Dear Neighbors:
When we travel on Blackstone Boulevard these days, it is impossible to miss the ongoing strike at Butler Hospital, which is taking place during Mental Health Awareness Month. It is my hope that the parties will reach an acceptable agreement soon for the good of the patients there, the people who serve them and the neighbors whose quiet enjoyment of their homes has been disrupted. In this week’s letter, I discuss Providence’s taxes.
1. The Revaluation
Last month, Mayor Smiley submitted a proposed budget to the Providence City Council that incorporates a revaluation, as is required by State law every three years. Taken by itself, the revaluation can be “revenue neutral,” i.e. higher property values can be balanced by lower tax rates to produce the same overall tax revenue, or “levy.” For example, if the valuation of the City’s property tax base doubled, a “revenue neutral” revaluation would cut the tax rate in half, resulting in the same overall “levy.”
While the overall levy could remain “revenue neutral,” relative values can change within or across neighborhoods. During the 2013 revaluation, our neighborhood saw more stable values while other neighborhoods saw steep declines. As a result, property tax bills in our neighborhood increased relative to the rest of the City. In contrast, in 2016, values increased in the rest of the City more substantially than in our own, causing our tax bills generally to decline even as those elsewhere in the City increased.
2. The Mayor’s Budget
The Mayor’s presented his budget last month. As part of that budget, he proposed an overall property tax increase (or increase in the levy) of 7.5%. He attributed the increase principally to a significant increase in the school budget resulting from a settlement with the Rhode Island Department of Education of their claim that the State’s takeover law required the larger local contribution. Other factors, such as the annual increasing pension obligation, contributed to the tight financial picture that the City faced.
The Mayor’s budget also incorporates the increased property values resulting from the revaluation. As a result, the new tax rates are lower than before (declining for homeowners from $10.46/thousand to $8.25/thousand), but your tax bill is probably higher because of the combination of the higher valuation and the increase in the overall levy. You can calculate your new tax bill under Mayor Smiley’s budget (based on your new valuation) by clicking on this link.
3. The City Council’s Role
After receiving the Mayor’s budget, the City Council Finance Committee began hearings on the budget, which it will continue for another several weeks. As they review City department budgets, they are investigating whether the expenditures align with City priorities and whether the money is being efficiently spent. Given the proposed tax increase, the City Council is also looking for budgetary savings to reduce the impact on taxpayers.
Under the State’s Paiva Weed law, municipalities must obtain General Assembly approval for levy increases that exceed the 4% permitted cap. As noted in my March 23 letter, the City Council, by a 14-0 vote, passed a Resolution requesting General Assembly approval of a tax increase not to exceed 8%. In the Resolution, the City Council stated it “will be deeply circumspect and diligent in seeking and passing a balanced budget not detrimental to those least able to afford increases in taxation and will prioritize new revenue sources and encourages the city administration to be similarly mindful, prioritizing new revenue sources and thoughtful cuts over residential property tax increases.”
4. The General Assembly’s Role
The General Assembly will now review whether to approve the City Council’s request for permission, if necessary, to approve a budget with a levy increase of greater than 4%. On this basis I introduced S-1041, which would authorize the City (acting through its City Council and Mayor) to enact a tax levy of up to 8% consistent with the principles of the City Council resolution. The General Assembly also is considering other proposals to increase the City’s revenue, such as a tax on parking.
5. My Approach
In my first year on the City Council (in 2011), the City faced a $110 million structural deficit due to what Mayor Taveras called a “Category 5 fiscal hurricane.” To balance the City’s budget, we found it necessary to approve an extraordinary tax increase that exceeded the Paiva Weed law’s 4% cap. We concluded that the impact to City services (including public safety, sanitation and community centers) and the resulting harm to residents’ quality of life was too severe to justify a rigid adherence to the 4% cap. While taxpayers would have preferred a smaller increase or no increase, they generally accepted that we had done the best we could.
As a State Senator, I am urging my colleagues (particularly my fellow Senators who represent Providence neighborhoods) to pass S-1041. I am sorry to report that none of my Providence colleagues agreed to co-sponsor the bill. In my ongoing conversations, I will continue to urge them to allow our Mayor and City Council to perform their duties without our interference, as our Mayor and City Council have been elected to prepare and approve a responsible City budget that is in the best interest of taxpayers and residents.
From my own time serving on the Providence City Council, I respect the difficult task ahead for our City’s elected officials, and I will continue my work as a State Senator (through legislation in such areas as greater education aid and greater support for public transportation) to stand up for Providence.