PROVIDENCE – The Providence City Council Finance Committee approved a $770 million budget for fiscal 2020 over the weekend that among other things includes a flat property tax rate to be applied to both owner- and non-owner-occupied homes along with a homestead exemption for owner-occupied homes. The budget comes in slightly below the $772.6 million budget proposed by Mayor Jorge A. Elorza in April, one that instead includes two distinct tax rates for owner- and nonowner-occupied homes.
The property tax rate in the council’s proposal would be $24.56 per $1,000 of assessed value, with the homestead exemption subtracting 40% of assessed value for owner-occupied property (other exemptions include those for senior, widows and veterans, among others).
The council said that its budget called for flat-funding most departments, with austerity measures for certain city departments in an effort to mitigate property tax increases following recent property revaluations. The council said that the revaluations particularly hit Providence’s “most disadvantaged communities.”
Elorza’s proposed rate structure is projected to create $340.2 million in revenue, according to Victor Morente, press secretary of the mayor’s office. City Council’s tax regime was projected to create $358 million in revenue, according to Billy Kepner, deputy chief of staff-communications for council.
The moves to mitigate property tax impacts came after city-wide property revaluations hit lower-income neighborhoods with proportionately higher tax increases, Kepner said, although the total tax revenue figures supplied do not show council’s plan producing less revenue.
The changes in property tax rates in both plans were significant. In fiscal 2019, the property rate was $18.80 for homeowner-occupied properties and $31.96 for non-homeowner-occupied properties.
Elorza had proposed the retention of the two-rate tax plan for homeowner-occupied buildings and non-homeowner occupied buildings: $15.35 per $1,000 of valuation for owner-occupied dwellings (an 18.4% decrease) and $24.56 per $1,000 of valuation for non-owner-occupied dwellings (a 23.2% decrease). The decreases were said to partially offset the rise in property values.
For a home with an assessed value of $100,000, the mayor’s proposed plan would cost a homeowner living in their property $1,535, or $61.40 more per year than the council’s proposal, scaling up to a $614 difference between the two proposed rate structures for a $1 million homeowner-occupied home.
There would be no difference in the tax levy between the owner and non-owner-occupied homes under the two plans, at $2,456. Based on those two sets of calculations, the full projections given by City Council and the mayor’s office do not jibe with results that apply the new rates to a home valued at $100,000.
Elorza’s office also said that the mayor is open to a different tax rate structure if it is created collaboratively.
The City Council highlighted that its budget fully funded some of the mayor’s proposed budget items, including increased funding for the school department, approval of a freeze of the commercial and tangible property tax rates in the city, increased funding to summer job programming, and increased funding to Providence Talks.
Still, Elorza issued a statement over the weekend criticizing the budget process, saying the council was “inappropriately intent on settling personal scores with specific city employees,” saying that the council had created a budget without talking to department heads.
Kepner denied that any particular office was targeted by the committee’s budget, saying that when taxes increase for residents, some cuts need to be made.
The mayor’s office pointed to cuts the budget took in relation to funding requests, including a $171,000 cut in information-technology and cybersecurity services, a $450,000 cut for the Department of Arts, Culture + Tourism and a $40,000 cut for the Commissioner of Public Safety’s salary, among other things.
The council removed all proposed non-obligated pay increases, all proposed non-obligated jobs, and level funded most programs, Kepner said.
“I cannot support and sign a budget that was hastily thrown together and passed without having been through the most basic budgetary processes,” Elorza said in a statement over the weekend.
Elorza spokeman Victor Morente, said that budget was created without input from councilors not on the Finance Committee, saying, “this budget was crafted … without engaging department directors, who are experts in their programs, nor members of the community who did not see the final budget until it was introduced and subsequently passed out of committee.”
City Council insists that its budget meets the city’s fiscal obligations, and asserted that their budget is “fiscally responsible.”
Chris Bergenheim is the PBN web editor. You may reach him at Bwergenheim@PBN.com.
