PROVIDENCE, R.I. (WPRI) — Providence Mayor Jorge Elorza is proposing to increase the city budget by $29 million in the upcoming year, mostly using federal funds from the American Rescue Plan Act that President Biden signed last month.

The mayor’s $540 million proposed budget for fiscal year 2021-22 also includes a pilot program to start diverting mental health calls away from police, a $15 minimum wage for city workers, and pay raises for most employees.

Separate from the $540 million municipal budget, Elorza has proposed $135 million in city funds to help run the state-controlled Providence schools. While that would be a $5 million increase over the last budget, it’s still less than the nearly $140 million that the school district’s leaders requested.

Elorza is proposing no change in property tax rates for residents or businesses, though his administration still estimates the city will generate about $7 million in additional tax revenue next year due to the natural expansion of the tax rolls.

The mayor pre-taped his annual budget address on Tuesday, which streamed online at 6:15 p.m. The address usually takes place in the council chambers, but was virtual again this year due to the pandemic.

The budget must be approved by the City Council, which typically happens in June shortly before the new fiscal year begins on July 1. The current fiscal year’s budget was delayed by nearly a year due to the pandemic, and the mayor signed it into law just 12 days before releasing the new one.

The unchanged proposed tax rates are $24.56 per $1,000 of value for residential properties, with a 40% homestead exemption for owner-occupied homes; $36.70 per $1,000 for commercial properties; and $55.80 per $1,000 for tangible taxes, with an exemption for businesses that have less than $10,000 in tangible property.

The motor vehicle excise tax will decrease to $30 per $1,000, exempting the first $5,000 of the car’s value, in line with the state’s car tax phaseout law.

The city is expecting to receive more than $150 million from the American Rescue Plan Act, which was the first COVID stimulus bill in which Congress included direct aid for states and cities to cover revenue shortfalls in their budgets.

Elorza said he’ll form a task force to solicit community input on how to spend the lion’s share of the money. But he already proposed spending $33 million of it Tuesday night, including $16 million to cover unspecified “eligible expenditures” in the general fund and expected revenue shortfalls.

In addition, Elorza is proposing to spend nearly $17 million of the federal relief money on items such as summer camps and jobs for Providence youth, early learning infrastructure and grants to public libraries.

As discussion continues about changing police policy, Elorza is proposing to spend $600,000 on a pilot program to study diverting certain mental health and social service emergency calls away from the police.

“It’s time that trained experts respond to individuals who want a helping hand and not handcuffs,” Elorza said in his prepared remarks.

An audit of the police department released earlier this month suggested creating an entirely new office to oversee emergency response. It would direct non-criminal matters such as mental health, addiction and homelessness to other agencies.

“Rather than the public safety department being the main hub through which all community safety is achieved, the current police and fire departments should be one spoke among many,” Elorza said.

In the same vein, the mayor is proposing to add a new city director to oversee equity and inclusion, in addition to the previously announced new police major position to oversee diversion services and community relations.

Achieving the goal of diverting calls — and possibly funds — away from the police could take years. In the meantime, the city is increasing the number of police officers, planning to hold a six-month police academy in May that will hire 50 new officers.

Elorza’s budget proposal increases the overall police budget by about $2 million, which includes the 4.5% raises for officers negotiated in a recent collective bargaining agreement.

Elorza is proposing to give non-union Providence employees a 3% raise in the upcoming year. Raises are also locked in for firefighters and unionized city workers, per their contracts.

In his budget address, Elorza also addressed the guaranteed income pilot program he’s previously touted, which he said will “provide direct cash assistance, with no strings attached, to families most in need.”

The program isn’t actually in the budget, since it would be funded philanthropically, and details about who is eligible or how to apply have not yet been announced. Elorza said donors would include Jack Dorsey, the CEO of Twitter who has pledged to donate millions to fund guaranteed income programs in dozens of cities.

“I believe that people should be allowed to invest in themselves, as they know best,” Elorza said.

The mayor’s budget also includes the proposed salary increases authorized last week by the Providence Salary Review Commission, which met for the first time since 2017 to recommend raising salaries for the mayor, city councilors and top city workers.

Even if the recommendations are adopted by the City Council, the increases only represent a cap on the position’s salary, not an automatic raise for the people in those jobs. The mayor’s current salary cap is $143,000, for example, but Elorza makes $125,000. The Salary Review Commission recommended raising the salary cap for the mayor to $150,000.

The mayor’s proposal fully funds the position of fire chief even though Providence hasn’t had one in six years, which is likely to be a controversial line item when the council considers the budget. The city is currently paying Public Safety Commissioner Steven Paré, who is also acting fire chief, a portion of the fire chief’s salary in addition to the commissioner’s salary.

Councilman James Taylor, a former Providence firefighter and member of the Finance Committee that scrutinizes the budget, has already said he won’t vote to approve the spending plan if the fire chief job is funded.

Elorza acknowledged to reporters Tuesday afternoon there are no plans to hire a fire chief any time soon. The fire department currently has two assistant fire chiefs and several battalion chiefs.

“We’ve been running the department well,” Elorza said.

As the city climbs out of the pandemic and starts holding downtown events again, Elorza proposed to nearly double the budget for PVDFest and other downtown programming to $550,000. PVDFest will be spread out over several months this year instead of one massive festival in June.

Elorza is also proposing to make the fully required $93 million payment to the city pension fund, an increase of $3 million from last year, and a $100,000 payment to the rainy day fund. Moody’s Investors Service, the Wall Street rating agency, warned this month that rising payments to the pension fund are going to pose an increasing burden on city taxpayers in the coming years.

The City Council plans to formally receive the budget during a special meeting on Thursday, after which the Finance Committee typically vets each department’s budget in further detail.

At least one public hearing is also required to be held before the budget is amended and passed by the council.

Steph Machado ( is a Target 12 investigative reporter covering Providence, politics and more for 12 News. Connect with her on Twitter and on Facebook.