Providence asks General Assembly for more state aid to cover deficit

PROVIDENCE, R.I. (WPRI) – City officials have asked the General Assembly to increase municipal aid to Providence by between $4 and $5 million to help cover the city’s remaining structural deficit, according to Director of Administration Michael D’Amico.

“We have been clear that we would like an increase in funding,” D’Amico, the Taveras administration's top finance official, said Monday.

D’Amico’s comments came following a presentation to the City Council Ways and Means Committee where he took issue with a report released last week by Internal Auditor Matt Clarkin that projected an $11.2 million shortfall at the end of the 2012-13 fiscal year. The city ended the 2011-12 fiscal year with a $15 million deficit.

Clarkin predicted that shortfalls in the annual required pension contribution, property tax collections, fines and forfeits and the city’s overnight parking program, along with a $4.5 million payment due to the reserve fund, would leave the $11.2 million deficit.

But D’Amico said the city’s tax collections have improved and argued that the payment to the reserve fund doesn't count against the budget. He said that when compared with the $110 million structural deficit the new administration inherited in 2011, the projected shortfall is a “small number.”

Providence has slashed its deficit by renegotiating union contracts, reaching payment agreements with the city’s tax-exempt colleges and universities and agreeing to pension changes with the unions and retirees. The city has also made deep spending cuts and closed schools.

“I think we have a $5 million problem,” D’Amico said.

In his State of the State address last month, Gov. Lincoln Chafee asked lawmakers to increase state aid to cities and towns by $20 million to help relieve property tax bills. Providence would be slated to receive over $2 million of those funds.

The city is currently slated to receive $31.1 million in municipal aid for the 2012-13 fiscal year.  

“Failure to support these initiatives will only drive Rhode Island further down on the chart that matters most to our economic climate – the burden of local taxes borne by businesses,” Chafee said. “Our state as a whole cannot be successful without the financial health of our cities and towns. We’re going to continue encouraging local prosperity by supporting our municipalities."

D’Amico said Chafee’s proposal is a good starting point and the city is only seeking slightly more to help balance its budget.

“We would like Governor Chafee’s proposal at a minimum, but we want $4 or $5 million,” he said.

House spokesman Larry Berman said Mayor Angel Taveras presented his legislative “wish list” to House Speaker Gordon Fox, D-Providence, and other members of the city's delegation on Monday, but said a specific proposal for additional funding was not presented.

“Speaker Fox said that once a formal proposal is presented, he will give it careful consideration,” Berman said.

Dan McGowan ( dmcgowan@wpri.com ) covers politics and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan