By PBN Staff
Federal, state spending cuts could hurt city
Providence Mayor David N. Cicilline presented a $610 million budget for fiscal 2007 to the City Council last week, saying the $610 million budget will require no new taxes – presuming the state chips in $10 million more than Gov. Donald L. Carcieri has proposed.
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Cicilline’s budget would increase spending by $27 million, or 4.7 percent, from the current year. Major factors contributing to the spending hike include about $11 million for the city’s schools, about $7.1 million for wage increases, and $3.4 million for rising health care costs.
The mayor stressed that spending growth in the city “has been reined in dramatically” since he took office, from about 7.5 percent per year between 2001 and 2003, to an average of about 3 percent between 2004 and 2006.
“This compares favorably to state budget growth,” he added, “which has increased by an average of 5.7 percent per year since 2004, even while the state is sharing less of its increased revenues with cities and towns.”
In his presentation, Cicilline illustrated the work his administration has done since he took office to try to stabilize the city’s finances, such as:
•Eliminating 425 positions.
•Funding the city’s annual pension contributions 100 percent.
•Negotiating the Dunkin’ Donuts Center deal with the state.
•Purchasing fuel-efficient city vehicles.
•Restoring the city’s reserves.
•Restructuring debt.
The city’s finances have received “A” upgrades from three major bond-rating agencies, the mayor noted.
“No single sweeping action or silver bullet has made this possible,” said Cicilline. “Instead, it has been the result of thousands of decisions, ideas and actions – a daily focus on efficiency by hundreds of city employees over the course of the last 40 months.”
Cicilline also praised “most” of the city’s labor unions for being “critical partners” in the cost-cutting effort. “They have accepted provisions that bring their contracts in line with many 21st-century realities,” he said, “saving money for our taxpayers and giving management additional flexibility to meet new challenges that old contracts didn’t account for.”
When he took office, no city employees shared in the cost of health care. Now all non-union employees and all union workers covered by contracts signed under Cicilline’s administration, including schoolteachers, pay a portion of their premiums. That alone has saved the School Department nearly $4 million through fiscal 2006, he said, and it will save more than $1 million through the next fiscal year on the city’s contract with the Laborers’ Local 1033.
But the mayor said the city’s efforts can only go so far to make up for the difficult budget climate being created by rising fuel costs and deep budget cuts at both the state and federal levels.
On the federal front, Cicilline expressed special concern about the 25-percent cut to the Community Development Block Grant program being considered by Congress. CDBG grants provide funds for many important programs, he said, such as development of affordable housing, outreach to families in crisis by Family Services of Rhode Island, and assistance with heating fuel from PROCAP, which helped 6,000 Providence families this winter.
At the state level, Cicilline said, the $300 million budget shortfall that the General Assembly needs to close “will also produce serious consequences that will be felt throughout the state.” He specifically criticized Carcieri’s proposed cuts to the R.I. Department of Human Services and to RIte Care and the limited school aid, and he said the governor’s plan “flatly disregards current law” in its handling of revenue-sharing with the cities and towns.
“This trend is why Education Week gave Rhode Island a grade of ‘D’ for our over-reliance on property taxes to pay for schools,” he said. He also cited a recent report by the R.I. Public Expenditure Council that showed Rhode Island has the second-highest reliance on property taxes to fund education in the nation.
The mayor also warned that the city will soon have to deal with the challenge of fundamentally restructuring its pension system. Final recommendations from the Pension Review Committee are expected this month, he said, and after reviewing them, he will submit a pension reform proposal to the City Council.
