Smiley and City Council Agree to Major Tax Hikes — Further Impacting Affordability

Smiley and City Council Agree to Major Tax Hikes — Further Impacting Affordability

 

Up, up, and away.

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Providence Mayor Brett Smiley and the Providence City Council have announced that they have reached an agreement on major tax hikes, and nearly every homeowner and renter is going to feel the pain.

If Providence has a housing affordability problem, the news has not hit the decision-makers in City Hall.

The tax increase is the second increase in three years.

Smiley said in a statement that the tax increase is an example of his "management."

The tax increase that will hit single-family homeowners and owner-occupied properties with a 6% increase.

No one gets hit harder than renters in multi-family properties that are not owner-occupied with between 2 and 5 units — the owners will see a 13% increase, which will be passed along to tenants in nearly every instance.

In part, Smiley said, “I am happy to support a budget that underscores my administration’s continued commitment to responsible financial management while supporting the evolving needs of our neighbors.”

 

 

It marks the latest in fiscal chaos in Providence. 

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.” 

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."

READ A COMPREHENSIVE REVIEW OF SMILEY’S FISCAL MANAGEMENT

Smiley also said in a statement released today, “This was a very difficult budget to develop and an even more difficult budget to vet with financial uncertainties at the state level. I respect the City Council's work to smooth out increases for all property owners in a way that responds to recent revaluations in our neighborhoods. Together we developed a streamlined, cost-effective budget that addresses the city's severe budget shortfall and lessens the burden on our taxpayers.

“This is a hard budget year. Revaluations are sky high, and Providence is making up for decades of underfunding schools in just one year,” said Council President Rachel Miller. “But that doesn’t mean working families should carry the burden. These revisions make the system fairer, protecting homeowners, renters, and small local landlords. By evening out the impact, we are preventing displacement and working to keep Providence affordable—for all of us.”

The new budget agreement will be heard in the City Council's Finance Committee, and if approved, it will need to be approved by the City Council twice before becoming final. Tax bills will be sent out late.