Providence Mayor Jorge Elorza used his annual budget address Wednesday to call for more sacrifices that he calls necessary to prevent Rhode Island's capital city from sinking into a worsening financial cycle.
The most immediate hit will come for Providence residents since Elorza proposes a $13 million hike in the city's tax levy.
The mayor signaled his intention to seek more contributions from non-profit institutions like colleges and hospitals; he said they own about 40 percent of the city's real estate. Elorza also pointed to how Providence's pension fund is only 27 percent funded.
"There is no simple solution to this issue, but ensuring the sustainability and affordability of our retirement system is essential for the city's long-term success," the mayor said in his prepared remarks. "In the coming weeks, I will continue reaching out and engaging the city's labor unions, retirees and stakeholders so that put the city's finances on a sustainable path."
A lingering and bitter dispute between City Hall and the Providence firefighters' union raises questions about the mayor's ability to secure pension concessions beyond those reached by his predecessor, Angel Taveras.
But Elorza's spending proposal includes a measure that will please city residents: the doubling, to $2,000 of the car-tax exemption. Elorza said the higher exemption will spare 6,500 vehicles from the car tax. The car tax will be cut in half for an additional 12,500 vehicles, he said.
The mayor's budget calls for a new police academy class of 60 cadets and a new class of 80 firefighters. Both groups would be expected to begin work in the spring of 2017.
A federally funded report indicated the city will spent $176 million more than it can afford over the next 10 years, Elorza said: "It showed that we currently lack a system for budgeting beyond the current and upcoming year; and that we need a process to make the long-term changes and investments that take more than a year or two to succeed."
The mayor's budget address didn't delve into the options suggested in the report by the National Resource Network. Rather, Elorza called his latest spending plan an incremental step to poise the city for better days. He noted also how the city's revenue shortage isn't new. Back in 2011, Taveras took office to discover a surprise deficit of $110 million.
If as expected the city makes a deficit-reduction payment of $4.3 million by June 30, Providence will enter the next fiscal year with a cumulative deficit of $9.3, city officials say.
Elorza pointed to the looming effect of term limits in calling on the City Council to work with him on shoring up city finances.
"We have a great opportunity before us to blaze a new trail," he said, invoking a quote by Ralph Waldo Emerson. As Council President Luis Aponte "has pointed out, in seven years, assuming we all win re-election, there will be a new mayor and 12 new city council members. What kind of a city do we want to leave behind for them?"
Aponte didn't rule out the possibility of a larger hike in the city's tax levy. He didn't point to any immediate objections in Elorza's plan, but said he needs more time to review it.