Lombardi budget calls for 50-cent tax increase
Lombardi budget calls for 50-cent tax increase
NORTH PROVIDENCE - Mayor Charles Lombardi's $92.6 million budget proposal for the 2014-2015 fiscal year calls for a 50-cent tax hike for home and commercial property owners.
The 50-cent increase would be due to a proposed boost in revenue from the town of $634,000 to the North Providence School Department, an amount that is slightly less than half of the more than $1.3 million increase school officials are looking for.
The $1.3 million request is in addition to the $1.5 million more that the schools are tentatively set to get next year due to changes in Rhode Island's education funding formula under Gov. Lincoln Chafee's proposed budget.
"Although the School Department is justified in its request, I find it difficult justifying a tax increase of nearly one dollar during these difficult economic times," said Lombardi in his budget letter.
The town's current residential real estate tax rate is $24.29 per $1,000 of assessed value, and commercial real estate rate is $31.03 per $1,000.
"It's the best possible budget that we thought we could put together, being fair in addressing our educational needs and addressing what the taxpayers can afford," said Lombardi on Monday.
For the owner of a home valued at $200,000 after the current town-wide revaluation process is complete, the new tax bill, based on a tax rate of $24.79, would be $4,958, up $100 from the $4,858 he or she is currently paying.
But town officials will likely have to "equalize" the tax rate based on lower values for many properties, meaning the tax rate will likely be higher than $24.29 by the time the 50-cent hike kicks in. Whether a resident will end up paying more in taxes will depend on how much the value of their home went down as part of the 2013 revaluation of all properties.
Tangible and motor vehicle taxes would stay the same under Lombardi's proposal.
Lombardi's budget is by no means final, but simply kicks off a 2014 budget season that will run for the next several weeks. The Town Council will go through each line item of the budget and hold public hearings before taking a vote on a final budget, which would then be sent back to Lombardi for his signature.
A 50-cent tax increase, if finalized, would follow up an 11-cent increase in 2013 and no tax increase in 2012 or 2011.
The $1.5 million more to the schools through the education funding formula is to be used for staffing and contractual obligations, which includes medical coverage, said Finance Director Justin Cambio. The $634,000 extra from the town is meant to be used to enhance technology to enhance learning in the classrooms.
According to school officials, their original $1.3 million request was to be split evenly between curriculum and technology upgrades. It will be up to them what they do now, said Cambio, whether that means spending half of the $634,000 in each area or all in one area.
Lombardi's budget calls for about $43 million in spending on the town side of the ledger and about $49.5 million in spending on the school side. A "small increase" of about 1.75 percent on the town side, equaling about $800,000, will be paid for by increasing the town's estimates of how much tax money will be collected instead of taking it out of taxpayers' pockets, said Cambio.
"That was a conscious decision not to go to the taxpayer," he said. "By increasing the percentage in collections we're being extremely aggressive."
Though there would be an increase of about 4.5 percent to the schools, from $47.4 million to $49.5 million, the state pays for three-quarters of the total school budget, he said.
The town side of the budget, broken down, calls for $37 million in operational spending, $2.3 million toward the elimination of the town's deficit from four years ago, and $3.5 million toward debt service payments on borrowed money.
The entire public safety budget is going up by about $150,000 under Lombardi's proposal, or a 1 percent increase to nearly $16 million, a "pretty good" number given how safe the town is, said Cambio. The "lion's share" of spending increases are in public safety, the board of canvassers (with an election coming up), and on the cost of streetlights.
The last $2.3 million payment on the town's five-year deficit reduction bond will be due in July 2015, said Cambio. At that point town officials will have money cleared up for extras. Lombardi maintains that he wants to use some of the money on a road-repaving program and car tax relief.
"That's only 15 months away," said Cambio. "It's something to look forward to."
According to letters from the ratings agencies, the town has gone from a deficit of more than $10 million in 2009 to having reserves of $5.6 million, said Cambio, for a swing of $16 million in five years, or 20 percent of the town's entire fund balance.
Ratings agencies are recommending that for the town to continue on the right fiscal path, they should continue managing their debt appropriately, increase the reserve fund through annual surpluses, and continue to fund their annual contributions into the pension fund.