Mayor Joseph Solomon says he’s tightening the screws on city spending in an effort to deal with the looming financial crisis he outlined in his state of the city address two weeks ago.
In an interview Monday, Solomon said he has instructed city directors to reduce budgeted spending for the remainder of the current fiscal year by 5 percent. The reduction does not apply to salaries that represent the largest portion of the municipal budget, which are set by contract. Solomon said he has asked directors to look at all “nonessentials” and to trim “as close to the bone as possible and keeping things running.”
Meanwhile, members of the administration are bracing for Monday’s joint meeting with the School Committee, at which time the school department will outline its projections for the 2019-2020 budget. It’s anticipated schools will ask for an even greater chunk of city revenues, according to a fiscal report prepared by school finance director Anthony Ferrucci in late February – which showed the schools are anticipating $12 million in unbudgeted expenses that include staff salary raises and big increases in fringe benefits, along with a slew of other non-personnel costs.
In his speech, Solomon said the city could be looking at a structural deficit of $18 million going into the budget for 2019-2020. Arriving at that amount could result from a combination of factors. Already the city faces a structural deficit as a result of the City Council and mayor’s decision to balance the current $316.3 million budget with $3.8 million from reserves. That number could be driven up by another $4.9 million if the city were to fully fund what schools say they need this year.
The city budgeted $500,000 in street light savings, which will not be realized.
But that’s not the end.
The city and the firefighters face arbitration, as they have not reached a contract. An award or settlement, which has been estimated to cost $900,000 in raises and legal cuts, could put the city deeper in the hole this year and leave a gap to fill next year. And yet another factor are projected tax revenue collections that were budgeted at 99 percent for the current year. The estimated rate of collections is projected to be shy by $1 million, further adding to the structural deficit.
How does the city expect it all to balance out?
It is most likely to be a combination of tapping reserves and cutting costs this year and raising revenues and further cutting costs next year.
Mayor Solomon said he is using “zero-based budgeting” in drafting the budget for the fiscal year beginning on July 1. The technique requires zeroing out all budget line items and then justifying each expense from there as opposed to starting with the last budget and building on that.
“I will sit down with each [department director] and go line-by-line and make adjustments from there,” the mayor said. He said that process has already started and, in fact, in announcing that retired Providence Fire Marshal Peter McMichael was his choice for fire chief as reported in Tuesday’s Beacon, the fire department budget has been completed. Solomon said that in his capacity as acting chief, Marcel Fonteneau compiled the budget. Fonteneau retires from the department this Saturday.
Solomon said he is taking a “proactive” approach to dealing with the city’s financial crisis, talking to officials at both the state and federal level about grants and sources of additional revenue. He cited city efforts to obtain $900,000 in payments in lieu of taxes (PILOT) from the Rhode Island Airport Corporation. He said he is also looking to lease city property for added revenues. A number of former schools and school buildings are available. And, he noted, City Council action approving the sale of the former Christopher Rhodes School as the site of a 30-unit single-family housing development that will put the property on the tax rolls.
Mayor Solomon said Wednesday he has not talked about pay reductions, freezes or furloughs for added savings. Former Mayor Scott Avedisian implemented such measures during the recession and to offset cuts in state aid.
Solomon said his orders are “to save every possible dollar.” Toward that effort, he said he has consolidated city positions and is looking for directors and employees to take on extra work where they can. As an example, he noted how Fonteneau filled three command positions within the fire department and how the city clerk is filling two positions.
Asked about the upcoming budget and what residents might expect, Solomon said, “We’re not going to be able to enjoy certain luxuries we have in city.” He said the focus would be on providing the fundamental service from police and fire to trash collection and schools, which he described as “baseline services.”
One thing Solomon promised taxpayers wouldn’t see is either a supplemental tax bill or a request to exceed the 5 percent maximum increase in the tax levy as set by state law. The City Council and then the General Assembly would need to approve such an action.
But unlike two years ago, when the City Council chopped up Avedisian’s budget to approve the first no tax increase budget in more than 16 years, there’s no talk of holding the line on taxes this year.