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Council committee approves city budget, bringing back homestead exemption

Providence

PROVIDENCE, R.I. (WPRI) — In a rare Saturday meeting, the Providence City Council Finance Committee unveiled — and quickly passed — a budget plan that changes the city’s tax structure and reduces some of the extra spending Mayor Jorge Elorza was asking for.

The vote on the $770 million proposed budget was 3-1. The full council is expected to take it up at a special meeting on Wednesday.

Elorza quickly signaled his opposition to the plan, asking councilors to “go back to the table in earnest.” The new 2019-20 fiscal year starts Monday.

“I cannot support and sign a budget that was hastily thrown together and passed without having been through the most basic budgetary processes,” Elorza said in part.

Council Finance Chairman John Igliozzi criticized Elorza for being in Honolulu at a meeting of the U.S. Conference of Mayors this weekend.

“I’m not in Hawaii,” Igliozzi said. “We’re trying to cut taxes to help people, and where’s our fearless leader?”

Councilors said they opted to level-fund most departments rather than include increases Elorza requested for Arts, Culture and Tourism (ACT) and information technology, among other areas. City Treasurer James Lombardi said the council eliminated $1 million worth of new positions, eliminated non-contractual wage increases proposed by Elorza, and cut some unfilled positions.

Among the positions eliminated: the director of economic opportunity, a job held by Brian Hull until he resigned last month. There’s now a federal investigation into a questionable lease deal Hull made while in the job, and the city is auditing the department.

Councilors also denied Elorza a new assistant engineer in the Department of Public Works, who would have helped with road work.

The new tax plan would set a single rate of $24.56 per $1,000 of assessed value, with a 40% homestead exemption for people who live in their homes.

Lombardi said all homeowners who live in their homes would get a lower tax bill under this new plan compared with Elorza’s original proposal, which was to set tax rates of $15.35 for owner-occupied properties and $24.56 for non-owner occupied.

But Lombardi said the council has not yet calculated how many homeowners will still get a tax increase compared with last year.

The meeting got heated at times as certain councilors, including some who are not on the committee, said the process had not been transparent.

East Side Councilwoman Helen Anthony, who is on the committee and voted against the plan, asked why there wasn’t a document outlining the changes between the council’s new budget and the mayor’s plan. (The committee voted just a short time after being handed the newly printed budget documents.)

Councilwoman Nirva LaFortune, who also represents parts of the East Side, questioned why the council didn’t include Elorza’s plan for a $450,000 bump to arts and culture programming. The department produces downtown programming like salsa nights, the winter lights market and PVDFest.

“You’re a city that thrives on arts and culture, and they’re investing in our community,” LaFortune said.

Council President Sabina Matos said she supports arts and culture, but couldn’t give them a budget increase “on the backs of homeowners.”

“I don’t think it would be prudent for us to take more from poor people to give more money to arts and culture,” Matos said. She added that she’d like to see nonprofits contribute more to the city.

The council’s proposal retains the position of deputy public works director, currently held by Michael McKenna, which some councilors had proposed to eliminate. Target 12 reported on Friday that a text exchange between a councilman and a DPW employee about possibly demoting McKenna is now the subject of an internal investigation.

“Instead of focusing on important public policy issues, the council was inappropriately intent on settling personal scores with specific city employees,” Elorza’s statement said.

The new tax proposal comes afters weeks of furious debate over a plan to have a graduated homestead exemption, based on value, that would have given higher-value homes less of a break. The plan required enabling legislation, and the General Assembly didn’t pass it before lawmakers wrapped up their session Friday.

The new plan to create a single homestead exemption of 40% is still a change from the way the city currently taxes its residents. Right now, there are two different rates for people who live in their homes and people who don’t, like landlords.

Opponents say bringing back the homestead exemption structure, which went away in 2013 under then-Mayor Angel Taveras, would cause confusion for prospective homebuyers who will see the higher tax rate on real estate websites and not know to cut the value by 40% before calculating their potential tax bills.

“This is a change to our tax structure,” Anthony said. “We finally know what it is this morning. We need to have a discussion on the change in our tax structure.”

Mike Raia, a spokesperson for real estate firm Residential Properties Ltd., said the proposal could have “unintended consequences and could make Providence less competitive.”

“We urge city officials to avoid making such sweeping structural changes without public input,” Raia said.

The council’s proposed budget also turns 10 assistant recreation director positions from temporary to full-time, funds four laborers to do rodent control, funds the school department’s requested increase of $1.5 million, and increases funding for the summer jobs program.

Steph Machado (smachado@wpri.com) covers Providence, politics and more for WPRI 12. Follow her on Twitter and on Facebook

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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