Nobody cares for taxes and lots of people love schools.

In recent  years voters have supported schools on numerous occasions, the most recent being the 2022 General Election with approval of a $350 million bond to build new Toll Gate and Pilgrim High Schools. This coming fiscal year beginning July 1, taxpayers will start paying for those new schools even though they won’t open for five years.

“We’re going to have to borrow a lot of money,” City Finance Director Peder Schaefer said in an interview on Friday. In the coming fiscal year the city is looking to issue bonds for $40 million that will be used for ongoing elementary and middle school renewal projects and about $20 million for the design construction of the two high schools.

Mayor Frank Picozzi’s budget message makes it abundantly clear that school construction costs are driving higher taxes.

“The budget I propose to you today increases spending 2.2% over the current year’s approved budget, from $353.2 million to $360.8 million. This includes a modest, but necessary, tax rate increase of approximately 1.5%, which is associated principally with borrowing costs for previous and ongoing school construction projects, as well as shortfalls in promised state aid,” he writes.

1.5% hike in taxes

It’s going to require a tax increase – the first of Picozzi’s administration and one his administration sought to minimize after weeks of department budget meetings and examining projected department costs line by line.

As outlined in a legal advertisement appearing in today’s Beacon, the administration is proposing to raise an additional $3.1 million that equates to a 1.5 percent tax increase.

Picozzi emphasized  the tax increase is “modest” and estimated it would amount to an additional $1.50 a week to a homeowner paying about $5,000 in city property taxes annually.

The proposed $360.8 million budget represents a 2.16 increase from the current budget.   If approved by the City Council, the residential rate would bump from $14.19 per $1,000 of assessed valuation to $14.40. The commercial rate would increase from $24.83 to $25.20 and the tangible personal property tax is unchanged at $37.64.

Boosting costs other than schools

There’s more to driving the rate than the cost of school bonding. The administration has built in employee contract increases – firefighters will get a 3.75 percent increase under the last year of their agreement – as well as increases for municipal employees and police who are in negotiations. The budget includes $1 million to cover the cost of the new contracts as well as increases for non-union employees.  In uncustomary fashion, Warwick schools have settled the Warwick Teachers Union contract well in advance to expiration of the current 1-year agreement this August as well as the Warwick Independent School Employees (WISE) agreement.  Teachers would get a 2.75 percent increase in the first year of their agreement and WISE 2.5 percent.

Should the mayor’s budget gain approval, the city share of the school budget would increase by nearly $4 million to $189.7 million. This is about $900,000 less than what the School Committee requested but proportionately more than historically allocated by prior administrations. Brandon Bohl, school finance director pointed out that from FY 2010 to FY 2022, the average annual increase in city school funding was 1.38 percent. That has risen to 2.85 percent for FY 23, 24 and 25.

“It’s important to emphasize the support we’ve received over the years,” he said. Apart from voters approval of the new high schools, Bohl said it is important that programming continues to improve. Together with new high schools he feels the city will benefit as it attracts new families year after year.

In a statement released to the Beacon, Superintendent Lynn Dambruch said, “Mayor Picozzi’s budget contains an appropriation to the Warwick School Department which shows his commitment to high quality education for students.  The appropriation also provides us with the means to continue building excellent programs.”

Picozzi is looking for schools to rein in costs.

“In 2019, there were 8,476 pupils in the WPS; for 2025, the projection is 7,480; by 2028 the number is 7,033. The declines are approximately 2% a year. The whole effort and financial strategy to build two new high schools cannot work if the Superintendent and School Committee refuse to modify costs over the long term to reflect this declining enrollment,” he writes.

Picozzi and Schaefer briefed City Council President Steve McAllister on the budget last week before he left on vacation.

“Schools are definitely a big part of this budget,” McAllister said Tuesday. McAllister said he was concerned with projected revenues from installing traffic cameras since at this time the council has not voted on purchasing the cameras and the issue may not come before the council until after the start of the fiscal year.

“I think that is a very big leap, kind of putting the cart before the horse,” he said. “It’s a little presumptuous.”

$1.3 million projected from traffic cameras

In his message Picozzi said,  “After a thorough study of our peer municipalities, we can comfortably estimate annual associated revenues of $2.5 million. Implementation of this program is not expected until late fall of calendar year 2024; as such, this budget conservatively estimates $1.3 million in associated revenue in FY25.”

Additionally, other than $1.9 million in school debt service payments pushing the budget, Schaefer pointed out it is an election year and the board of elections is budgeted to get an additional $200,000. An additional $250,000 is budgeted for the assessors that is in the process of a full revaluation that will implemented next year based on values as of Dec. 31, 2024.

Things might have worked out differently with either a reduced tax increase or none at all if anticipated state revenues materialized.

State aid that isn’t coming

“Had the state executed the car tax phase out in the same manner they sold the proposal to the general public, the 3% indexing would generate an additional $750,000 in state aid,” reads the mayor’s message. He goes on to say the city would have also been in line to receive an additional $250,000 for full reimbursement for the $50,000 tangible tax exemption.

As budgets focus on projected costs and revenues, Picozzi’ budget message also steps back to give a financial appraisal of the city as well as developments that portend to show future growth.

In opening remarks Picozzi’s message reads, “I would first note that we remain in excellent financial condition, with substantial reserves that remain at healthy levels, even in the current high inflationary environment, and while contending with non-discretionary budget constraints.”

According to the audit for the 2023 fiscal year, the city had an unassigned reserve balance of $30.4 million. Of that, the budget calls for the use of $3.1 million. In a call Tuesday, Mayor Picozzi said, “we’ll cover that by holding expenses down” which would eliminate a structural deficit going into the 2026 Fiscal Year.

The budget includes the creation of a pension administrator position, financed by pension assets, as was proposed in a study authorized by the Retirement Board. The position won’t be established until affirmative action is taken by the Retirement Board. The budget also proposes a continued freeze on police officer contributions for pension benefits. The current 18.54% rate is the highest in the state, hindering recruitment and retention. Freezing the rate will require an additional $80,000 contribution by the city.

Future developments

Citing plans for developments on Post Road including those of the Ann& Hope Plaza, housing developments on the former Wickes and Randall Holden School properties and a four-story apartment complex on Post Road near the Airport Connector, Picozzi notes, “In spite of increased costs of commercial lending due to higher interest rates, the city continues to enjoy significant investment in commercial and multi-unit residential projects. These investments, upon completion, will improve economic outcomes in our city through enhanced non-residential tax revenues, expanded housing opportunities, and increased employment in construction and warehousing, office, and retail.”

The budget message goes on to note commercial developments,  “will not require an increase in the cost of municipal or school services.”