Taveras Proposes 6% Property Tax Increase for Providence

Taveras Proposes 6% Property Tax Increase for Providence

Providence's financial problems continue to plague homeowners in the capital city. Despite an effort to close a monumental budget hole since entering office, Mayor Angel Taveras is faced with raising taxes for homeowners 6% in the 2013-2014 fiscal year.

The mayor's proposed budget outlines spending $663 million - an increase of more than 3% over 2012-2013 spending.

2013 Budget Plan Fell Short

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As GoLocalProv reported in the fall, the ability to close the budget deficit was ambitious. The city would not be able to close the gap.

As Stephen Beale reported last November, Nearly halfway into the fiscal year, Providence Mayor Angel Taveras has yet to achieve his goal of balancing the city budget, new data uncovered by GoLocalProv reveals.

Many months ago, the city faced a $110 million deficit for the current fiscal year. Calling for shared sacrifice from unions, taxpayers, and others, Taveras came up with a plan that would have closed that nine-figure gap. But now, six months later, key cost-cutting initiatives either have been thwarted, failed to generate the expected savings, or never even been fully implemented.

2013-2014 Budget Address

Taveras said in his budget presentation on Thursday, "We have increased the non-owner occupied residential tax rate in next year’s budget to $33.75 per thousand from effectively $27.11 per thousand. We have also increased the owner-occupied residential tax rate from effectively $15.95 per thousand to $19.50 per thousand."

Equally, the value of Providence residential property continues to slide. "The average residential property value went down 13 percent this year in Providence. The average residential property will see a 6 percent increase in their tax bill.  For example, on a $150,000 home, that comes out to about $12 per month. Based on current tax rates, Providence’s owner-occupied rate will rank 19th out of Rhode Island’s 39 cities and towns," said Taveras.

"I know that many homeowners work hard to balance their checkbooks. I recognize these increases are an additional burden but they are necessary in order to balance our City’s checkbook," said Taveras.

Political Impact

The proposed budget increase of 6% creates a firestorm of political issues not only for Taveras who appears to be gearing up for a run at the governorship, but also for Council President Michael Solomon who wants to succeed Taveras. Solomon can't deliver a dramatic tax increase for homeowners in 2013 and then try to run for Mayor in 2014.

For Council members the impact is also a political minefield. For a city wrestling to recover from a long-running recession, raising taxes by 6% is a surefire way to assure an unhappy electorate.

The Taveras budget has a number of increases in spending. "Providence’s school budget is increasing $8 million. Providence’s public safety budget and the City’spension and health care costs represent almost all of the remaining $12 million in increased spending next year," said Taveras. "Our budgeted pension and health care costs are increasing by $9 million in the coming year. And they will increase about 3.5 percent every year after that."

Next Step

For the Taveras budget the next step is the City Council Committee on Ways and Means. The committee is comprised of:

Councilman David Salvatore, Chair
Councilman Luis Aponte
Councilman Terrence Hassett
Councilwoman Sabina Matos
Councilman Sam Zurier