NP council adopts 'imperative' budget after delay

NORTH PROVIDENCE - The Town Council approved the annual budget on a split vote Thursday, July 8, but not before alarming bond rating agencies, the mayor's office and Rhode Island's auditor general.

The vote had been expected 48 hours earlier, but council members balked Tuesday night, July 6, when councilors Paul F. Caranci and Frank A. Manfredi questioned the amount of revenue anticipated in the budget from car excise taxes.

The two council members were concerned that recent adjustments in the amount of car value allowed to be exempted could result in a hidden tax hike that could hit unsuspecting car owners; equally disconcerting to them was the prospect that an additional $4.9 million in revenue could be raised for the already balanced budget.

No vote was taken on the budget as had been scheduled.

The alarms went off Wednesday morning when word got out that North Providence, a financially-strapped community with a credit rating on the brink of junk bond status, didn't have a budget six days into the new fiscal year. Without a budget, payroll this week would have been at risk and necessitated borrowing money from the town treasury that had been set aside to pay a tax anticipation note in August, according to officials.

The town's bond counsel, attorney Sandra Matrone Mack, notified the various parties on Wednesday that the budget had not passed, but that after questions had been addressed she anticipated it would be adopted on Thursday night.

Mayor Charles A. Lombardi, Chief of Staff G. Richard Fossa, Town Solicitor Anthony Gallone and acting Tax Assessor Janesse Muscatelli, joined by Mack, spent better than one hour standing at the foot of the stage in council chambers addressing the questions and concerns raised primarily by Caranci and Manfredi.

At one point when Muscatelli needed clarification on vehicle value dollar amounts from acting Finance Director Maria Vallee, who did not attend the meeting, Mack called Vallee by cell phone. She reached Vallee who was attending to her mother in a hospital. Mack put the call on speaker function to enable the council and the others to listen to Vallee's responses. Acting Town Clerk Dee Comella left her seat at the council table and squatted down on the stage to hold a small tape recorder near Mack's phone to record Vallee's comments for the meeting minutes that in ordinary circumstances are recorded by a taping system in the chamber.

Mack encouraged the extraordinary effort to answer the council's questions having said at the outset, "It is imperative that the budget be passed simultaneously with the deficit reduction plan (which the council had passed on Tuesday night. The School Committee passed the deficit plan a week earlier)," Mack said.

She added that without budget passage "the cash for the bonds will not be available to maintain the fiscal stability of the town."

She reminded everyone that the "bond rating would drop" without an adopted budget, leaving the town's credit rating at the less-than-desirable "junk bond" status.

In the end, Manfredi's questions were answered when the administration provided him with current total vehicle value in town and he was assured that an excise tax increase did not loom this year.

Caranci, however, did not accept the explanations and was concerned that unlike fiscal 2009-10 when a $6,000 motor vehicle tax exemption was in place, the lower $500 exemption put in place statewide by the General Assembly this year, if adopted by North Providence, would hike the excise tax for vehicle owners.

Caranci provided a breakdown that showed a car valued at $6,000 in 2009 did not generate a tax bill, but this year could require a $230 payment; a car valued $10,000 in 2009, $167.80, but in 2010, $398; or a car valued at $20,000 in 2009, $587, but $818 in 2010.

Caranci took issue with Lombardi's budget letter to the council on March 30 that said, "the budget enclosed with this letter makes difficult choices and holds the line on taxes."

Caranci said on Thursday night, "This statement does not read "and hold the line on the tax rate." It reads "taxes." Clearly, while the tax rate does not change, taxes will increase to every resident of North Providence that owns a car, even if they do not own real estate."

Caranci continued, "If the revenue from the motor vehicle excise tax was anticipated at the time of this submission in March, then was this statement an obvious attempt to deceive both the council and the taxpayers, or is it possible that this revenue source was not being anticipated despite what we are being told now?"

The town faces a $4.9 million aid loss from the state, which formerly reimbursed municipalities for the vehicle tax exemptions they provided. The state has severely slashed those payments.

As compensation, the General Assembly has allowed towns to tax vehicles on all but the first $500 of their value. Previously, a state mandate required municipalities to exempt from taxes the first $6,000 of a vehicle's value, and the state then reimbursed them for the uncollected taxes.

A testy exchange ensued between Caranci and Lombardi when the mayor interrupted Caranci on a couple of occasions during the meeting.

"Do you ever shut up?" Caranci shouted at Lombardi. "Do you ever shut up? Just sit down!"

Lombardi replied, "If you can't control your kids don't take it out on me."

Lombardi said later he was referring to a personal problem being encountered by Caranci at home.

Caranci told The Breeze later that his children do not live at home and live out of town.

"This is just typical of Charlie Lombardi," Caranci said. "He is very small minded. His reference to my family is just an attempt to deflect attention from himself."

Caranci said that he is unaware of any problems with his children.

Caranci reminded the council that he had cautioned them in the last three years about problems in the budgets provided by Lombardi and that "I was proven right."

He voted against the $81 million budget on Thursday night.

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