Mayor's Office Salaries Up $300K as Providence Budget Gets First Passage
GoLocalProv News Team and Kate Nagle
Mayor's Office Salaries Up $300K as Providence Budget Gets First Passage
On Monday, the Providence City Council voted 10-5 to approve the recently approved tax levy for the upcoming year. The second vote was 10-4 (with Councilman Nick Narducci leaving), and then the rest of the ordinances considered were approved 11-3. Council members Seth Yurdin, David Salvatore, Sam Zurier, Wilbur Jennings, and Narducci voted against the proposed tax levy on Monday.
"No amendments were offered, everyone who had something to say said it. The dissenters dissented, the supporters supported," said City Council President Luis Aponte.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTOne line item of note in the budget was that salaries for the Mayor's office grew from $1,775,748 in FY16 to $2,0171,694 for FY17 -- over 15%.
"The FY 2017 Providence Budget is a mixed bag. On the positive side extra dollars were set aside for the rainy day fund, an account was created for unanticipated, but likely costs resulting from fire negotiations and motor vehicle tax relief was enacted," said former Rhode Island Department of Administration Director Gary Sasse.
"On the negative side Providence's business tax burden will be less competitive in attracting investment and the City may becoming more dependent on giving developers preferential tax deals which home owners may end up paying for," added Sasse.
Sparring on Spending
Following cuts to the federal Community Development Block Grant program, the Council’s spending plan included a $1 million fund strictly allocated for neighborhood infrastructure projects, "designating dollars for public property improvements and brick and mortar projects. The neighborhood fund also expands access to infrastructure to include streets and neighborhoods not eligible for CDBG dollars due to regulations around census tract and poverty level."
“Because census tracts determine the locations in which the city can use CDBG dollars, capricious census boundary lines divide neighborhoods and streets, deeming many necessary infrastructure projects difficult to fund,” said Aponte.
Not everyone was in support of the measure, including Salvatore.
"The City Council finance committee created a $1 million 'infrastructure fund' to be divided into fifteen accounts, with each member having control over the expenditure of the funds. While this could be a positive, it could also be problematic given the fact that the allocation of the money is entirely at the discretion of the council member," said Salvatore. "Because of past failures with legislative grants, this measure seems reckless. In fact, I find it shocking that this unprecedented budget maneuver comes in the wake of recent public scrutiny surrounding legislative grants at the General Assembly and in city hall."
Supporters, such as Majority Leader Bryan Principe, stood by the budget, however.
“I am proud of our commitment to reinvesting in our neighborhoods,” said Principe. “Our citizens who we represent each day deserve it. We have a budget that sees a decrease in the amount of the expansion in the levy, a budget which lowers tax rates for residents, and a budget that establishes a path for making necessary investments in our neighborhoods. It is our primary responsibility as city councilors to pass a budget, and this is a budget that serves the people of Providence.”
Looking Ahead
"Bottom line, the FY 2017 budget should not make Providence's structural budget situation more problematic," said Sasse. "While state oversight over Providence finances should continue, State intervention is not necessary. "
GoLocal Guest MINDSETTER™ Michael Riley, who was repeatedly warned of the city -- and state's -- pension problems, offered a much more dire prediction, however.
"The city will default once again on June 30 on debt owed to the pension fund. A diligent Auditor General or Revenue Director could use that combined with the recent ratings downgrade of Providence to intervene but they do not and its all politics," said Riley. "Every one knows the city is walking dead - just like Puerto Rico is right now - yet no one has intervened. The Governor still wants [their] elected powers]...so does Elorza. My guess is neither one will have it by 2018."
10 Biggest Issues Facing Providence in 2016
#10
Firefighters, Con't
The battle that started last year spills over into 2016. After Mayor Elorza announced he was going to reorganize the Fire Department from four platoons to three with a condensed shift schedule, the firefighters took the battle to court — and callback costs soared with injured firefighters out on leave. Elorza said the change could save the city “as much sat $5 million” in the next fiscal year (FY17) -- but the city is currently seeing red. "Through the middle of December, fire fighter "call back" expense has been $4.7 million, which represents almost all of the $5.05 million budgeted for the entire fiscal year," reported Councilman Sam Zurier on Sunday. "Should this trend continue, the cost of this line item could exceed the budget by $5 million by the end of the year."
Now it all rides on the outcome in the courts. If it ends in a negotiated settlement, the crisis could be averted. If not, firefighter union head Paul Doughty has said that Elorza can “hand over the keys to the city" for bankruptcy.
#9
Crime
From the West Side to the East Side, residents across the city in 2015 were organized and mobilized to demand action from the Elorza Administration on crime in the city. GoLocal reported at the end of 2015 that over half of the police department is eligible to retire — and the city still needs to get a new class of officers underway as budgeted. Tensions were high following a Dunkin’ Donuts worker writing #blacklivesmatter on a police officer’s cup (and the Black Major Movement continuing to call for a black major in the department).
Councilman Seth Yurdin announced this week that he is introducing a resolution to establish a special commission to review relations between the Providence Police Department and the community it serves. The Special Commission on Community-Police Relations will review current public safety practices and create opportunity for public input.
#8
Grafitti and Potholes
It’s been a mild winter so far, so perhaps at least one of the two scourges of the city will be mitigated this coming year. But addressing the conditions of the roads continues to be an issue for Providence. Last year, Mayor Elorza made a public display of commitment to addressing problematic potholes, and also pledged to respond to the rampant graffiti issue in the city that has seen the property destruction spread to private houses.
City Councilman Michael Correia recently put up a $1000 reward to find who was tagging properties in his district. Residents of the city want to feel safe, and that includes driving on roads that won’t inflict damage on their cars (or take out runners and bikers) and that their personal property won’t be destroyed. Graffiti continues to crop up, and it needs to be addressed quickly when it does.
#7
Taxes - Commercial
The city’s commercial tax rate might be frozen — for now — but there are a lot of moving pieces. The $36.75 per $1000 rate on commercial properties is among the highest in the country -- a point well-known in RI circles.
“Providence has a problem with the commercial tax rate,” said developer Colin Kane. “With new construction or significant rehab -- the costs aren't supported by current rent.” The property revaluations expected shortly will shed some light how the city will move forward addressing tax rates, but in the meantime, the TSA extensions before the Council are the 600 pound elephant in the room. “The City Council is looking for nickels in the couch cushions because of the fiscal challenges facing the city,” said Kane. “And they weren't caused by this council or mayor, but by the fact that they were kicked down the road. And now we want to malign people like Buff Chace who made the city what it is?”
#6
Taxes - Residential
The owner occupied residential tax rate could be in the crosshairs as the city looks to address revenue issues in the coming year. “Everything’s on the table,” Aponte told GoLocal. And with the revaluation, things could be in flux for the current owner-occupied rate of $19.25 per $1000 .
“Suppose you had a city where there was a wild appreciation of real estate values — that used to happen here, Providence has seen 10% before. State law says you can only increase the levy unilaterally by 4 and a quarter,” said City Counciman Sam Zurier. “So supposed you have a situation where your values go up 10% and you want to collect 4 — you have to reduce the rate by 6%. "
"If values go up enough — even 5% - then the city will get additional money without raising the rate. During a [revaluation] year - you have to get into tax bills versus rates. And when you factor in commercial and non-owner occupied values and rates, it’s tricky.
#5
Schools
Providence Schools face a tall order ahead of them. The search is on for a new superintendent following the departure of Dr. Susan Lusi. The current School Board President is stepping down at the end of the month. Providence High Schools scored among the worst in the state following the release of the first year of PARCC test scores. Current School Board member Nick Hemond is slated replace outgoing President Keith Oliveira, but question remains for the choice of the new super. Council President Aponte told GoLocal this week that stability in leadership in the school department is one of the greatest challenges facing the city moving forward. Can that be achieved in 2016?
#4
Superman
Lights have been spotted on recently in the Superman Building - i.e. Industrial National Bank Builcing — but the fact remains that the city’s iconic skyscraper remains vacant, which former Mayor Joseph Paolino called one of the biggest issues facing the city (stating that the fact that it remains empty cost him a mortgage from a top bank for an adjacent property).
Citizens Bank is eyeing a new corporate campus somewhere in Rhode Island, and while indications point to one most likely going in the suburbs, a number of business and community leaders are hoping Superman isn’t ruled out completely. Previous efforts to get state support to turn the building into apartments fell flat, and Providence residents are gun-shy about any project looking for public support. But the fact remains that the empty anchor is an eyesore for the city, and getting a tenant — or tenants — in should be a top priority in 2016.
#3
Lack of Development
Providence needs more cranes. The city has seen its first one in a while by the Jewelry District with developments at Johnson and Wales, which is a good sign — but the city needs more.
“Owners and property developers want to be treated fairly and play on a level field. Providence does not have a business friendly reputation. This is why there are few cranes in the sky in Providence and very few new businesses coming to the city or planning to expand in the city,” URI Distinguished Professor of Business Edward Mazze told GoLocal earlier. So in order to get the construction equipment in — Providence has to figure out how best to lure businesses here in the first place.
#2
Leadership
Providence needs a win — or a least a path to victory. Whether that be getting a tenant in Superman, bringing in a notable business, or articulating a concrete plan to move Providence forward, residents want to feel that the city is on the right track.
The City Council recently announced that it received the results of its cluster analysis study to identify where opportunities lie — and now we need to see results. The Mayor made multiple trips abroad in 2015. He campaigned on a promise of doubling exports from Providence in five years. What results will we see from those overseas meetings? Providence wants a concrete vision moving forward.
#1
Bankruptcy
“Absolutely not,” said City Council President Luis Aponte, as to whether the city could go into receivership in light of its current precarious financial condition.
“If the city loses, Elorza can hand over the keys, because the city will go bankrupt,” has said firefighter union head Paul Doughty regarding the firefighters legal battle over the Mayor’s platoon reduction.
Financial advisor and GoLocal MINDSETTER Michael Riley said receivership is almost a certainty.
“Essentially Providence is bankrupt and insolvent. It is only by illegally borrowing from the pension fund the last 10 to 15 years that have saved them from being sued by creditors, and the lies continue,” said Riley. “Until Providence goes into receivership nothing else can happen — no railroads, no Superman, they are sunk. I consider everything else irrelevant.”
