Mayor Frank Picozzi has announced Wednesday the Finance Department has completed a mid-year review of the current year city budget that has been filed with the state and distributed to the City Council.

The forecast projects a $1.2 million deficit, relative to budgeted levels in the current year. This is offset by an increased surplus from the prior year of $1.9 million, which is more than expected, but less than the $3.8 million announced by the previous administration.

According to a release, overall revenues in the current year are expected to be about $1 million below budgeted levels, as the hospitality industry has been devastated by the COVID-19 pandemic. The meals and beverage tax, hotel tax, and airport related revenues have all been affected. On the plus side, state aid will exceed budgeted levels by $1.2 million.

 Modest spending surpluses in many city departments are offset by a significant deficit of $2.6 million in the fire department. That deficit is mostly associated with overtime and a $500,000 deficit in police and fire pension contributions, resulting from incorrect payroll information used in preparing the FY21 budget. The net spending deficit projection is $200,000.

 The report is based on expectations that local appropriations to schools are enough to support Warwick school activities for the year. The overall deficit projection is less than 0.3% of annual operating expenses. According to City Finance Director Peder Schaefer, risks to the forecast include:  pending grievances associated with the city employee layoffs put in place last April, as well as additional revenue risks in the hospitality industry. Property tax revenues are expected to meet estimates contingent on renewed collection efforts and a planned tax sale at the end of the year.  

The Mayor believes the modest deficit is manageable. “The next challenge will be crafting a FY22 budget that is reasonable and affordable,” Mayor Picozzi said in a statement..