Big financial squeeze

Mayor Solomon vows no supplemental tax bill to balance current budget

Posted

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.

Comments

21 comments on this story | Please log in to comment by clicking here
Please log in or register to add your comment
richard corrente

"Cut Taxes - Cut Spending"

and Warwick will slowly get out of this financial mess. Solomon is doing a damn good job so far. He didn't cause it. He inherited it. But he's taking the right steps to bring Warwick to solvency. That is in the best interest of the 80,000 taxpayers that are paying the tab.

Happy St Patricks everyone.

Rick Corrente

The Taxpayers Mayor

Thursday, March 14
Pepe Le Pew

False claims against the fire department, and there are constant articles. Well know warwick loudmouth kills a hundresd of animals gas chamber style or lies about it and the Beacon says NOTHING. Par for the course my friend.

Thursday, March 14
justanidiot

master mayer, two words bull shit. if he didn't know and try to do anything as council president, then he inherited nothing.

Friday, March 15
Hillsgrove Hal

As the article explains, Mayor Solomon is proposing to cut services while raising taxes -- something the article also notes could have been avoided two years ago with a modest tax increase, but the city council decided against it.

justanidiot, you are right -- Solomon can not blame this mess on other people because he's been on the city council for 20 years and had plenty of chances to avoid it.

Friday, March 15
richard corrente

Dear Justanidiot,

No question. He knew. How many times did I write about it? Solomon can read. So yes, old friend, he knew! The problem was Avedisian and Carruolo. Without even notifying the City Council, these two made decisions that, I believe, are criminal.

Plus, let's be honest. It always was Avedisians/Carruolo's budget, not the City Councils. That budget (I've read every one) was full of "other" line items that had no explanation and often (I remember one in particular) Avedisian was "on vacation" during the budget hearings and couldn't be reached for explanation. Therefore the "other" items were passed by the City Council in a "rubber-stamp" method that became the common technique of Avedisian and Carruolo, his Chief-of-Staff.

Solomon, so far, has taken a MUCH more transparent approach. I don't personally like him. He doesn't like me. (I went to shake his hand but he refused saying "Not after all those things you're saying about me!") That said, he is way-outperforming the secretive previous administration by miles! That can only benefit the 80,000 taxpayers that are paying the tab. Please don't judge Mayor Solomon by the "go-along-to-get-along" attitude of Councilman Solomon. I think Warwick deserves to give him a vote of confidence. Maybe you and I should too. What do you think?

Happy St Patricks weekend old friend.

Happy St Patricks weekend everyone.

Rick Corrente

The Taxpayers Mayor

Friday, March 15
wwkvoter

corrente nonsense notwithstanding, we are borrowing from limited savings AND having a max tax increase allowed by state law with expected similar difficulties next year. the one year trick wont change the fundamentals that will take decades of higher and higher tax rates to dig out from. and the consequences could by damaging home values, and making warwick less attractive to retail (which is number one a huge part of our tax base, and also under its own threat from online retail).

oh and this is during a hot economy, just wait until the recession comes and that reduces tax revenue too.

not trying to be pessimistic just realistic.

Friday, March 15
justanidiot

master mayer, please let us know whens youse gets your head our of yer arse

Friday, March 15
patientman

Second to last paragraph the article states

"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."

I thought max tax increase is 4.25%

Friday, March 15
wwkvoter

Patient I thought so too but a quick search found this which says it's actually 4% since 2013 (it went down slowly since 2006 update to the tax cap law which had been 5.25% since 1985 which i never knew. No time to double check but it looks like 4% or get GA to pass a waiver. (Which I believe is why Mattiello was asked to attend the Titanic Captain's Briefing, oh I mean Solomon's State of Warwick... ;)

https://www.cga.ct.gov/2006/rpt/2006-R-0544.htm

Friday, March 15
Hillsgrove Hal

wwkvoter, unfortunately I think you're right and we're looking at maximum tax increases at least this year and next year.

I'm also curious what Mayor Solomon means by services that are "luxuries" and can be cut.

Friday, March 15
Patient Man

wwkvoter, Thanks

5% compounded over a decade would mean a Warwick owner currently paying $4,000 a year in property tax will be paying $6,515. That's a 61% increase. Even more unsustainable than 4.25%. 4.25% would be $6,065.

Friday, March 15
Patient Man

Oops I used the wrong compounding calculator. 10 years compounded on $4,000 would be about $6,400. Doesn't make me feel any better.

Friday, March 15
wwkvoter

patient, it's 4% max without a waiver (which I suspect we would get this year and maybe next). AND, to clarify further, that's a 4% max increase in the Levy (total property taxes), not the rate. Any new buildings would reduce the rate a little, and there is some new residential and commercial construction going on in Warwick. But let's just say it is a 4% rate hike every year, this is the table for a home that is paying $4000 property tax in this budget year and increasing 4% each year for the next ten years (which, as we all know, goes by quick!):

2018 $4,000

2019 $4,160

2020 $4,326

2021 $4,499

2022 $4,679

2023 $4,867

2024 $5,061

2025 $5,264

2026 $5,474

2027 $5,693

2028 $5,921

2029 $6,158

Friday, March 15
Bob_Cushman

Even with a maximum increase in property taxes each year for the next 5 years from fiscal 2020 through 2024, if no significant structural changes are made to the city and school budget to reduce the cost of active and retired employee benefits, Warwick will have a deficit between $50 to $70 million.

For the final 3 months of this fiscal year, 2019, an approximate $11 million structural deficit exists. Schools $$4.9 million deficit. City $6.25 million deficit.

For the 2020 fiscal year that begins on July 1, the structure deficit is approximately $16 million.

Keep in mind a max tax increase in the 2020 fiscal budget brings in an additional $8.6 million.

Friday, March 15
wwkvoter

Bob is that 50-70mil deficit in one year or across those 5 years?

Friday, March 15
Bob_Cushman

that's total over 5 years fiscal 2020 - 2024 with a maximum tax increase in each of those 5 years.

Friday, March 15
wwkvoter

thanks bob, so it's a problem that would be "solved" with 4% tax increases (approx 20% total) plus 10mil or so in cutting in each year (well actually a single 10mil cut that is durable would approx do it). of course with already crumbling roads, and other ignored infrastructure needs, how do you cut even more? the retirees cant be cut absent a bankruptcy, which no one needs. so this will be difficult...

I'd like to say "thanks scotty" but actually it's the voters as this has been in the news, and letters to the editor, your column, all along. some warwick idiot will freak out about the tax bill and then re-vote travis anyway regardless of whether she has learned how to add, for example. same for the other wards. patientman said it best ' the voters are co-conspirators in all this' or something to that effect.

Friday, March 15
Mike02886

PVD Mayor to House of Representatives, City is in great shape......... NO

Warwick Mayor leaves while in term to take a job where he's a past board member. Who leaves a political office mid term to go to a new job?? Who will be the next RI Mayor/former Mayor to head to jail ( PVD, PWT, CF, CRN )?

4 days ago
Hepdog

Important that union workers continue to retire in their 50s to Florida while the rest of happily pay for it.

Who cares about nice roads? Alignments are only $75. Suck it up, buttercups!!;

4 days ago
richard corrente

Dear Bob Cushman,

I have often-said that you are the most intelligent person in Warwick but, in this case, you might not be factoring in an important ingredient. The many people leaving Warwick. According to the U.S. Census 5,800 people moved out of Warwick in the last ten years. They took a lot of tax revenue with them as well.

Bob, in my sincerest opinion, the only way to solve this problem is to "Cut Taxes" (to attract more taxPAYERS) and "Cut Spending" (such as "voluntary pension buyouts).

Bob, if Warwick keeps losing taxpayers and increasing taxes, the remaining overcharged-taxpayers will have the highest taxes in the country. All BOTH of them.

By the way, Hepdog comments about city employees retiring "in their 50's." Who wrote THAT legislation? There is the guy who should go to prison! Do you know who he is Bob? I know it wasn't you. I also know it was done with Avedisians' approval.

Happy Spring everyone.

Rick Corrente

The Taxpayers Mayor

3 days ago
wwkvoter

Two election slaughters and corrente is still talking out his arse... AND calling himself "mayor"... incredible!

ANYWAY, looks like the Big Squeeze just got much tighter - 2.5 MILLION worth:

https://www.wpri.com/target-12/solomon-omission-from-firefighter-contracts-will-cost-city-at-least-25m/1861763275

3 days ago