NEWS

Gov’s budget short changes city $800K, says Schaefer

By JOHN HOWELL
Posted 2/15/24

City Finance Director Peder Schaefer has a nose for numbers. When they aren’t what he expects them to be he starts digging.

He did that last week as he reviewed the governor’s budget …

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NEWS

Gov’s budget short changes city $800K, says Schaefer

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City Finance Director Peder Schaefer has a nose for numbers. When they aren’t what he expects them to be he starts digging.

He did that last week as he reviewed the governor’s budget and questioned why the state allocation relating to the elimination of the car tax was level funded for the fiscal year starting on July 1 of this year.

As he put it, “the amount was frozen rather than being indexed as it was supposed to be.” In layman’s terms, the city was getting short changed. It’s not a few pennies either.

Under legislation eliminating the motor vehicle tax collected by municipalities, not only would they get a base amount representing the lost revenues but an annual adjustment (the index) commensurate to the state’s overall percentage increase in sales tax revenues for the past year.

The logic of an increase is that motor vehicle values increase annually and if the state level funded the payments, municipalities would get a proportionately declining source of revenue. The index was designed to kick in the upcoming budget.

Governor McKee’s budget  has Warwick getting $25,246,000 .Had the index been applied as written in the legislation, Schaefer estimates an additional $800,000 should be coming to Warwick.

House Speaker K. Joseph Shekarchi is aware of the potential impact on the city budget, which is of concern, but his focus is largely on the overall state budget.

He said that collectively he is seeing an additional $1 billion in budget requests.

“I don’t know where the money is going to come from,” he said.

Shekarchi recommended Warwick elected officials make their concerns known to the governor’s office .

One monetary issue he feels Mayor Frank Picozzi and the administration need not worry about is the $500,000 the Rhode Island Airport Corporation was paying the city in lieu of taxes. RIAC ceased the quarterly payment last fall on the basis of findings in a RIAC audit. In its report RIAC primarily attributed the payment as a reimbursement for services performed by Fire Station 8 on Post Road. The auditors found the amount excessive and recommended the payments cease. The ruling was not appealed by RIAC although additional services provided by the city may have qualified under the designation of payments in lieu of taxes (PILOT).

As the $500,000 PILOT payment was legislatively enacted, Shekarchi said, “it has to be paid under the law. Warwick will get it.”  

budget, finance, shortage

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