PROVIDENCE, R.I. (WPRI) — Seven Rhode Island cities and towns that are deemed financially “distressed” would get a cut to their state funding under Gov. Gina Raimondo’s new budget proposal.
Raimondo proposed cutting funding to the Distressed Communities Relief Fund by half in her $10 billion tax-and-spending plan released Thursday.
The communities on the list — Central Falls, Cranston, North Providence, Pawtucket, Providence, West Warwick and Woonsocket — would have their combined relief aid cut from about $12 million to $6 million in the budget for the upcoming fiscal year, which starts July 1.
Providence Mayor Jorge Elorza said Friday the cut would “create an incredible and unnecessary budgetary strain” for the city.
Providence received more than $5 million from the relief fund in the current year’s budget, which would be cut to $2.7 million under the new proposal.
“The city is disappointed and concerned about the impact this cut would have,” Elorza said.
Providence — and all the distressed communities — would still get millions in state funding in Raimondo’s proposal. Providence would get more than any other city in non-education state aid, at $59 million. Most of that is made up of the reimbursement due to the state-mandated car tax phaseout and PILOT aid to help make up for the lack of property taxes paid by nonprofit colleges and hospitals.
Brenna McCabe, spokesperson for the Department of Administration, pointed out that overall state aid to municipalities would increase by close to $50 million in Raimondo’s budget — the vast majority of which is education aid.
Providence would receive $263 million in education aid in the proposed budget, nearly $4 million more than the previous year.
“The distressed communities program was created 30 years ago during an economic recession to support communities that were hit the hardest,” McCabe said in an email. “But the economy is the strongest it’s been in a generation, with record high jobs numbers and record low unemployment numbers. Given that … we felt it was appropriate to reduce funding for the distressed communities program from its historical levels.”
McCabe also pointed out that Raimondo is proposing legislation that would let cities start taxing any “non-mission” properties owned by tax-exempt entities like hospitals and colleges. (A coffee shop inside a hospital, for example.)
The budget will be vetted by the General Assembly over the coming months, which makes changes before passage in June. Democratic House Speaker Nicholas Mattiello has already cast a skeptical eye at the proposed relief cut, writing in a statement Thursday that “local aid reductions are very troubling and will have grave consequences for some of our cities and towns.”
Cranston, the city he represents, would lose $1.2 million in relief funds from the cut.
“It is frustrating to see that cities and towns, some of whom are still facing significant challenges, will face another cut in the proposed budget,” said Cranston Mayor Allan Fung. “A $1.3 million cut will have a tough impact on Cranston residents if it is allowed to go through.” (Cranston would also get about a $4 million increase in education aid in the proposed budget.)
Senate President Dominick Ruggerio — whose hometown, North Providence, is also on the list — vowed on Facebook to “fight this cut.”
The executive director of the Rhode Island League of Cities and Towns, Brian Daniels, said he was “very concerned” about the 50% cut in distressed communities aid. Daniels said it would “lead to higher taxes or services cut in places that can least afford them.”
“Cutting over $6 million only serves to penalize communities whose tax base can’t support large tax increases,” Daniels said. “Especially when state aid to all communities has still not recovered from pre-recession levels.”
He also expressed support for the additional education aid, most of which comes from the mandated education funding formula. Raimondo’s proposal also includes additional money for English learners, and more public pre-K seats.
The Distressed Communities Relief program started in 1990, and municipalities are added or removed from the list based on how high their property tax burdens are compared to the income of the people who live there.
Eight communities received distressed community aid in the current budget year — the cities and towns listed above, plus Johnston — but Johnston has now fallen off the list.