Drop in revenue spells tax increase in proposed 2020 budget

Drop in revenue spells tax increase in proposed 2020 budget

NORTH SMITHFIELD – Despite a drop in the proposed tax rates, commercial and residential taxpayers could see their taxes go up under the proposed fiscal year 2020 budget thanks to a 2018 revaluation that saw a spike in property values around town.

Under a budget proposal prepared by Town Administrator Gary Ezovski, the town’s overall tax levy would increase by 3.93 percent, just short of the 4 percent cap imposed by state law. Tax rates under that budget would drop from $17.24 to $16.34 for residential property and $19.13 to $18.13 for commercial property.

However, with 97 percent of the town’s properties seeing an increase in value during the last statistical revaluation, those numbers could spell an increase for many in town. According to the results of the statistical revaluation released in February, residential property values rose 20 percent on average from 2015, while commercial property values rose 10 percent. That translates to a $162,947,066 boost in the total assessment of taxable residential property in town and a $25,250,751 increase in the total assessment of commercial property.

The Budget Committee’s 2020 proposal, submitted to the Town Council Monday night, offers a more modest increase, recommending a 3.13 percent increase in the overall tax levy. That number is based on a $44.9 million budget, compared with the current year’s $44 million.

According to Ezovski, the increase is due to a significant drop in revenue following a tangible tax reporting error by National Grid, the nonprofit conversion of the Rehabilitation Hospital of Rhode Island and Stanley Tree Service’s move to Smithfield. Taken together, those three factors account for about $1 million in lost revenue as the town faces an approximately 2 percent spending increase.

“It piles up to be a lot of money that won’t repeat,” he said.

The budget presented by the Budget Committee Monday night includes a 2.48 percent increase in the local appropriation for the schools, the same amount recommended by Ezovski. In their budget, the School Department requested the maximum 4 percent increase for the school budget alone, partly to offset a steep drop in state education funding. From 2019 to 2020, state education aid to the town is expected to decrease by more than 6 percent, even more than the 3.7 percent decrease originally projected when budget discussions began earlier this year.

As noted by the Budget Committee, the 4 percent ask comes after School Department administrators made approximately $1.1 million in direct cuts to their previous budget, denying staff requests and also factoring in a $345,000 decrease in costs due to the scheduled closing of Halliwell Elementary School. Most of the requested increase, they noted, was dedicated to increases in salaries and benefits, leaving little room for additional resources.

Members of the Budget Committee asked the School Department to create a three to five year forecast and also earmark $50,000 in reserved funds toward program development to attract out-of-district students to the district’s new career and technical education (CTE) programs. From last year to the current year, the number of North Smithfield students attending out-of-district charter schools and CTE programs rose from 56 to 78, further straining an already tight budget.

While the town administrator and Budget Committee agreed on a recommended increase for the schools, the two budgets differ in their approach to post-employment benefit accounts and capital expenditures, accounting for a $94,000 difference. The Budget Committee’s version recommends funding only two new SUVs for the Police Department instead of three, reserving half the cost of a third for next year, and holds the town’s contribution to its other post-employment benefits steady at $200,000. Ezovski’s budget, by comparison, increases the town’s contribution to $250,000, an increase he defended as necessary for the town’s future planning.

“I believe that’s the kind of decision-making that ultimately puts communities in the kind of circumstances that everyone looks at and says, how did we get here?” he said about the Budget Committee’s decision not to increase the contribution.

In addition to the change in tax rates, the proposed budget would result in $19.46 increase in the sewer rate, making the annual charge $527.99 per equivalent dwelling unit. The water rate would increase by 53 cents per thousand gallons, bringing the rate to $7.64, as the town brings a water line extension to Mechanic Street and Old Great Road. Revenue from future user connections is expected to offset part of the cost of the extension, but only after the new homes have connected.

Comments

Town Administrator Ezovski is recommending commercial and tangible tax rates be lowered. Those rate reductions will cause a loss of tax revenue. All homeowners will be required to pay more than they should, in order to cover the loss of revenue from the reduction of those tax rates. National Grid benefits the most from the lower tangible tax rate. Personally, I have no desire to have the tax bill on my home increase, so that National Grid can pay less in town taxes. I certainly hope the Town Council refuses to follow the Administrator's recommendation.

In a re-evaluation year the impact on homeowners differs significantly. There are residents who will see their tax bill increase by 20+ percent as a result of the proposed new tax rates and the increase in the assessed value of their homes. On the flip side, residents who saw little change in the assessed values of their homes will see little change in their tax bill. North Smithfield residents can find the directions for calculating how the new rates and new home assessments impact their projected tax bill by visiting the Facebook page: Cliff Notes by Mike Clifford
Mike Clifford

Waking up this morning to the wonderful news out of North Smithfield regarding taxes required toasting with an extra cup of coffee. I had seen the proposed tax ad declaring the proposed tax rate and mused that, though I thought my personal evaluation was inflated, it would all equal out. WRONG!! The poor foresight of the administration and the lack of oversight of the council once again places the taxpayer in a lose lose position. A tax increase of over $250 per quarter is just a mere pittance for the honor of allowing these savants or ostriches the management the financial future of the taxpayer. Oh my, they were not aware that in Jan 2017, Prime Health Care was in process of returning to non profit status. That certainly was a red flag saying the future of that tax money was bleak. They also had no idea that the revenue from National Grid was drying up, nor could they foresee that the reduction of the vehicle tax needed to be paid attention to. No problem, our grateful populace will happily dig deeper into their stashes of cash, for “they trust us to do the right thing”. After all, those taxpayers even have the history of paying an extra quarter of in case taxes, so what's the problem? Maybe best practice should be that “windfalls” be set aside for worthy or emergency situations rather than lumping it in with taxpayer subsidies and it would put a realistic look at the monies that are available. Feigning ignorance is an insult to the taxpayer. To add insult to injury, the sewer and water increases are to be as acceptable. Blame it on Stanley Tree Service, National Grid etc, any excuse will be accepted. When is enough enough ?

We can agree on one thing Mr or Ms Truthseeker. If the leadership of a few years ago had set aside the windfall from National Grid's major line project to pay one time capital expenditures we wouldn't have the current condition. This administration is just required to act on the consequences of those prior decisions while still trying to reasonably fund schools, public safety and slso fix our roads. We are still working on a revenue item that could moderate the tax increase but there is no eraser for situations of the past. We also have no recourse for the reduction in aid to education coming from the state. There are many factors coming together for a perfect storm but those two factors are the primary contributors to our fiscal 2020 budget challenge.

Mr Ezovski, your response with anything other than the reasons for ignoring red flags issues, should not surprise me. These were your last excuses for tax hikes. You respond to me with a new variety. You have been in charge since December of 2016, RED FLAGS : 1) Prime Care applied for return to non profit status Jan 2017. 2) Vehicle tax phase out began in 2018, phase two begins this year. 3) National Grid issue, by your recent admission, began in previous administration. I apologize for not including the previous administration along with Stanley Tree and National Grid as the convenient excuses for our dilemma. Reductions in reimbursement of school funding are ongoing issues that we deal with on a yearly basis.Allocated money somewhere went astray after bonds were voted upon ? 2014. The wheels of govt move slowly. Based on lack of tangible results, date of going out to bid and subsequent action are oblivious. Again any excuse is better than none, except for those who pay the freight. The lack of acknowledgment of RED FLAGS occurred. Your job is to anticipate before a crisis. We pay the price with hard earned currency. You,sir,excuse yourself with hollow words.

It seems whenever Mr.Ezovski is in the mix we get hit with higher taxes. Does anyone remember the fifth quarter tax years ago from the school committee. All keep hearing are excuses!