Providence council president eyes tax increase, pension changes in 2016

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Luis Aponte_240550

PROVIDENCE, R.I. (WPRI) – Officials in Rhode Island’s capital city will embark on a “multi-pronged” approach to stabilize the city’s finances in 2016, but the Providence City Council’s president says part of that strategy will likely be an increase in residential property taxes.

In a wide-ranging interview, Council President Luis Aponte said city leaders will seek to aggressively market economic-development opportunities in the new year, but acknowledged that the city’s first tax hike in three years may be unavoidable.

“At this point, the question before us is how much of a tax increase, as opposed to whether or not there will be a tax increase,” Aponte, a Democrat who represents Ward 10, told WPRI.com.

Aponte said it’s too soon to say how much the city will need to raise taxes because officials are still waiting on the results of a citywide property revaluation. Mayor Jorge Elorza will likely release his next budget proposal – for the fiscal year that begins July 1, 2016 – in March or April.

In each of the last two fiscal years, Providence officials have held the line on all taxes – Aponte actually helped rental property owners secure a small reduction in the current year’s budget. But the city’s car tax rate ($60 per $1,000 of assessed value, with the first $1,000 exempt) is the highest in Rhode Island and the commercial real estate rate ($36.75 per $1,000) is consistently ranked among the highest of any large city in the country.

Aponte, who rents an apartment on Blundell Street off Thurbers Avenue, said he sees some room for growth in the city’s owner-occupied residential rate, which currently sits at $19.25 per $1,000. There are 19 Rhode Island municipalities with higher residential tax rates, according to the state Division of Municipal Finance.

The Elorza administration has estimated the city ended the 2014-15 fiscal year with a $5-million deficit – Providence’s annual independent audit is expected to be released next week – but officials have told the state they expect to close the current fiscal year with a balanced budget when it ends on June 30.Aponte wants pension changes, more state aid

As the mayor and the City Council look ahead to the 2016-17 budget year, Aponte said he is “seriously considering” changes to the city’s shaky pension system and wants the General Assembly to provide more state aid to the city.

Aponte said he doesn’t believe there is much more the city can get out of its retirees beyond what was contained in the 2013 pension settlement, but he said it is likely that “future employees are going to contribute more toward their pension and probably wait longer to collect it.”

He also said he wants to reform what is known in city parlance as “option four,” a policy that allows retirees to withdraw their pension contributions with interest in exchange for a much smaller monthly pension benefit. Aponte said he wants to consider barring retirees from withdrawing all of their contributions so that the city has more money in its pension fund to invest.

Providence reported the market value of assets in its pension fund was $357.7 million as of June 30, 2014, according to The Segal Group Inc., the city’s actuarial firm. The unfunded pension liability grew to $894.3 million last year. Segal is expected to release an updated review of the city’s pension fund early next year.

When it comes to state aid, Aponte said the city will ask the General Assembly to provide more support, but he stopped short of stating how much Providence would seek.

State aid to cities and towns – which consists of the payment-in-lieu-of-taxes (PILOT) program, distressed community funds, municipal incentive aid, state library aid and motor vehicle tax reimbursements – has dropped dramatically over the last seven years, thanks in large part to a massive reduction in car-tax reimbursements.

Providence saw its state aid fall from $62 million during the 2008 fiscal year to $27 million in 2011, according to the Division of Municipal Finance. For the current fiscal year, the city is slated to receive about $37 million from the state. At the same time, state education aid for Providence grew to $228 million for the current year, up from $178 million in 2008.

Aponte said he wants to see the state revisit the PILOT program, which partially reimburses the city for tax payments it would receive if nonprofit colleges and hospitals were required to pay taxes. He said he thinks the state should work with the city and the nonprofits to increase payments rather than having the city negotiate “one-off deals every time a new administration comes in.”

“We don’t want to be in a position to cringe every time the colleges and hospitals announce an expansion,” Aponte said. Providence is scheduled to receive about $27 million in PILOT funds this year.

In addition to taxes and more state aid, Aponte said he believes Providence can begin to expand its tax base in 2016, particularly on the vacant I-195 land.

Aponte said the city plans to promote a slew of incentives to recruit new businesses, including a standardized tax-stabilization agreement policy for the I-195 land and a separate tax break for developers who wish to build in neighborhoods throughout the city as well as incentives from the newly-established Providence Business Loan Fund Corporation and a storefront improvement grant program.

He said the city also needs to make the permitting process far more predictable, particularly for small business owners who can’t afford to wait several months in order to obtain all the necessary operational licenses.

Although he hasn’t spoken directly anyone from General Electric, which is considering Rhode Island as its new headquarters after Connecticut lawmakers approved a tax increase this year, Aponte said the city would be willing to “roll out the red carpet” to bring 800 or so new jobs to Providence.

“We would be committed to clearing the path so that GE had a clear path to get here,” Aponte said.Firefighters, streetcars, PawSox

As for some of the city’s other pressing issues, Aponte acknowledged that he wants to see a “cooling-off period” between the Elorza administration and the firefighters so the two sides can attempt negotiate a settlement over how much workers should earn for an increase to their work schedule.

Aponte, who has been the most vocal supporter of the proposed Providence streercar line, said he doesn’t expect to project to move forward “in its current iteration,” but stressed that the city does need to find a “better and more thoughtful way” to move people around Providence.

On the proposed baseball stadium for the Pawtucket Red Sox, Aponte maintains that he would support building a ballpark in Providence “if it makes sense for the city,” but he said he hasn’t had any recent conversations with team owners.

On schools, the council president said he hopes to meet with Meghan Hughes, the new president of the Community College of Rhode Island, early in the new year to discuss ways to ensure more Providence students earn their associate degrees within two or three years of entering the school.

Aponte also said he wants to establish a “public safety track” in at least one of the city’s high schools in order to better prepare students who would like to become police officers or firefighters.

‘We want to have a diverse, well-prepared pool of candidates as opposed to just thinking about needing diversity,” he said.

As for politics, Aponte acknowledged that he still hasn’t reached a settlement with the R.I. Board of Elections on outstanding campaign finance fines, but said he hopes a deal can be completed early in 2016. Aponte, who owed the state $47,834 as of June and failed to file his most recent campaign finance report, has repeatedly admitted that he “screwed up” by falling behind on his quarterly filings.

Aponte said he hopes to serve two terms as the council president and defended his “conscious decision” to grow the City Council staff, noting that if all current council members and Mayor Elorza win re-election in 2018, the city will have at least 13 new councilors and a new mayor after the 2022 election.

“We need to build a staff to create the kind of resourced office that helps new council people,” Aponte said.

On Mayor Elorza, he admitted the mayor has had to overcome some learning curves in his first year in office, but said they two continue to meet and talk regularly, even if they don’t always see eye to eye.

“I’m rooting for him,” Aponte said.

Continue the discussion on FacebookDan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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