PROVIDENCE – In the midst of an unprecedented health and economic crisis, the unveiling of Mayor Jorge O. Elorza’s fiscal 2021 spending plan was anything but conventional.
In a Zoom call with reporters on Tuesday, Elorza unveiled a $506.8 million municipal budget for the upcoming fiscal year, with a $134.4 million allocation for the Providence Public School District. Noticeably absent was the state’s expected contribution to the schools budget plan. That’s because the school district is now under the state’s jurisdiction due to the takeover of the city school system last fall.
Unlike prior years, the fiscal 2021 spending plan does not include any so-called “rainy day fund” money, though if there is a surplus at the end of the year, money could still be set aside. The rainy day fund has about $20 million, none of which has been used to support losses related to COVID-19, Elorza said.
Acknowledging the uncertainty surrounding the city’s financial future, Elorza said he felt encouraged by the city’s current position.
““Because of the responsible decisions we’ve made over the past several years, we’re in as good a position as we’ve been to address these challenges in decades,” he said. “We feel confident even under the worst-case scenario we have a plan in place and we will be able to overcome it.”
All city taxes would remain at their current rates, though in a nod to efforts by the state to reduce the tangible tax burden on small businesses, the city proposes to exempt businesses with less than $10,000 in personal property from paying the tangible tax, pending approval from the General Assembly. This is expected to create a $500,000 decrease in tax revenue.
Despite the abrupt economic shutdown prompted by COVID-19 and corresponding loss in hotel, meals and service taxes, the city still expects to generate an additional $1.2 million in taxes in fiscal 2021 based on natural expansion of its tax base and the expiration of a tax-stabilization agreement for the Manchester Street Power Station.
The municipal spending plan represents a .15% increase over the current budget, including funding of several new initiatives such as a dedicated affordable housing trust fund and $150,000 to support community-based health centers with COVID-19 testing.
“We are still nowhere where we need to be for a robust testing capacity,” Elorza said.
The budget does not account for other coronavirus-related emergency spending, which the city assumes will be reimbursed by federal funding.
The budget also calls for a Providence Housing Trust fund to offer gap financing to developers who build affordable housing projects. The estimated $1.2 to $1.4 million in the fund represents 10% of the estimated revenue from projects with Tax Stabilization Agreements.
The $134.4 million allocation for city schools represents a $4.4 million increase over current-year funding. The school contribution includes level-funding for summer-learning programs, employment and internship opportunities, and the Providence After School Alliance. As part of his commitment to a universal pre-K program, the mayor has also set aside $350,000 for early learning and development.
The budget proposal calls for borrowing $191.6 million over the course of the next five fiscal years to finance infrastructure investments as part of the city’s capital improvements program. In the current fiscal year, the city borrowed $65.3 million for CIP infrastructure projects.
“We’re making the investments today to create the city tomorrow that we want to be a part of,” Elorza said.
The city will also invest $1.5 million for a new police training academy, which will train up to 50 new officers for the Providence Police Department, and $100,000 in professional development for city staff.
About $90.5 million would be set aside for the city pension fund, up from the $86.7 million pension contribution in fiscal 2020.
The City Council canceled its Tuesday night meeting minutes before Elorza was set to deliver his budget proposal. The ordinances and budget documents were already delivered, allowing the budget to be submitted regardless, the mayor’s office said.
In a statement, Council President Sabina Matos wrote, “Unfortunately, the budget articles were not made available to the public prior to our meeting. During these restrictive times, it’s paramount that the public be given every opportunity to scrutinize and engage with its government. To that end, I have decided to cancel the meeting and will reschedule once the budget ordinances are made available for public vetting.”
