During an unprecedented Warwick “State of the City” address last week, Mayor Joseph Solomon delved into fiscal details that outlined a highly troubling reality facing the city, which includes a looming structural deficit upwards of $18.6 million this coming budget season, unresolved contracts with the fire department and growing expenses in the school department – none of which have immediately apparent answers.
“At this moment, the city is ailing, with a poor prognosis for the immediate future,” said Solomon from the podium set up at Warwick Veterans Middle School – as the City Hall chambers continue to be renovated after sustaining water damage.
It was a sobering change of tone from Solomon, who for the most part in his first year of being mayor – since stepping into the role in an interim capacity last May and being duly elected this past November – has maintained a message of overall optimism regarding the city’s outlook while noting its challenges.
In the hour-long address, Solomon painted a picture that pointed a clear finger of blame towards Scott Avedisian, who spent the past 18 years as the lead executive of Warwick and departed to take the top job at the Rhode Island Public Transit Authority in the midst of his final term.
Solomon criticized the “maintenance budget” that Avedisian left, which level-funded various departments (like the schools). Solomon said that this budget left a $7.4 million structural deficit within it that failed to account for the need of a new collective bargaining agreement with the fire department (no such agreement has been reached), rising costs within the schools, fringe benefit cost increases for city employees and counted on unrealized savings from projects that hadn’t been realized yet – such as a streetlight LED conversion program that hadn’t been actualized.
Solomon also criticized the actual status of the city’s rainy day fund – the reserve account composed of many years’ worth of surpluses that serves as insurance against one-time, unexpected expenses. According to Solomon, at the time of him taking office the reserve fund had been advertised as between $22-25 million. In actuality, he said, it stands closer to $13-14 million.
“In short, in the many years leading up to my being sworn into office as mayor, our community had been led to believe that we were sailing along on calm, tranquil waters,” Solomon said. “Instead, the reality is that we have been heading straight into a perfect storm, without proper warning, preparedness or safeguards.”
Solomon referenced how he brought in the Rhode Island Public Expenditure Council to investigate the financial health of the city and its operations. He said they assisted in “restructuring” the finance and treasury departments and are now working with other departments in the city as well.
However, when asked about whether he had based his statements on reports from RIPEC following the address, Solomon said that there was no report regarding the city’s financial health that had been finalized yet. Ed Ladouceur, chair of the council finance committee, said Monday he had not seen the audit for the fiscal year ending 2018 but he is confident in the numbers Solomon presented in his address. He also noted that the audit ordered by the council last spring has not been finalized.
The Beacon has filed Access to Public Records Act requests in order to obtain any financial reports – preliminary or otherwise – that have been received by the council or the mayor’s office.
In a release sent out by his press secretary at the Rhode Island Public Transit Authority, Scott Avedisian responded to the criticism thrown his way in the address, indicating that Solomon and the all-Democratic City Council should shoulder some of the blame for the financial situation they find themselves in.
“The Democrats, including several incumbents, had complete control of the Council and could have done anything they wanted,” Avedisian said in the statement. “For them to say that I did this and they did not know about it is ludicrous.”
Avedisian cited that during the budgetary process for the FY18 budget, he had proposed a tax increase along with $3 million in reserve funds. However, as reported by the Beacon on June 6, 2017, the Council voted to cut $5 million and used $1.2 million in reserve funding in order to approve a budget that did not require a property tax increase.
“As a result, the Fiscal 2018 budget year began with a $6.2 million hole that they created – not me,” Avedisian wrote, adding that a year after the no tax increase, they raised the tax rate the maximum allowable by law and took an additional $3.8 million from the fund reserve.
“That adds up to $10 million in expenses that the Council never properly budgeted for,” Avedisian wrote.
Avedisian was also critical of the accusation that he was responsible for improperly funding the school department in the FY19 budget proposal he left Solomon before departing for the job at RIPTA, as the Council opted to fund only $1.5 million of the school department’s $8.1 million need and, instead, allocated $5 million towards a road paving initiative.
On Monday Avedisian said the RIPTA press secretary was not at work Friday and had issued the statements from home. He said all future calls relating to his tenure in Warwick should be made to him personally and not through his office at RIPTA.
Addressing “fictitious” information
Ladouceur defended the council and their fiscal decisions made in the past few years on Monday, saying that they could only work off the information they received from Avedisian and his department heads, including the assessment that the city had as much as $22-25 million in reserve funds when the actual number discovered and reported by Solomon was closer to $12-13 million.
Ladouceur said that the council would have approached the no tax increase budget of FY18 differently if they had the information they possess now.
“You can’t make changes about anything you’re not privy to or not aware of,” he said. “If we all had hindsight, certain decisions would be made differently. Back two cycles ago we made decisions based on the info we were privy to and based on the information that we saw.”
“This is not being political, it’s being factual,” Solomon followed up with on Monday regarding the figures he brought to light in the State of the City. “The numbers don’t lie.” He agreed that the council “would have approached things differently” in regards to the no tax increase during FY18 had they known the information they know now.
“We hope the information we get is reliable and accurate,” he continued. “The more side agreements that come to the surface, the lack of funding for raises the prior administration helped negotiate, that indicates someone was not at the wheel at the time of steering this vehicle down the road.”
Here, Solomon is referring to the school department again. He argues that Avedisian inserted himself into mediation attempts between the school administration and teachers’ union in order to broker a deal that would end the prolonged contractual dispute that had been ongoing for years. However, Solomon adds that Avedisian failed to include any funding mechanism to deal with the millions in labor cost increases that this deal would have on the city.
During his address, Solomon said he had already begun “taking a very close look at all departmental functions and am digging into the numbers,” and was supportive of zero-based budgeting, “where each line item starts at zero and any allocations associated with it must be vigorously defended.”
Solomon confirmed on Monday that the city would be utilizing the zero-based budgeting tactic in order to try and solve the large looming deficit, and would be asking for large spending decreases from unspecified departments across the city.
“I’ve requested other departments a reduction in areas of 5 percent cut in spending if we can. Everyone is going to have to tighten their belt to deal with the foundation that the prior administration left,” he said. “By approaching it that way, everything is on the table, everything is transparent, and transparency is one of the key pledges of my administration in its service to the citizens of this city.”
Ladouceur agreed with this methodology.
“That’s something the mayor’s going to push forward with and I agree with that and support that,” he said on zero-based budgeting. “We’re going to continue to do our due diligence and look at every item we can look at, just as we have been doing. There’s going to be certain wish list items that we can’t approve because we simply can’t afford it.”
Ladouceur added that the while the current outlook appears dark, and while it will not be a “painless” process to get through, he has confidence in Solomon and his colleagues on the Council to address the issues and steer the city back onto a good path.
“There’s a lot of work ahead, and we’re up to it. Mayor Solomon, given the situation we’ve inherited, I can’t think of anyone more qualified than he is to be in that corner office. We’ve got an extremely confident, motivated city council,” he said. “It’s a big challenge, it’s not going to be painless. Nobody is trying to give anyone that impression.”
As Mayor Solomon did in his address – sandwiching the doom and gloom fiscal reality between heaping layers of praise for the city of Warwick’s economical and business development and policy improvements he has made since he assumed the mayor’s office – Ladouceur opted to also search for the bright side in the situation.
“We have our share of doom and gloom, but we also have our share of bright spots,” he said, citing the recent sale of the former Christopher Rhodes School as an example of due diligence that resulted in a positive outcome for the city. “We have some even brighter spots in the day ahead. Challenging, yes, but also exciting, I think it is. I’m really happy I’m part of the team that is going to be able to move forward in the future and play a role in the exciting part as well.”
Solomon finished his thoughts on a sunnier note as well on Monday.
“I’m not going to let this defeat us as a city,” he said. Everyone is contributing towards the resolution of this financial tsunami that we were left with. What we’re going to do is proceed on a positive note based on actual numbers, as opposed to fictitious numbers.”
With reports from John Howell