Mayor Taveras Delivers Fiscal Year 2012 Budget to City Council

Shared sacrifice is major theme of Mayor's first budget submission.

Mayor Angel Taveras today delivered his proposed 2012 budget to the Providence City Council. The budget reflects the many difficult decisions the City faces to address a 'Category 5' fiscal emergency and to restore financial stability to Rhode Island's Capital City.

• Watch and read the Mayor's Budget Address here
  
• Download a copy of the Mayor's Address here
  
• Click on the links below to get copies of the budget documents:
  
  
  • Compensation Plan for July 1, 2011 - June 20, 2012
  • Proposed FY 2012 Levy Ordinance
  • 2012 Appropriation Ordinance Introduction
  • Classification Ordinance FY 2012

A major theme embedded in the $616.7 million budget is one of shared sacrifice. The budget does not rely on new borrowing or other one-time fixes to balance Providence's annual operations. Rather, the budget significantly cuts spending and seeks to leverage a variety of opportunities for revenue generation.

Included in the budget submission is a reduction in spending across many departments, including fire and police. School closures and additional cuts to school spending will shave ~$28M from the school budget. Taxpayers will see an increase in property taxes. Tax-exempt organizations will be challenged to significantly increase their contributions to the City, effectively increasing current levels of contribution to $9M. The City will cut contributions to outside agencies by 10%.

The budget also reflects various revenue generating activities, including the introduction of a formal program to allow resident on-street overnight parking across the City.

Many components of the budget are contingent upon a number of factors, including state aid and savings that can only be accomplished through collaboration with the Governor's office and the Rhode Island General Assembly. As the budget demonstrates, these changes are vital to avert financial catastrophe in Providence.

Budget Highlights by Category

Personnel
Salary and benefits of city employees constitute the overwhelming majority of the city's budget. Of the $635 million in public expenditures last year, $465 million was spent on salary and benefits - nearly three quarters of all spending. Cuts to the personnel budget are painful but necessary.

This budget reflects the 10% pay cut taken by the Mayor and a 13% reduction in the mayor's overall office budget.

This budget reflects a revised labor contract with Local 1033 that cuts pay, increases health insurance co-pays, and through a variety other measures saves the City $26M over the next four years.

This budget proposes a $6M cut to both police and fire. How these cuts will be achieved will depend on the union's willingness to negotiate on cost savings measures.

Schools
Our schools faced a $28 million deficit. Addressing this deficit requires the closure of schools and elimination of some teaching positions. This budget also reflects significant cuts in overall personnel spending.

Tax-Exempt Organizations
The administration has been in negotiations with the City's tax-exempt organizations to come to an agreement on how these organizations can share in the sacrifice required to put Providence back on solid financial ground. If tax exempts paid full tax value on their property, the amount paid to the City would be $97.5M.

This budget seeks $9M in contributions from tax-exempt organizations.

Because the City has not been able to reach agreement on increasing payments, the City is supporting legislation at the State House requiring tax-exempt institutions to pay 25% of what their real estate taxes would be if they were not a non-profit corporation. This concept is not new - over a hundred municipalities across America have established PILOT programs - and recently Boston asked its tax-exempt institutions to do the same on a voluntary basis.

We are hopeful that we might reach a negotiated agreement directly with our colleges and universities, but we will continue to fiercely advocate for passage of this legislation. Our relationship with the tax-exempt institutions simply cannot continue on the path we are on and this budget reflects the reality that, moving forward, our city must be able to rely on these organizations for substantially more financial assistance.

Taxpayers
After laying off city workers, instituting pay cuts, reducing the police and fire budgets, increasing contributions from universities and hospitals, closing schools, and reducing the school budget, the City still cannot close the massive structural deficit without a tax increase. Car taxes will not rise, but property taxes will.

This budget seeks to increase the tax levee by 5%, creating approximately $15M in new revenue.

Other Revenue Generators / Cost Savings
In addition to increased contribution from the tax-exempts, the City will seek additional revenue in the following ways:

1. The City will implement a resident overnight parking program that will enable residents to park on street overnight with a permit.
2. The City is seeking support from the General Assembly to amend its retiree health care benefits system, which will save the City $11.6M.
3. $300,000 more parking meter revenue, with hourly parking rate increase to $1.25 per hour from $1 per hour.
4. $2 million through increased parking enforcement.
5. Increased fees for dumpsters and a new $20 fee for disposal of mattresses.

Other work will continue to strengthen Providence's financial condition. Chief among these activities is ongoing pension reform. Local 1033 and the City agreed to set up a commission to examine the possibility of moving city employees to the municipal employee retirement system. In the coming weeks, as we negotiate with our unions, we will also begin to address our long term pension obligations. We will also work closely with the state to tackle this issue.

Moving forward, we'll be working with the General Assembly, our partners in the non-profit and business communities and others to address issues ranging from the 195 land to the future of the Providence Water Supply Board.

In his budget address, the Mayor concludes his presentation with this:

"As we move forward, let it be said of us that we came together and rose to the occasion. Let it be said that we set aside politics for the greater good. Let it be written that while others went into receivership, we solved our problems. Let it be said that while some looked to Providence's fiscal crisis and saw nothing but darkness and foreboding, we seized this opportunity to show that hard work and shared sacrifice made brought about Providence's finest hour."