PROVIDENCE, R.I. (WPRI) — A little more than a month after Mayor Brett Smiley released his $586 million budget proposal, city councilors on Thursday shared highlights from their revised tax-and-spending plan.
At a City Council Finance meeting, Council President Rachel Miller presented an overview of the council’s proposal to the committee, including a modification of the mayor’s proposed increase in property taxes for residential homeowners.
Smiley had proposed an increase in property taxes for residential homeowners, while also seeking to cut the commercial tax rate charged to businesses and large apartment buildings. The city has not passed a tax increase in eight years.
“Revaluations have meant soaring tax bills in working-class neighborhoods, causing families and longtime homeowners significant challenges, threatening displacement, and causing real harm for some city residents,” Miller said in her presentation to the committee.
Smiley proposed a residential tax rate of $18.70 per $1,000 of assessed value, up from $17.80. He also proposed to decrease the homestead exemption — the amount of home value that owner-occupied owners can exempt from their taxes — from 45% to 40%.
Councilors opted to cut Smiley’s tax-rate increase by almost half, proposing to raise the rate only to $18.35 per $1,000 of assessed value, and only lower the homestead exemption to 43%.
For the average priced home in the city, Miller said the council’s proposal raises taxes by approximately $226, which is $222 less than the budget the mayor proposed in April.
Miller acknowledged the city is full of renters, and said she agreed the commercial tax rate is too high and “obstructing growth, especially for small businesses and community-based organizations.” She proposed decreasing the commercial rate to $35.10 per $1,000, a 30-cent drop from the current rate but $1 more than the mayor proposed.
“The 30 cents I am asking you to consider starts to balance that out,” Miller said.
Miller also noted she’d like the city to be able to talk about its tax structure “outside of the constraints of the tight budget timeline.” She said in the fall, she plans to ask the council to convene a commission on taxation to do that.
Miller said the council’s proposed budget would save $4.1 million for residents.
“The savings I will ask you to consider are largely administrative and include adding $500,000 from [federal American Rescue Plan Act funds] for revenue recovery, reducing fire call-back and police overtime by $200,000 and $350,000 respectively, and zeroing out the public safety commissioner and commissioner’s administrative assistant positions, which are currently empty,” Miller explained.
The public safety commissioner and commissioner’s administrative assistant positions total around $200,000, according to the City Council’s internal auditor.
Miller also explained the city took advantage of federal guidelines on APRA and was able to earn $692,000 interest on it. She said the administration’s finance team also adjusted technical errors and “administrative clean up” that equaled $328,000 in savings.
Smiley’s budget plan also included money to repair sidewalks, help homeless individuals, and hire more police officers. The mayor proposed increasing police department funding from $100 million to $108 million, in addition to money for a second academy in October.
A police academy with 30 recruits is underway and ends in August. Last week, Smiley told Target 12 he wasn’t sure the council would support the request for an additional academy.
“There were a lot of very skeptical questions from council people about why do we need another police academy and I’m concerned that the council might be considering punting on that decision, which I think would be a wrong decision for Providence,” Smiley said on May 31.
The council’s budget proposal included a second police academy but Miller said it would be under the assumption the program would not start in October as previously planned.
“The police department shared with you that it takes 8 to 12 months to go from recruit to graduate in the police academy and was proposing to launch an academy in October but had not yet begun recruitment,” Miller said. She noted the budget had also included 21 weeks for 40 graduates of the second academy to be out on the street as officers.
“That is nearly five months — they would have had to graduate from the academy and be on the street by Feb. 9 for that to be possible,” Miller said. “We were able to smoothly correct that oversight in conversation with Mayor Smiley and his team.”
In doing so, Miller said that would save $1.69 million in the police department’s budget.
Miller also said the budget proposal includes funding a lateral fire academy — one for fire personnel moving from another department — but that the council was asking for that to be the last one of this term.
“You shared loud and clear that while we need firefighters now to keep costs down, we lose a lot in diversity and opportunity by not opening up recruitment to the incredible residents of our city,” Miller said.
Miller also talked about PILOTs, or payments in lieu of taxes. She said large tax-exempt institutions like universities and hospitals need to step up.
“According to 2021 data, if Providence’s largest tax-exempt institutions paid full taxes on their properties, the city would bring in $130 million in revenue. If they paid just 10% of their full taxes, they would bring in $13 million in revenue in one year. Instead — PILOT agreements generated $6.7 million last year,” Miller said.
Miller said Smiley needs to bring a “strong PILOT treaty that closes the budget gap” and gives both residents and tax-exempt institutions the chance to grow. Therefore, Miller asked the council to propose a freeze to non-essential hiring as part of next year’s budget ordinance until new PILOT agreements can be reached with tax-exempt institutions.
“I anticipate that those proposals will be before the council in the next several months,” she said.
Miller noted the details of the proposal were being finalized until Thursday, and a red-lined budget substitution would be available on Monday.
Smiley issued a statement about the council’s revised budget overview, saying it is “critically important” a balanced budget is passed that focuses on issues residents care most about, while also preparing the city for the expiration of COVID-related funding.
“I am pleased by the progress we have made working collaboratively with the City Council to invest in public safety, focus on better city services, and improve the local quality of life,” Smiley said.
“In the week to come, we hope to pass a budget that will set Providence on firm financial ground and over the next year, work together to increase revenue to the City of Providence to address the serious deficit that we are expecting next year,” he added.
The Finance Committee will hold a public hearing on Tuesday, June 13 at 5:30 p.m. at City Hall. From there, the committee will vote on the amended budget.
If the amended budget is passed out of committee that night, it would then go before the full council, which would have to approve it twice before it could take effect.