safe and welcoming city for everyone.”
Years earlier, Smiley hurled personal attacks at Trump. In October 2016, Smiley, then-Raimondo's top staffer, tweeted an expletive-laden attack on Republican Presidential nominee Trump.
Smiley tweeted, “Trump is that blowhard asshole you get seated next to at a dinner party who just spouts off uninformed opinions.” Smiley later apologized.
Smiley's refusal to plan for federal budget cuts is in direct contrast to other mayors, including Boston's Michelle Wu, who is bracing the city for federal cuts under Trump.
CharterCARE Is in Bankruptcy and Attempting to Transition to a Non-Profit
CharterCARE's parent company, the bankrupt Prospect Medical Holding, is the third-largest taxpayer to the city of Providence after RI Energy and Dominion Energy, owners of the Manchester Street Power Plant. CharterCARE operates Roger Williams Hospital in Providence.
The city is owed millions in unapid taxes for this fiscal year, but according to Smiley's office. they have booked another $5.9 million to come from CharterCARE in the FY26 budget.
"CharterCare is owned by a for-profit company and they negotiated with the previously for a stabilization agreement. As such, they were a taxable entity as of December 31, 2024, and they have a tax stabilization agreement payment that is expected to be paid. Given the uncertainty related to these payments, the City reduced our projected collection rate for FY26," said Anthony Vega of Smiley's office on Wednesday night.
Presently, there is a rescue effort to keep the hospitals open, and officials admitted two weeks ago that there would be no tax payments in the future. Officials said that if the hospital does not close, it will begin to negotiate a payment in lieu of a tax agreement. That would likely be a fraction of the existing $5.9 million payment.
That deal to keep CharterCARE open faces many challenges. READ MORE
And, on Wednesday, Prospect began closing hospitals.