No Warwick Tax Increase: Council OKs $323.5M FY21 Budget

WARWICK, RI — The Warwick City Council unanimously passed Mayor Joseph J. Solomon’s proposed $323.5 million budget Saturday morning with a few adjustments but no change to the bottom line and no Warwick tax increase.

Solomon’s addition of $2 million to the Warwick School Department’s budget was unchanged. However, the $171,538,668, is still $6,327,732 less than the Warwick School Department’s requested $177,886,400.

Councilmen Jeremy Rix and Anthony Sinapi each lauded school officials, particularly Finance Director Anthony Ferrucci, for their candor and transparency in the budget process this year. Budget season communication between city and school officials has been strained in past years.

“It’s like night and day compared to last year,” Sinapi said.

While councillors praised the zero-tax increase, all who commented before Saturday’s vote noted Warwick faces tough decisions on how to approach its financial future after the immediate COVID-19 pandemic crisis and it’s economic effects have passed.

Council President Steve Merolla noted a Providence Journal report of a 49.6 percent drop in state revenue due to an economy stilled to halt spread of the coronavirus that causes COVID-19.

“That’s of prominent concern to me,” Merolla said, since Warwick’s budget relies on state aid.

On a more positive note, Merolla praised Solomon’s move in giving residents and businesses an extra 30 days to pay taxes.

Rix also lauded Solomon’s work in presenting a lean budget, the result of what he called a line-item scrutiny. He said he wanted to point out those positive developments before moving to more critical observations.

Rix continued, saying the zero tax increase perpetuates a structural deficit for the city, and that the budget also assumes a 99 percent collection rate, which he noted history indicates may not work out this year, despite past performance at that level.

Rix said Solomon’s response to his request for tax collection rate history, both in recent years and during the recession in 2009 and 2010, show that while last year’s collection rate was 99 percent as the FY21 budget projects, the recession years showed only a 98.3 percent collection rate.

“Which is millions of dollars,” Rix said.

Given the years since the last recession, Rix said, the situation could be even worse.

Both Rix and Merolla referenced past testimony from the city actuary warning that reform on the city’s contracts and OPEB payment system with unions is necessary to preserve both the city’s finances and its ability to make good on the promises on pensions and health care made in the contracts.

Richard Corley noted the state’s approach to funding schools through property taxes is regressive and needs to change. Also, he said, when the city continues to rely on state and federal funding to balance its budget, “We are saying that the way we do business is not sustainable,” he said.

He said it likely makes sense to simply move the state’s education system to a state-wide district approach long-term.

Councilman Ed Ladouceur  agreed with the need to address the city’s union contract and structural deficit challenges.

“I fully believe we can not continue having upwards of 82 percent of our taxpayer dollars going to salaries, health care, pensions, free lifetime healthcare, etcetera,” Ladouceur said.

Merolla reiterated his support for budget and contract reform, but, “This budget is not the opportunity to do that,” he said.

The Council’s unanimous vote followed the passage of a resolution moving  $100,000 from Building Inspection/Budget Reduction (similar line items were introduced into the budget last year to record contingency funds realized from cost-cutting measures, according to Rix), to Finance.  The resolution also moved $733,104 moved from City Contractual Obligations to Fire Dept. Salary line item. The moves did not affect the final budget figure.

The budget leaves tax rates as follows:

• Residential at $18.73 per $1,000 assessed value
• Commercial at $28.10 per $1,000 assessed value
• Personal property at $37.46 per $1,000 assessed value
• The motor vehicle rate is frozen, per state law, at $34.60.

Previous Warwick Budget coverage:

Warwick School Budget: Committee OKs $177.8M Plan

Committee Nixes $700K in Warwick School Staff Cuts

Council Reviews Warwick’s $323.5M COVID-19 Burdened Budget

Warwick Budget Hearing Questions Unanswered

Budget hearing documents:

FY21 Proposed General Fund Budget

Reduced Size FY21 Proposed Capital Budget

FY21 Proposed Enterprise Funds Budget – Reduced Size

Fy21 SC ADOPTED Recommended Budget 05-06-20