PROVIDENCE, R.I. (WPRI) – Fewer Providence homeowners will see a property tax hike than previously proposed, according to a new budget plan released and then immediately approved by the Providence Council Finance Committee Wednesday night.
The amended tax-and-spending plan, which now goes to the full council for a vote, cuts the residential tax rate further than Mayor Jorge Elorza originally proposed in April, while slightly increasing the commercial tax rate above Elorza’s proposal.
The newly proposed residential tax rate for the fiscal year that starts July 1 is $17.80 per $1,000 of home value, lower than the $18.50 rate proposed by Elorza in April. (The current tax rate is $24.56 per $1,000.)
The council’s plan also keeps Elorza’s proposal to increase the homestead exemption from 40% to 45%, allowing homeowners who live in their properties to exempt that portion of their home value from taxation.
The city had to cut the tax rate due to a mandated revaluation done this year that sent home values skyrocketing. The city can only raise the overall tax levy by 4% each year.
But even with Elorza’s original tax rate cut, more than half of Providence homeowners would have seen a higher tax bill this year, Target 12 reported in April.
The new City Council plan will decrease residential tax bills overall compared to Elorza’s plan, though many homeowners will see still see a higher bill than last year, especially if they do not live in their property.
The average residential tax bill will now increase by $114 under the council’s new plan compared to $309 under Elorza’s plan, according to an analysis provided by the City Council.
The tax increase is not spread out evenly throughout the city. Homeowners in several lower-income areas saw property values rise higher than the homes on the more affluent East Side, which stayed more stable.
“These people need to get a second job to pay these high property taxes,” lamented Councilman Oscar Vargas, D-Ward 15, who represents Olneyville, Valley and Silver Lake. Properties in his ward increased in value by 60%.
Councilwoman Jo-Ann Ryan, chair of the Finance Committee, acknowledged the issue, and said it was why the council opted to lower the residential tax rate below what Elorza had proposed.
“We just kept playing with the numbers to figure out where the sweet spot was, where we could pass along as much relief as possible,” Ryan said.
In order to balance the budget without making cuts to expenses, the committee opted to make up for the lower residential tax rate by setting the commercial tax rate to $35.40 per $1,000, higher than Elorza’s proposal but lower than the current tax rate of $36.70.
While commercial property values also rose during the recent valuation, they didn’t increase as much as residential properties.
Tax bills are typically sent out once the budget is approved, with the first quarterly payment due July 24.
The $568 million new budget proposal also includes $5 million for the redevelopment of the vacant Superman building, which was not included in Elorza’s original proposal. The budget says the grant will be funded through annual savings known as attrition, when employees leave the city and their jobs aren’t filled immediately.
The council’s new budget also defunds the long-vacant position of Providence fire chief, a perennial issue that almost caused the budget to implode in past years. A provision calls for the $175,000 salary to be restored if Providence hires a permanent chief.
The city hasn’t had a permanent fire chief since 2015. Public Safety Commissioner Steven Paré, who is the acting fire chief, has been paid out of both budget lines for years, allowing him to earn more than the $132,000 budgeted for public safety commissioner.
“He is presently making $33,000 more than the ordinance,” city treasurer and council chief of staff James Lombardi told the committee. “As you know, it not only adds to the salary but his future pension.”
A previous effort by the council to cut Paré’s salary three years ago prompted a veto threat from Elorza, a threat he did not repeat this time around.
“The mayor is pleased that there is agreement on 99.9% of the budget,” spokesperson Theresa Agonia said.
Ryan said she expected the move to result in a reduction in Paré’s pay. But Elorza’s office said Paré would not get a pay cut. It was not immediately clear how he would be paid once the fire chief line is defunded.
“We do not have a qualified fire chief,” Ryan said. “That’s an empty position. … We’re asking for a qualified fire chief to be hired.”
There are several other changes from Elorza’s original budget plan, including a provision to allocate some speed camera revenue to purchase police cars, and a plan for how to reallocate unused money from a small business relief fund that’s expiring.
A key item that remains the same from Elorza’s proposal is a plan to hire 50 new Providence police officers in the coming year.
The committee voted 4-0 in favor of the new city budget. (Councilwoman Helen Anthony, the committee’s fifth member, joined the meeting on Zoom but could not vote because she wasn’t there in person.)
This was earlier in June than the committee usually wraps up its work on the budget. Many of the more controversial issues or new programs that typically lead to budget fights were settled in the American Rescue Plan Act budget, which was approved earlier this spring.
Since the state budget has not yet been finalized, it’s possible the city budget will need to be further amended if state lawmakers make changes such as eliminating the car tax one year early.