Providence leaders reach agreement on $770M budget

Providence
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PROVIDENCE, R.I. (WPRI) – Following 11th-hour negotiations that led to an agreement between city leaders, the Providence City Council on Wednesday gave initial approval to a $770 million budget.

The tax-and-spending plan, voted on three days into the new fiscal year, still needs to clear a second and final vote slated for Tuesday before it’s delivered to the desk of Mayor Jorge Elorza, who is now expected to sign it.

“It’s a good budget,” said Majority Leader Jo-Ann Ryan, D-Ward 5, who is vice chair of the Finance Committee. “I think the mayor recognized our changes were well thought out and fair.”

Elorza, who said earlier this week he would veto the council’s original budget blueprint, changed his mind after councilors agreed to reinstate some of his funding requests, including $225,000 for the Arts, Culture and Tourism Department and money for a fire chief position that’s now been vacant for years.

“After weeks of tough negotiations, we reached a budget proposal that invests in our neighborhoods and moves Providence forward,” Elorza said in a statement. “The budget that the Providence City Council is voting on tonight maintains critical service supports and reflects sound budgeting practices that ensure our city is on sound financial footing in the future.”

The City Council voted 11-4 in favor of the budget and 13-2 on a separate vote for school funding, which increased $1.5 million compared to a year earlier. The council would have had the 10 votes necessary to override a veto, but council leadership said there’s no need because budget negotiations resulted in the deal with the mayor.

The budget, which level-funds most other departments, was roiled in controversy in the weeks leading up to the vote, exacerbating an already-contentious relationship between city councilors and the mayor.

The tension culminated last week when budget talks broke down, as Elorza blamed councilors for trying to settle “petty personal scores,” rather than negotiate in good faith.

He criticized the council for proposing a $40,000 cut to the salary of Public Safety Commissioner Steven Paré, along with an effort to eliminate a Department of Public Works position based on a possible deal with a councilman the city is now investigating. (It wasn’t immediately clear whether Paré’s salary will change under the new budget.)

Leaders of the all-Democratic council, meanwhile, heavily criticized the mayor for traveling to Hawaii for a U.S. Conference of Mayors meeting during negotiations – just days after a scathing report came out showing Providence schools are among the nation’s worst.

City leaders had already butted heads over taxes, as a recent revaluation resulted in higher tax bills for many homeowners outside of the more-affluent East Side where home values haven’t increased as quickly as some other neighborhoods.

Ward 2 Councilwoman Helen Anthony, who represents the East Side and voted against the budget, said the tax debate “purposely pitted the East Side against the rest of the city.” She described the process as “not transparent, ethical, or based on sound budgetary practices.”

Ward 4 Councilman Nicholas Narducci, who spoke in favor of the budget, disagreed and blamed Elorza for dividing the city.

“I’m getting a little tired of hearing how we as a council are putting one side of the city against the other side of the city when I think it was the administration that did that, not us,” he said.

In an effort to level the playing field, members of the Finance Committee proposed implementing a two-tiered tax system, but failed to get required support from the R.I. House of Representatives.

Instead, the council approved a single tax rate – $24.56 per $1,000 of assessed value – along with a so-called homestead exemption, giving a 40% discount to people who live in their homes. The mayor originally proposed a tax rate of $15.35 for owner-occupied homes and $24.56 for non-owner occupied.

Ward 14 Councilman David Salvatore, who represents the Elmhurst and Wanskuck neighborhoods and also opposed the budget, raised concerns about the new single tax rate. He said he fears it will scare off potential homebuyers from wanting to buy a home in Providence because it’s too high.

He also lamented the budget process and how everything came together.

“This body is playing politics again with property taxes,” he said.

The capital city’s budget challenges go well beyond disagreements between leadership. Providence is facing a $1 billion pension liability, with a funding level of just 26% – well short of the state’s long-recommended rate of at least 60%.

The city will spend almost $87 million – or about 11% of the total budget – toward its pension plan this fiscal year. The annual deposit is forecast to continue climbing each year, leaving less money for other expenses such as sidewalks and schools.

Despite the weeks of infighting among city leaders and the ongoing financial challenges, however, Elorza in the end was bullish.

“I look forward to signing the final budget,” he said.

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for WPRI 12. Follow him on Twitter

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

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