Council OKS $331M Warwick FY22 Budget 8-1

WARWICK, RI — The Warwick City Council voted 8-1 to OK the $331 million Warwick FY22 Budget Thursday, with no tax increase, as Councilman Jeremy Rix dissented to argue more funding for retiree health care.

The budget set its tax rates using a tax collection rate of 99 percent, an estimate Warwick Finance Directer Peder Schaefer said is justified since many people will be attempting to refinance their homes and won’t be able to do that without being up to date on their house tax bills.

Given that rate of collection, the Warwick tax rates are:

• Residential: $18.73 per $1,000 value
• Commercial/Industrial: $28.10 per $1,000 value
• Tangible property: $37.46 per $1,000 value
• Motor vehicle: $30 per $1,000 value

An ominbus amendment proposed by Mayor Frank Picozzi passed unanimously, shifting amounts between various line items without affecting the bottom line:

• 43-100 – Library Salary – Reduced by $20,000
• 43-355 – Library Special programs increase, $20,000 to a $43,000 total.
• 16-630 – Legislative Professional Services – reduce $218,544 by $50,000
• 34-360 – EMA Professional Services – reduce $50,000 to zero
• 35-360 – Fire Professional Services – reduce $60,000 to zero
• 35-116 – Fire Unused Sick – increase $32,272 by $280,000 to $312,272
• 75-162 – Fire Healthcare – reduce $4,181,565 by $120,000 to $4,061,565

Council denies Warwick Schools request to add $500K

The Council voted against adding $500,000 to the Warwick School Department’s budget to pay for new programs intended to reverse loss of students and the resulting costs of about $6 million to the city, to other districts.

“I feel that the School Department’s request for the $500,000 beyond their budget is reasonable,” Rix said, introducing the motion to add the funds.

Councilman Vinny Gebhardt disagreed, repeating his suggestion to the Warwick School Department that they work on winning back 25 students, which would save the district $500,000, “Which they can use as they see fit.”

Councilman William Foley, a former teacher, said he was not in favor of granting the district more money now, but would consider a supplemental budget allocation to them later in the year. Right now, Foley said, the district should re-allocate its funds to build the programs. He pointed to the dozens of teachers laid off and wondered why those savings had not been applied to new programs.

Councilman Ed Ladouceur said he also opposed adding the funds, pointing out that neither Superintendent Phil Thornton nor the entire Warwick School Committee, which voted to ask for it 3-2, seemed to agree the funding should be added.

“Based on the information presented, I will withdraw my motion,” Rix said.

OPEB Trust Boost Attempt

Earlier during the third and final budget hearing following Monday and Tuesday meetings, Rix proposed an amendment to increase $250,000 for an Other Post Employment Benefits (OPEB) trust, which pays for retiree health care, to $1 million.

Warwick’s OPEB line item, as well as that of may Rhode Island cities and towns, has been historically under-funded. In 2019, Warwick’s OPEB liability was $352 million, as reported by Warwick Post in the story, ‘Warwick OPEB Costs: Fluid With A Chance of Investment, Contract Fixes.”

Rix said the city’s OPEB liability now stands at $380 million (it grows at about $34 million a year). During the hearing, Rix acknowledged the problem is considered a long-term issue. “But, more and more, it’s also becoming a short-term issue,” Rix said.

RI Auditor General Denis Hoyle, when questioned earlier by Warwick Post about when and how the city will be required to pay the debt, said the liability is not static – meaning that not every retiree will claim their due at the same time because many won’t retire for decades. Warwick has paid for both active and retiree healthcare on a pay-as-you-go basis, which the city’s actuary advised is acceptable.

Hoyle suggested an OPEB trust, which, regardless of how much was in it, would provide the city a discount on its liability. The city could also use the trust, which would grow through investments, to help pay for the OPEB costs.

After the hearing, when asked about the OPEB trust approach, Rix said, “It’s a first step. But, we need the City, active employees, and retired employees to all come to the table to figure out how to make this work. Healthcare costs will keep going up, and, the ratio of retirees to active workers will continue to widen.”

“It would be necessary to raise taxes to accomplish this,” Rix said during the hearing, “My general thinking is that smaller tax increases over time are preferable to a shocking tax increase later on,” Rix said, or leaving the city in a position where it can’t fund essential programs. He added in his closing remarks that tax exemptions should be expanded for taxpayers in the greatest need.

Councilman Anthony Sinapi referenced the last revaluation, which left many people thinking the city had raised taxes, and said raising taxes so soon before the next revaluation would be too big a burden for many, especially as the housing bubble has inflated home values further. “People are going to get hit harder, potentially, than last time.” Sinapi pointed out, “And it’s likely going to be the people that can least afford to be hit.”

Councilman Ed Ladouceur made a similar amendment adding the funding to the OPEB trust by reducing firefighter overtime by $2 million, placing $750,000 into the OPEB account to raise it to $1 million, and using the balance to reduce the $5,876,468 draw-down from the rainy day fund by $1,250,000. Rix withdrew his own amendment in favor of Lacouceur’s revenue-neutral approach.

Ladouceur’s amendment failed, with only Rix and Ladouceur voting for it.

During his vote against the budget at the end of the hearing, Rix said he hoped his vote would bring attention to the need to more substantially address the OPEB liability.