Consultants offer ideas to help Providence solve financial woes

NATIONAL RESOURCE NETWORK on Monday released suggestions to help Providence deal with its financial problems. One of the suggestions was to increase tax collection rates. / COURTESY NATIONAL RESOURCE NETWORK
NATIONAL RESOURCE NETWORK on Monday released suggestions to help Providence deal with its financial problems. One of the suggestions was to increase tax collection rates. / COURTESY NATIONAL RESOURCE NETWORK

PROVIDENCE – Charging for trash collection, selling the public golf course, increasing the meal and beverage tax, asking more of non-tax-paying entities and renegotiating pension and health care agreements with city employees are just a few of several ideas being floated to help Providence fix its fiscal problems.
The National Resource Network, a coalition of nationwide consultants, on Monday released the second installment of its report on Providence, detailing a number of ideas the city could follow through the next 10 years to help bring some stability to its finances. Two-weeks ago, NRN released benchmark findings from its report citing a number of troubling – albeit previously known – fiscal trends, including a structural deficit that unabated could exceed $37 million by fiscal 2026.
The 167-page report details numerous proposals, ranging from minor ideas, such as creating a performance management center that could provide cumulative savings of $257,000 through 2026, to much more complex and contentious ideas, including the clawback of previously agreed upon pension and health care agreements with city unions, which could save the city tens of millions of dollars over the 10-year period.
Absent from the report, however, is any recommendation of bankruptcy. David Eichenthal, NRN executive director, told reporters earlier this month that he “didn’t understand why that was a part of the conversation,” despite a number of people – including Mayor Jorge O. Elorza – saying all options had to be “on the table.”
The report also suggests the city’s largest nonprofits, such as its universities and hospitals, contribute a greater amount through payment in lieu of taxes in exchange for the city earmarking those funds for agreed upon and targeted investments.
“Providence and all anchor institutions need to move beyond a transactional relationship,” according to the report, adding that the cumulative revenue impact could total $27.2 million through 2026.
The report details a number of possible changes to the current tax code, including an admissions tax on tickets for entertainment ($27.8 million through 2026), a 25-basis point increase to the meal and beverage tax ($12.9 million), adding a local option tax of 50 cents on the sale of cigarettes ($20 million) and a new 5 cents tax on all plastic bags distributed in the city ($5.7 million), to name a few.
NRN has also proposed the sale of Providence’s 18-hole public golf course, Triggs Memorial Golf Course, which has been managed by FCG Associates since 1990. The 70 acres of urban land had a 2015 assessed value of $21.4 million. If the land were privately owned and developed into housing, NRN estimates the annual property tax receipts would be a minimum of 1.9 times more than the current lease payments. If operated as a privately-owned golf course, any sale price exceeding $10.3 million would be net profitable for the city, according to the report.
Looking beyond the necessity to increase revenue, however, NRN insists the city must continue to invest in itself. The coalition proposes reducing both the commercial and excise tax rates by 3 percent by fiscal 2018. The effect would be a decrease in tax collections by $4.9 million, or a cumulative reduction of $46.9 million through 2026. Overall, however, NRN says Providence could do a better job at collecting taxes. In 2014, the city’s collection rate totaled 93.2 percent, which was the second lowest among comparable New England cities and second worst among Rhode Island cities. East Providence was the worst at 90 percent. The cumulative revenue impact through 2026 could total $35.9 million, according to the report.
The report also ranked nine comparable New England cities, including Providence. Providence ranked second worst in front of Hartford, Conn., 91 percent, while Stanford, Conn., ranked the highest at 98.8 percent
The report also proposes investing in infrastructure, like its backlog of 3,500 sidewalks, and putting more money toward education. Funds realized through the hypothetical sale of Triggs Memorial Golf Course could go toward the creation of a “Youth Innovation Fund,” creating outcome-based programming for students.
The NRN report comes out just days before Elorza is expected to deliver his fiscal 2017 budget.

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2 COMMENTS

  1. I feel bad for the residents of Providence, I lived on the East Side for over 10 years and finally moved when my child was old enough for public schools because, sadly, he was NOT allowed to go to any of the three close-by elementary schools in our neighborhood, and was instead going to be bussed-off to a school far away near Atwells ave. Horrible thing to do a family that’s spent more than a decade raising their family in the local neighborhood, but I digress. Providence had to hire consultants to come those conclusions?? I agree with Jim’s comment: What are the tax payers of Providence paying the Mayor and his staff to do? And no, you will not see cuts. You will also never see suggestions to get rid of the sanctuary status of the city — which on top of the pensions, health care benefit deals cut with the public city unions/workers, Fire Fighters’ Financial woes, etc., is draining that city dry. I will NEVER go back to Providence, and now that the parking meters are everywhere and crime is so bad, I will never visit again either, and I no longer encourage by business associates to meet in that city for meetings & lunch because we are tired of getting parking tickets and dealing with pan-handlers on every single side-walk. It’s very sad, and I think you are right Jim: no hope at all.