Picozzi Finds Warwick Running in the Red -- Faces $1.2M Deficit at Mid-Year

Picozzi Finds Warwick Running in the Red -- Faces $1.2M Deficit at Mid-Year

Warwick Mayor Frank Picozzi announced on Wednesday that the city is facing a mid-year $1.2 million deficit.

According to Picozzi, this is offset by an increased surplus from the prior year of $1.9 million, which is more than expected, but less than the $3.8 million announced by the previous administration.

The announcement comes after the Finance Department completed a mid-year review of the current year city budget -- and blamed "incorrect" payroll information used by the prior administration for the fire department as one of the reasons. 

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“The next challenge will be crafting a FY22 budget that is reasonable and affordable.” said Picozzi, while adding he believes the current deficit is "manageable."

City Finances in Focus

In the current year, overall revenues are expected to be about $1 million below budgeted levels, with the city citing the hospitality industry having been "devastated" by the COVID-19 pandemic. The meals and beverage tax, hotel tax, and airport-related revenues have all been affected. State aid will exceed budgeted levels by $1.2 million.

Modest spending surpluses in many city departments are offset by a significant deficit of $2.6 million in the fire department. 

"That deficit is mostly associated with overtime and a $500,000 deficit in police and fire pension contributions, resulting from incorrect payroll information used in preparing the FY21 budget," said Picozzi's office. The net spending deficit projection is $200,000.

The report is based on expectations that local appropriations to schools are enough to support Warwick school activities for the year. The overall deficit projection is less than 0.3% of annual operating expenses. 

According to the city, risks to the forecast include: "pending grievances associated with the city employee layoffs put in place last April, as well as additional revenue risks in the hospitality industry. Property tax revenues are expected to meet estimates contingent on renewed collection efforts and a planned tax sale at the end of the year."