Behind the Providence Budget Battle — Mayoral Election 2022, East Side vs. The Rest of the City

Behind the Providence Budget Battle — Mayoral Election 2022, East Side vs. The Rest of the City

At one level, the emerging Providence budget battle is an effort to refine the city's tax structure — trying to find a balance between tax fairness and fiscal responsibility.

But in Providence, nothing is ever quite as it appears. This battle is also the first salvo in the 2022 Providence Mayor’s race as the Majority of the Providence City Council is term-limited out.

In an often heated Providence Finance Committee meeting on Thursday -- which started with a highly-charged exchange between Councilwoman Nirva LaFortune (Ward 3) and Chairman John Igliozzi (Ward 7) -- East Side residents came out in opposition to the plan, with virtually no supporters for the 11th-hour proposal at City Hall. 

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LaFortune said that the proposal was something that hadn't been discussed or gone through the proper vetting process, to which Igliozzi said he had informed her of the details -- to which LaFortune shot back and accused Igliozzi of calling her "a liar."

"Do not insult me," said LaFortune, who is rumored to be looking to run for mayor in 2022, to the applause of those in attendance.

Budget Politics

The architects of the new tax structure — Igliozzi and City Council President Sabina Matos -- are both potential mayoral aspirants.

The proposed tax structure shifts a greater portion of the tax burden to more expensive homes on the East side of Providence — Wards 1, 2, and 3.

Those city wards are home to many of the state’s wealthiest and most powerful including Governor Gina Raimondo, Congressman David Cicilline, and a plethora of CEOs -- and political donors. 

One of those first up to testify Thursday against the Igliozzi and Matos' plan was Jim DeRentis, the husband of all but announced Providence mayoral candidate Brett Smiley.

Presently, Smiley is Raimondo's Chief of Staff and own a group of political consulting firms that count Providence Mayor Jorge Elorza as a client.

DeRentis, a Providence realtor who primarily works on the East Side said, “I am profoundly disappointed  — this pits neighbors against neighbors. It's reckless.”

Elorza, who also term-limited out as Mayor, has made it clear that he is running for Governor in 2022. His fundraising base over the past five years has been the East Side. On Thursday he called the new tax structure that hits the East Side to be "illegal."

He is sitting on $500,000 in his campaign account.

 

Contentious Hearing Got Even More Bizarre

As East Siders came to oppose the new plan criticizing it for being unfair and poorly conceived, Igliozzi swiped back.

The meeting abruptly came to an end when Igliozzi, with the assistance of aides who took the addresses of those who spoke against his plan, ran the numbers of how the proposed taxes would impact those individuals and read the tax impacts out publicly.

And some in the chamber took affront. 

"[Igliozzi] was pandering. He never admitted that the way he rolled this out was not transparent. He questioned [Councilwoman] LaFortune's integrity -- I think she pointed out his hypocrisy more," said Kira Wiedner Green, the top Providence realtor at Residential Properties LLC.

"I've never been to a public meeting where comment was stopped and ceased, and I've never been to a meeting with this type of reply," said Green. "He communicated the math this morning -- and he interrupted the public for his own gain.  It's not the people who divide the city, it's the politicians, and it's bad for the city. And non-transparent government is bad for the city."

Igliozzi said he used the exercise to show people that their taxes would be decreasing for what he said would be the most part. 

"People came and publically stated their names an addresses. We tried to create a discourse -- a conversation -- because the majority of the people who came before me, it seemed that no one looked at the council's proposal," said Igliozzi. 

Igliozzi said be believed a number of people who were quoting what their taxes would go up by were using numbers that had been initially put out in the public by an unnamed source -- which Igliozzi had previously told GoLocalProv had no merit. 

"I welcome everyone back -- why would they be upset?  And for the record, the meeting started late because I was talking with people who kept coming up to me in the hallway with comments and questions," said Igliozzi. 

Igliozzi addressed some of the common themes raised on Thursday -- taxing the nonprofits, or considering bankruptcy. 

"The problem is I can’t tax non-profits — there’s no mechanism to extract money out of them at this time," said Igliozzi. "41% of the city's property is off the tax rolls -- I agree, let's try and get more money, but there's no legal mechanism at this time."

As for bankruptcy, Igliozzi said. "I don't even know just how many -- and there are lot -- of steps that would need to be taken legally before even considering bankruptcy," said Igliozzi. 

Others Attacked the Plan’s Impact

Sally Lapides, a top Providence realtor and head of Residential Properties said, “We sell the majority of the homes on the East Side and all over Providence. We are lucky on the East Side to have the properties with the highest values. It is exceedingly hard today with the tax rates the way they are to sell the properties with our tax rate, because our assessments are high. This will be like a crowbar going into a speeding bike — it will stop the sale of homes over $350K in a snap. That will bring all the prices of homes down.”

“Ultimately, the city will get less revenue because values will go down. For people who have lived in their homes all over the city on fixed incomes or owner-occupied multi-unit homes, they can’t just raise the rents. I would implore you to look at the 50% of the buildings that are not taxable — where we do PILOTS — [that are] minuscule compared to property taxes that would be on the buildings. It would be absolutely impossible for houses to sell and have people want to come to Rhode Island [under this proposal],” added Lapides.

Another East Side resident Olivia McCullough, testified, "We’re overreliant on property taxes that are unsustainable. We need to tackle the nonprofits and deal with the pensions — you’ll kill the cash cow, which are the homeowners. Maybe it’s time to consider bankruptcy..if that’s what it takes." 

Bruce Goldstein took a more even-handed approach but said the new plan was simply not thought out.

“I think everyone in the room is sympathetic to the inequities after the last valuation. The problem is with the process — there have to be better ways to correct the issue for people who are seeing their taxes going up 40%. Without careful evaluation by economists — I can’t think anyone can predict how this will affect property values,” said Goldstein. 

Ray Mathieu — a retired top executive at Providence Equity and former candidate for State Representative -- was more direct, "Let’s call a spade a spade. What this insertion of the homestead exemption is, [it's] an underhanded way of attacking the so-called wealthy people on the East Side of Providence. I question why [you] are reinstituting this exemption. It's a little suspicious that we suddenly want to reinsert it — it’s opening a door to raise our taxes in the future.” 

David Kanig who has lived in Providence for 23 years, after moving to Rhode Island from San Francisco, told GoLocalProv the following in a follow-up interview. 

"They're choosing different rates for people with different levels of home assessments. That's unfair. It's a way to increase taxes without incurring the ire of as many people that would be roused by an even tax increase. It's a sneaky way of running more money into City Hall -- and the idea that the wealthy need to 'pay their fair share' is total crap."