PROVIDENCE – Like its Statehouse counterparts on Smith Hill, after years of surpluses city officials are being confronted with the prospect of future operating budgets with growing gulfs between expenditures and the revenues needed to pay for them.
After closing fiscal 2015 with a cumulative deficit of $13.5 million, the city reported year-end surpluses for seven consecutive years.
Included in the agenda packet for the first Providence City Council meeting since breaking for summer recess was a Sept. 12 memo sent to Finance Committee Chairperson Helen Anthony from Chief Financial Officer Lawrence Mancini showing that since the last update in December, projected 5-year budget deficits have increased for all of the next three years, and more than doubling in fiscal 2026.
Based on the previous year's budget and current revenue trends, the September memo shows the outlook has degraded since December, when projections showed a current fiscal year deficit projected at $7.1 million, falling to $5 million in fiscal 2026 before rising to $10 million in fiscal 2027 and $14.5 million in fiscal 2028.
However, the department’s latest projections show a fiscal 2026 year-end deficit of $10.1 million, rising to $18.7 in fiscal 2027 and $22.9 million in fiscal 2028.
These statutorily required projections do not include nor consider any changes to the commercial and residential tax rates.
The council did not take up the projections during its Thursday meeting, opting to waive the reading on a roll-call vote and refer them to the Committee on Finance, after which "it will be heard by members of the Council in the coming weeks," according to spokesperson Roxie Richter.
As for potential remedies, Richter referred all questions to the administration of Mayor Brett P. Smiley, who was not immediately available for comment.
“Since it has not yet been presented or heard by the Council, we will not be offering a statement at this time,” she said.
Mancini noted the upcoming statistical property revaluation scheduled for 2026 that could buoy city revenues with “potential growth in the city’s tax base." State aide was also projected to grow by more than $1 million this fiscal year primarily due to increases cannabis, meal and beverage and hotel taxes.
There are also updated PILOT negotiations set for 2025 with Care New England. Talks with Lifespan Corp. remain in progress, wrote Mancini.
Among the differences between the December 2023 projections and the most recent regard city salaries. While in December Mancini used a 1% placeholder increase for years 2024 to 2028 for police department salaries because a new labor contract expiring in December had not been finalized, the final agreement included annual increases of 4.5%.
The current Providence Firefighters IAFF Local 799 contract that will expire in 2027 includes a 4% annual increase. And current projections also use a 1% increase for years 2026 through 2030 for the LiUNA Local 1030 contract set to expire in 2025. Another change is the projected spike in annual retiree and active employee medical costs, which rose from 2% to 3% through 2030.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com
