PROVIDENCE, R.I. (WPRI) — The Providence City Council gave first passage to the city’s nearly $370 million tax levy on Thursday, signaling a willingness to set the tax rate and send out property tax bills for the next fiscal year without knowing what the new budget will look like.
The council must pass the levy for a second time before it goes to Mayor Jorge Elorza’s desk for his signature, and his administration can begin sending out the bills to land in mailboxes the first week of July. Tax rates are remaining the same as the current year.
The vote was 14-0, with Councilman David Salvatore abstaining from the vote.
“We’re not letting taxpayers know where their dollars are going to be spent in Fiscal Year ’21,” Salvatore said during the council meeting. “I can’t in good faith support approving a levy without knowing where tax dollars are going to be spent.”
The council typically passes the tax levy in conjunction with the spending plan side of the budget, but this year is holding off on the spending plan until later in July, as Providence leaders wait to see how much state and federal aid might come in. The new fiscal year begins July 1, and the city will operate under the current budget until a new one is passed.
Finance Chairman John Igliozzi warned of dire cash flow issues if the tax bills don’t go out soon so that first-quarter payments can start to come in.
“The city does not have the money to run its government for the next three months unless these tax bills go out,” Igliozzi said. “It’s that serious. This is not hyperbole, this is not puffing, this is not some political stunt. This is financial reality.”
Elorza spokesperson Patricia Socarras says the city “fully expects to meet the immediate cash flow needs through June 30 and early July,” when payments usually start coming in.
First-quarter taxes are due by July 24.
“By starting the tax billing process, which represents 70% of the total budgeted annual revenue, the city will have the ability to stabilize cash-flow until there is a state budget adoption,” Socarras said.
Some of the city’s expected revenue dropped as a result of the COVID-19 pandemic, with many hotels and restaurants closed for months, speed cameras shut down and traffic ticket hearings delayed. But the majority of Providence’s revenue comes from property taxes — residential, commercial, motor vehicle and tangible — which are mostly unaffected by the pandemic, other than delayed payments from people who cannot afford to pay on time.
The city also receives roughly $60 million from the state (not including education aid), money that is in question for the upcoming year as state leaders grapple with a massive budget gap due to the pandemic. The General Assembly is not passing the new fiscal year’s state budget before July 1, instead planning to return to Smith Hill in mid-July, ideally armed with more information about federal funds to help close the gap.
Elorza’s $507 million budget proposal (not including the school budget) submitted to the council in April included the state aid Gov. Gina Raimondo originally proposed for Providence, prior to the pandemic.
Council President Sabina Matos told WPRI 12 on Wednesday she would prefer to wait until the General Assembly passes the state budget before passing a city budget.