PROVIDENCE – Mayor Brett P. Smiley on Wednesday released his proposed $624.2 million budget for fiscal year 2026 that begins July 1, a 4% increase over the fiscal 2025 budget.
During his annual address to the City Council on Wednesday evening, Smiley said a crunch on city finances and a projected $25 million shortfall blamed in part on the $15 million settlement reached with the city’s schools required reductions in city services and payroll while bringing in more revenues to city coffers.
The spending plan raises fees and cuts the frequency of services such as trash removal, while cutting summer programs and eliminating city support for festivals and events.
Smiley said the administration “worked hard to make sure this burden would not fall solely on the backs of our taxpayers,” while avoiding the more drastic cuts to city services.
“Just like many households, this year’s city budget was exceptionally difficult to balance,” he said.
While the proposal is a $9 million overall reduction in discretionary spending from the current budget, baked-in expenses constitute roughly 96% of the city’s spending.
The proposal includes an additional $12.5 million in salaries and benefits for union and non-union employees, while increasing the city allocation to the state-controlled public school system by $11.5 million.
“In order to fully fund our schools, meet our employee obligations and continue to provide city services to our residents and businesses, we had to make significant sacrifices in our city budget,” Smiley said. “We were faced with difficult decisions.”
The budget reduces operating and supply expenses in nearly every city department, cuts 21 open positions and lays off two city employees. Cost-of-living adjustments are frozen for employees making more than $100,000 annually.
The proposal assumes $5.2 million in total revenue from fines and fees for parking violations and permits for vendors, among others, an increase of $1.9 million year over year.
Last year the city created a multitiered classification system for residential properties.
If the R.I. General Assembly approves the city’s request for a one-time exemption from the state law limiting increases in the total tax levy to no more than 4% in a single year, the budget plan proposes a total tax revenue increase of 7.5%.
Budget documents show that valuations across the city increased 37% on average due to the last property revaluation, meaning that most taxpayers will see higher bills despite paying lower rates.
Smiley is proposing a tax rate of $8.25 per $1,000 of assessed value for owner-occupied dwellings and $14.40 for non-owner occupied, while the rates for dwellings with six to 10 units would be set at $24.50 and set at $27.75 for dwellings with more than 11 units.
Property taxes on single-family homes would increase by 4%, or an average increase of $160 per month. The category that would see the sharpest increase would be multifamily, non-owner-occupied properties with two to five units, which on average will see tax bills increased by $1,197.47 per year.
The commercial tax rate would be lowered to $28.80 per $1,000 of assessed value, leading to commercial property owners seeing their tax bills drop by 2% on average, or about $400 per year.
However, Smiley’s proposed budget also increases a host of property tax exemptions, doubling the exemptions for veterans and increasing those for senior citizens by 25%.
The budget requires approval by the City Council and must be signed by July 1. Smiley’s proposal will be vetted first by the council’s finance committee, with public hearings planned in the coming months.
The administration will continue the departmentwide hiring freeze that was instituted earlier this year.
“The road ahead will not be easy,” Smiley said. “But with this budget, we are making thoughtful, responsible and compassionate decisions to look out for our neighbors and prove that government can still be a force for positive, meaningful change.”
The budget proposal also includes:
- $250,000 for the 2026 World Cup.
- $225,000 for City Year.
- $100,000 for WaterFire Providence.
- $75,000 for Housing Supports Matching Grants.
- $55,000 for Dorcas International Institute of Rhode Island.
- $68,962 to hire a nighttime manager.
- $30,000 for soundproofing and sound mitigation efforts for Providence businesses.
(UPDATES story throughout, with comments from Mayor Brett P. Smiley's budget address.)
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
