With a proposed $323.5 million budget that gives schools an additional $2 million, but trims the budgets of almost every other department – some by more than 28 percent – Mayor Joseph J. Solomon yesterday released a spending package that holds the line on taxes.
The budget is expected to be greeted with applause by the council members who earlier in the week were saying in these difficult times property owners can’t afford an increase in taxes.
As outlined in a legal notice appearing in today’s Beacon, Mayor Solomon anticipates an overall increase in property values to generate additional revenues to help offset an overall $1.7 million increase in spending. He is also relying on an increase in the draw-down of city reserves from $2.4 million to $2.8 million; an increase in enterprise fund transfers (payments from water and sewer) from $2.9 million to $3 million; and a bump of $100,000 in licenses and fees.
Solomon projects state and federal aid at roughly the same levels as the current year. He is relying on the General Assembly to implement the next phase in the phase of the motor vehicle excise tax.
In a telephone interview, Solomon placed the reserve fund balance at $31 million, “or maybe a little better.” In a follow-up call the mayor’s office clarified that the fund was $27.4 million according to the FY18 audit and climbed to $31.6 million for the FY 19 audit.
“I am acutely aware of the devastating financial effects this pandemic has caused for our residents and businesses. Our state is looking at a historic rise in jobless claims and the reality is that many people are having a hard time just getting by,” Solomon said in a release. “Cities and towns are on the front lines of responding to the COVID-19 crisis. My constituents are the people I have in mind when I make decisions that impact our community. We have had to make some difficult decisions in order not to increase taxes, but I have never wavered from my commitment to our residents and businesses.”
With the exception of principal debt expenses, health insurance, the school, planning and fire departments and fixed costs, virtually every department is faced with a reduced budget. The increase in the planning budget is attributable to a grant program the department is managing. Solomon has been able to achieve savings through a combination of leaving vacancies unfilled and layoffs. He said the city is proceeding with layoffs of municipal employees as the union voted not to forego a contracted wage increase as he requested.
Solomon sought the same concession of the Fraternal Order of Police, which likewise turned down the request. However, as that department is operating at about 156 of a budgeted 200, Solomon is not suggesting layoffs. He has budgeted for 175 for next year.
The firefighters contract does not call for a salary increase in the upcoming fiscal year.
The mayor emphasized his commitment to improving the city’s infrastructure both in his interview and news release. He pointed to plans to step up road repaving and introduce cost-savings LED streetlights with a low-interest $13 million loan from the Rhode Island Infrastructure Bank.
Solomon said the virus has had devastating effects on the city’s economy. He did not identify new costs in the budget relating to the virus, but said the city is keeping close tabs on costs relating to COVID-19, such as additional cleaning and PPE, in hopes of being reimbursed through $1.25 billion in federal aid to the state.
“Warwick’s tourism and hospitality industries comprise a large portion of our tax base, and those industries have been hit particularly hard by this pandemic,” Solomon said. “Thanks in large part to our prudent financial planning during the past two years, Warwick is better-positioned to weather this disaster. And, despite the tremendous challenges we now face, I am increasing the City’s contribution to our school budget while holding the line on City taxes.”
Funding the school request, which was calculated to require a maximum tax levy increase of 4 percent, was not an option for City Council President Steve Merolla. He asked how could that be considered when people have lost their jobs and unemployment is the worst it has been since the Great Depression.
Ward 7 Councilman Steve McAllister was of like mind.
“I want to give people some breathing room, as much as possible,” he said in an interview Monday.
Ed Ladouceur, chair of the council’s Finance Committee, said Monday he wants to “put the brakes on city spending wherever we can.”
On the issue of taxes, he said the mayor told him last week he was looking to hold the line on taxes. “It’s huge challenge for him and hopefully he can do it,” Ladouceur said.
For a related story about state aid for cities and towns, Solomon’s office released the following statement Monday: “I am committed to making sure we don’t increase the burden on our taxpayers, many of whom are struggling right now. Many of our local businesses have been severely impacted, and many local residents are out of work. We can’t ask them to pay more when they’re already dealing with so much.”
School budget request
Members of the City Council and Solomon were forwarded copies of the School Committee budget Friday. After line-by-line online meetings, the committee, although hopeful of shaving $8 million from the superintendent’s $181 million request, came up with about $4 million in cuts. The budget request forwarded to the mayor was $177,886,400. That amount did not include funding for a teacher contract that expires this August.
“While the amount of support needed has been identified through the course of this year, everyone at the school department is in agreement that this amount is an extraordinary request especially given the economic conditions we face as a result of the coronavirus crisis,” school finance officer Anthony Ferrucci writes in an accompanying budget letter.
With the mayor recommending an increase of $1.7 million for schools, and assuming it gets council approval, the School Committee will need to return to make the hard cuts.
Solomon didn’t dive into how schools should trim their budget, rather he emphasized the nearly $2 million in increased funding.
Solomon’s task has been made all the more challenging by the departure of Brian Silvia, former city treasurer, who stepped in to lead the finance department when former Mayor Scott Avedisian resigned from the job two years ago with then finance director Bruce Keiser leaving shortly thereafter. Silvia started his new job as Smithfield’s finance director on Wednesday.
Asked where the school district might trim its budget, assuming the mayor and council won’t be granting their full request, Ladouceur pointed out that 82 percent of school costs are in salaries and benefits and that’s where he would start. He said the same is true for the city. He said he would focus health care costs and would address, as he sought to do through ordinances, health care co-payments for retired municipal employees as well as other legacy costs.
He said the city couldn’t make up for lost revenues or, for that matter, businesses. “Small business is the economic engine pulling the train,” he said.
Merolla said he was “disappointed” by the school budget request. He didn’t offer suggestions on where the department could make cuts.
“Everyone has to take an austerity posture. It seems like people [the School Committee] are out of touch. People are struggling to make ends meet.”
City budget hearings start May 26 at 4 p.m. and resume the following two days at the same time. The council is slated to vote on the budget Saturday, May 30, during an online meeting starting at 9 a.m.
Merolla said the meetings would follow the same format at prior years with the school budget leading off.
McAllister followed school budget deliberations during their online meetings, concluding “there are no easy cuts” but that the city can’t do an additional $8 million for schools.
He is also of the opinion that “this is a crisis that is going to take years to recover … we’re going to do as much as we can, but we’re limited.”
Ward 8 Councilman Anthony Sinapi likewise followed School Committee meetings on Zoom and then followed up with a five-hour meeting with Ferrucci. He said the school budget “is looking better” and he seemed reasonably confident the administration could arrive at a “more viable ask.” According to information he received Tuesday, Sinapi said the public would be able to ask question through Zoom with people being recognized in the order of their questions.
Reached Wednesday afternoon, School Superintendent Philip Thornton said “We have some work to do on the schools.” He was joined by committee chair Karen Bachus, who noted the committee has already been back and forth with the budget and will continue to do so. She is hopeful of federal funding.
With so much changing because of the pandemic and the budget, Ferrucci advice was, “stay tuned and plan accordingly…it’s the new nom.”