Providence City Council grants first passage to FY2023 budget despite tax bill concerns

PROVIDENCE – The Providence City Council on Monday narrowly approved a $568 million fiscal 2023 budget despite reservations about higher tax bills for city property owners.

The vote Monday was the first of two needed before the tax and spend plan heads to Mayor Jorge O. Elorza’s desk for final signature. The city council will take up the budget for a second vote June 13.

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If finalized, city property owners will see their tax rates decline for the year that starts July 1, though rising property values mean most will still see bigger tax bills. The council-approved budget calls for a residential rate of $17.80 per $1,000 of assessed value – a significant drop over the current $24.56 aimed at partially offsetting the higher property values and keeping the city tax levy under the state-mandated 4% rise.

Still, the average residential property can expect to see their annual tax bill jump by $114, according to city analysis.

Commercial property tax rates would also drop to $35.40 per $1,000 of assessed value, which is expected to increase taxpayers’ bills by 15% on average, according to the city auditor.

Taxes proved to be the primary sticking point among council members, several of whom wanted the city to further lower tax rates.

“This year of all years we needed thoroughly to examine our budget to see how far we could reduce expenses in order to reduce the tax rate,” Councilwoman Helen Anthony said.

Councilman John Goncalves said the commercial rate in particular was not lowered enough and the rising tax bills for apartment buildings – which are considered commercial properties if they have at least five units – would harm renters.

“We’ve got a housing crisis in our city and this could make it worse,” Goncalves warned.

But Councilwoman Jo-Ann Ryan, who chairs the city Finance Committee, defended the tax rates, noting they are lower than the current years and the result of “many many many models” for how to balance the city’s revenue and expenses.

The $567.3 million spending plan marks a 5.2%, or $27.8 million, increase over the prior year’s budget, which would be covered in part by $25.5 million of the city’s American Rescue Plan Act funds.

The city has already approved a separate plan for how to distribute the city’s remaining $124 million in federal relief dollars, including nearly $37 million million to plug holes in the next two budget years. Many of Elorza’s signature initiatives, including a racial reparations program and affordable housing funding, are included in the ARPA budget.

With that in mind, the main fiscal 2023 spending plan does not introduce many new projects or programs but instead continues to concentrate on issues of years past: public safety, youth programming and high-paying jobs, and affordable housing.

One notable spending area includes $5 million to redevelop the “Superman” building, which has been touted as part of the financing plan for the long-vacant building but only formally added to the city budget by a panel of council members last week as a way to show the city’s commitment to the project. 

The budget also adds another $1.5 million for a new police academy to add up to 50 new officers.

Signature programs and events such as PVDFest, after-school programming through the Providence After School Alliance and city department-run services to deal with homelessness and substance abuse would be funded at their current levels while a “crisis diversionary program,” which started last year, would get a $121,000 boost over fiscal 2022 to hire more employees.

The city has again carved out $130 million to the Providence Public School District, which is under state control, despite an ongoing court battle between Elorza and state education leaders over how much money the city should be providing for its schools.

The budget also includes a $100.3 million payment to the city pension fund, which will not change even if the proposed $515 million pension obligation bond moves forward, according to Mancini.

Another $100,000 would be set aside for the city’s rainy day fund.

Separate from its general fund, the budget proposal also includes $500 million worth of capital projects to be funded over the next four fiscal years.

The tax levy was approved by an 8-6 vote, while the spending plan was approved 9-5. Councilmembers Anthony, Pedro Espinal, Nirva LaFortune, Kat Kerwin and David Salvatore voted against all components of the budget, while Councilman Goncalves voted ‘no’ on the tax levy but approved the rest of the budget articles.

Councilman Michael Correia did not attend the meeting.

Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.