The man who is charged with keeping his eye on city finances, albeit he has only been on the job for only a month, said last week, “I don’t see any disaster on the horizon.”

City Finance Director Peder Schaefer confided he had some concerns when he left the Rhode Island League of Cities and Towns to take the job. “When you show up, you don’t know what to expect.”

After diving into the books to file a mid-year report with the state Division of Municipal Finance that was also shared with the City Council last Wednesday, Schaefer found Warwick Fire Department overtime costs headed toward exceeding the budget by $6 million by the end of June. On the plus side of the ledger, some other departments are running small surpluses and state aid is $2.1 million more than projected in the $323.5 million budget.

Based on expenditure and revenue projections, Schaefer forecasts a $1.2 million deficit by the end of the fiscal year.

In a release issued last week, Mayor Frank Picozzi termed the projected deficit “modest.”

Schaefer was pleasantly surprised by the trending rate of property tax collections, which the mayor and City Council projected at 99 percent when drafting the budget last spring. In drafting the budget, some members of the public considered the collection rate unrealistic and a means of falsely justifying a no tax increase in an election year.

Digging in, Schaefer believes low interest rates are playing a huge role in the rate of tax collections. He points out that many property owners are refinancing their mortgages to take advantage of historically low interest rates. But in order to refinance, the homeowner must have fully paid their taxes. Full payment of taxes is also required on the transfer of properties, and the housing market has been hot since early last year with more than 100 single-family homes selling monthly.

City owed $12.8 million

Yet delinquent property tax, utility payments and sewer assessments have soared, in large part because the prior administration stepped back from conducting a tax sale last spring.

Tax Collector Kyla Jones reported last week that back taxes owed on 1,300 properties for 2019 and 2020 total $6 million. Largest delinquent property tax payer by far is the Wynham Hotel, with an outstanding tax bill of $860,000 dating back to 2017. The Walmart on Post Road, with back taxes of about $100,000, is also high on the list.

Jones said 2,300 customers owe $3 million in water and sewer bills. Usually, the city threatens water shutoffs to collect outstanding balances before moving to a tax sale. However, with the pandemic there has been a moratorium on utility shutoffs. The third area of delinquencies – sewer assessment payments of $500 or more – total $3.8 million.

That’s a total of $12.8 million owed the city.

Schaefer and Jones are looking at a June tax sale that may be conducted virtually. Meanwhile, Jones reminds people to contact her office to work out a payment plan to avoid the tax sale. Delinquency notices are also being sent so as to give taxpayers sufficient warning.

Firefighter overtime has long been a nemesis for the department.

Because of minimum manning requirements set by contract, Schaefer sees no way of addressing it in the current fiscal year.

“The number of active firefighters is down and you have to fill those positions,” he said. That translates into overtime.

However, as Schaefer explains, the overtime cost may actually be comparable or less than if the department had a full complement, since the city would be picking up the benefit costs of those added personnel plus their salary.

Considering the overtime, Schaefer said, “clearly some people are making big money.”

He said the new work schedule, tabbed “the Boston plan” – in which firefighters work the same number of hours, but as part of that have a 24-hour shift – doesn’t appear to have reduced overtime as hoped.

In his report, Schaefer writes: “Given that assumption, revenues as projected earlier will fall $1.0 million below budgeted estimates. Expenses are projected to exceed the approved budget by $200,000. This very modest spending deficit could be qualified by new spending needs as they are identified by the new administration including resolution of lay-off grievances. Absent any critical initiatives for the rest of the year, this results in a net revenue and expense deficit relative to the approved budget of $1.2 million. This is approximately 3 tenths of 1 percent of the total budget. It should also be noted that unaudited results for FY 2020 indicate a gross improvement of fund balance relative to expectations of $1.9 million. This would resolve any requirement to produce a corrective action plan as well as the availability of unassigned fund balance at the end of FY 2019 totaling over $27 million.”

In addressing the City Council Monday, Schaefer said his projections for the current fiscal year also assume that the school appropriation is sufficient to complete the year.