NEWS

Budget won't increase taxes, yet revenues questionable

Posted 6/4/20

In a virtual vote Saturday morning, the City Council unanimously passed Major Joseph J.  Solomon’s $323.5 million “more with less” city budget with no substantive changes, even …

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NEWS

Budget won't increase taxes, yet revenues questionable

Posted

In a virtual vote Saturday morning, the City Council unanimously passed Major Joseph J.  Solomon’s $323.5 million “more with less” city budget with no substantive changes, even as unanswered questions linger concerning funding for Warwick’s schools, declining city revenues, and changing levels of state and federal aid. 

“I think we all agree that there is no such thing as a perfect budget,” said Ed Ladouceur, Ward 5 councilman and chair of the Finance Committee. “I’m very pleased that the residents and tax payers of the city of Warwick are going to have some financial pressure taken off of them. But, I do have concerns with the revenue that we may or may not receive over the course of the year....” 

The biggest revenue concern for council members was the tax collection rate, the percentage of taxes the city collects from properties each fiscal year. In recent years the collection rate has been close to 99 percent, but with the economic recession caused by the coronavirus, council members believed that collection rates could fall, costing the city millions in lost revenues.

Ward 2 Councilman Jeremy Rix said that he doubted the city could achieve a full collection rate, citing the 98.3 percent collection rate for fiscal year 2009 - 2010, the last time Warwick faced an economic crisis on the scale of the one caused by coronavirus. Even a drop in the collection rate of a part of a percentage point could lead to a revenue shortfall of millions of dollars.

“As I examine this budget today, [revenue] is of paramount concern to me,” said Council President Steven Merolla. “I’m concerned about collection rates going forward, and how that impacts every line item on this budget. I’m worried going into the next collection year if we’ll be able to maintain that 99 percent.”

Asked Wednesday evening during budget hearings about revenue expectations for the current and upcoming fiscal year, Michael D’Amico, a financial consultant to Solomon, said that in the absence of meal tax data from the state, which is only calculated quarterly, the city was making estimates. 

The budget projects a 99 percent collection rate. Revenue projections from the airport are flat, or dip slightly, not taking into account the large decrease in business activity caused by COVID-19. The fiscal year 2021 budget takes into account possible decreases in meal (food and beverage) tax revenue, from $3.2 million to $2.8 million, as well as drops in miscellaneous income from the airport. It assumes level revenues from airport parking fees, even though flights and traffic have dropped precipitously.

Solomon added that along with revenue uncertainty, there was also lots of uncertainty about how consumers would react to the slow reopening of businesses over the summer months.

“We don’t know how society and the consumer base are going to react to [reopening],” said Solomon, who mentioned that the drop in air travel at TF Green Airport has hurt local hotels and businesses, and that other revenue streams, such as car rental taxes, are depressed from the lack of travelers. 

Full funding for Warwick Public Schools is also still uncertain. The school department had initially asked for $8.2 in additional funding from the city, but the budget passed by the council only includes a $2 million increase. 

Before approving the budget, city councilors voiced hopes that any state or federal aid could go toward the school department, to help offset its $6.2 million funding deficit.

After passage, Ward 8 City Councilman Anthony Sinapi docketed an item in the council calendar to address any fiscal requests the school department may still have for fiscal year 2021. Reached Monday, Sinapi said his intent is for the council to react to any outstanding fiscal concerns schools have in the coming weeks. 

Sinapi, who’s been reviewing the school budget with members of the school department and School Committee, said that two major unknowns still existed: the amount of savings from going to remote learning, and the amount of state and federal aid the district receives. Even with the uncertainty, Sinapi said that the relationship between the city council and school department is much better this year than last, and that both sides had “much more realistic expectations.”

“Last year I had people calling me asking me if they should move out of the district,” said Sinapi. “This year is like night and day… There’s a much more concerted effort together, so there’s no distrust of one side against the other.” 

Sinapi echoed other council members by saying that he trusted and appreciated the school budget presentation by Tony Ferrucci, the chief budget officer of the school department. Last year Sinapi called for a vote of no confidence against Ferrucci in the midst of the battle between the city council and School Committee over funding.

In other areas of the budget, Solomon said the city had obtained a 1.24 percent bond rate to purchase streetlights and convert existing fixtures to LED technology. 

Solomon also said that he hoped any city layoffs were “a temporary thing,” and that he was frustrated the city had to lay people off to balance the budget. Solomon’s budget calls for the elimination of 39 positions, all members of the Warwick Municipal Employees Local 1651.

Funding for the fire department is also flat, with no new training classes for firefighters due to the coronavirus. Solomon also said the city hopes the state would reimburse Warwick for services related to Covid-19 in Warwick, in particular for rescue and fire runs associated with hotels being used as quarantine locations by the Rhode Island Department of Health.

In the middle of the meeting there was a verbal scuffle between Solomon and Rob Cote, a Warwick resident, over the reopening of the McDermott Pool. Cote questioned the logic of maintaining pool operations while the facility was closed and could have undergone maintenance. After an exchange of sharp words, Cote was asked to stop asking questions and was not heard of for the remainder of the meeting.

ZOOMED IN ON THE BUDGET: In this screen shot, Ward 8 Councilman Anthony Sinapi poses questions during the Saturday Zoom meeting where the council approved the budget. (Warwick beacon photo)

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davebarry

Rob Cote is a loser.

Friday, June 5