City working toward 'maintenance' budget

By John Howell
Posted 4/26/18

By JOHN HOWELL If even the most routine of expenditures is subject to intense scrutiny by the City Council, which it is, then passage of the city budget promises to be an excruciating process. It's already begun with the School Committee passage of a

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City working toward 'maintenance' budget

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If even the most routine of expenditures is subject to intense scrutiny by the City Council, which it is, then passage of the city budget promises to be an excruciating process.

It’s already begun with the School Committee passage of a $171.9 million budget request calling for an $8.1 million increase in city spending.

That’s part of the picture. The School Committee’s budget has been passed along to Mayor Scott Avedisian, who will recommend a school budget along with his recommendation to the council by May 15.

Avedisian, who will be leaving the city to become CEO of the Rhode Island Public Transit Authority in May, said yesterday that he plans to continue finalizing the budget. In a meeting with department directors he called on their cooperation in working with City Council President Joseph Solomon who will become acting mayor and carry the budget across the finish line.

The city side of the budget that the administration is in the process of drafting is “essentially a maintenance of effort,” city finance director Bruce Keiser said Friday. Keiser said the budget contains no new initiatives, but that doesn’t mean it is without increased spending adding pressure to increasing taxes.

Costs are going up. In addition, even though the city finished the last fiscal year with a $9.5 million surplus, it is faced with a $4.2 million structural deficit. This is a result of the council’s action to pass a no tax increase budget by offsetting $1.2 million in city spending and $3 million for schools from city reserves. The $3 million went into teacher salaries settling a protracted contract dispute.

Therefore, just to level fund the 2019 budget, the city will either have to come up with an additional $4.2 million in revenues – a possible tax increase – or dip again into the surplus. Level funding, however, doesn’t appear to be an option apart from the school request.

On the city side, the administration is faced with increases in pension payments as calculated by its actuaries and contract agreements with firefighters, police and municipal employees. All three agreements expire on June 30.

Keiser said tentative agreements that will require council and membership approvals have been reached with two of the bargaining groups. He would not disclose what groups or any of the terms of the agreements.

That was news to Solomon. He said Saturday the administration hasn’t shared any budget or contract information with the council, yet he applauded the council for approving a “zero” tax increase budget last year.

“One of the more important functions of the council is dealing with the budget,” Solomon said. Solomon wasn’t beyond hoping, however.

“Maybe we can do the same if not better this year,” he said.

In follow up questions in the wake of the mayor’s announcement, Solomon said yesterday, “I’m sure if the mayor is going to leave he’ll want to work together for a smooth transition.”

Holding the line on taxes is going to take some magic.

Keiser said the city doesn’t expect an appreciable increase in the tax rolls – those numbers were being worked on last Friday – that would translate greater tax revenues. Likewise, he didn’t forecast other significant increases in revenues whether in state aid, airport revenues or property taxes, including the hotel and beverage tax.

As for the rate of property tax collections that the council bumped up to 99 percent with the current budget, Keiser said it is too early to know whether that will hit the mark. If it falls short of projections, that’s an even greater amount the mayor and the council will need to collect to balance the next budget.

Solomon is not worried. Based on monthly collection reports, he’s confident collections will hit the 99 percent mark.

If maintenance is the appropriate definition for the city budget, then based on the current $308.2 million budget, new contracts will call for salary increases in the range of 3 percent. Overall, there would be other increases in expenses relating to utilities and fixed costs.

Certain to increase based on the bids obtained are health costs, although this could be modest. The council has yet to review the bids from United HealthCare, Rhode Island Interlocal Trust, West Bay Community Health, which is the current provider, and Rhode Island Municipal. With the exception of United, the three other bidders work with Rhode Island Blue Cross/Blue Shield in providing coverage.

Keiser said the West Bay and United bids represent a less than 2 percent increase from current costs. This is in marked contrast to double-digit increases being seen in the private sector.

“This shows the benefit of large group coverage,” said Keiser.

Might there be areas in the budget that could be cut to offset increases and minimize the impact on the property tax?

Keiser doesn’t see it.

“The council had adopted very lean budgets,” he said. “There isn’t much room to work with.”

Whatever the mayor proposes, Solomon said the council would look it over and do its best for the citizens of Warwick.

Council Finance Committee Chair Ed Ladouceur was hesitant to comment on the budget until he sees the proposal coming out of the mayor’s office. He expressed his confidence in Solomon.

City Council budget hearings start May 29 and are scheduled to continue on May 30 and May 31.

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