Fung: Loss of state funding would result in 'substantial hit'

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Mayor Allan Fung last week called on state lawmakers to reverse local aid cuts proposed in Gov. Gina Raimondo’s initial budget plan for the coming fiscal year, saying the planned reductions in Distressed Communities and payment in lieu of taxes, or PILOT, funding represent a “substantial hit” to the city’s budget.

Fung appeared before the House Finance Committee on Feb. 6 alongside Brian Daniels, executive director of the League of Cities and Towns, and others as part of the committee’s hearings on the governor’s budget.

Raimondo has proposed cutting the $12 million in funding for the Distressed Communities aid program – which is designed to assist communities with a high tax burden relative to the wealth of their residents – by approximately half. Cranston would see the loss of approximately $1.2 million as a result, while Providence would lose roughly $2.5 million. Other municipalities that receive funding through the program include Central Falls, North Providence, Pawtucket, West Warwick and Woonsocket.

Additionally, the governor’s budget would fund the PILOT program – which compensates communities that house state facilities and entities such as hospitals and higher education institutions – at $46.1 million for the coming fiscal year. That represents a rate of roughly 26 percent of taxable value that would have been collected from those properties, short of the 27 percent allowed under the program. That represents a loss of $570,309 for Cranston, Fung said.

In written testimony submitted to the House Finance Committee, Fung said that the combined loss of $1,782,485 through the PILOT and Distressed Community programs “would result in a significant tax increase of approximately $0.31 per thousand [dollars of valuation]” – or $77.50 for an “average home valued at $250,000.”

The alternative to a tax increase, the mayor said, would be “significant service reductions to make up for the shortfall.”

“As mayor, I’ve worked hard over the years to contain costs as well as minimize property tax increases on our residents,” Fung said in his written testimony. “The additional loss of state aid makes our work even harder. Every dollar in state aid to cities and towns is one less dollar needed in property taxes to support vital services.”

While appearing alongside Daniels, Fung expanded on his written remarks. He said Cranston is “not adequately compensated” for the “plethora of services” it provides for state facilities at the Pastore Complex, and he pushed back against the idea that the city will realize more state aid funding due to proposed increases in education funding.

“Education dollars and the local dollars are totally separate, because we can’t control it,” he said, noting that the initial budget plan from Cranston Public Schools for the coming year seeks a roughly $1.7 million increase in city funding despite a proposed $4 million state aid increase.

Fung additional urged lawmakers to “please make a decision early on” with regard to the car tax phase-out – noting that the city must know how to proceed with billing – and criticized the use of so-called funding “scoops” from quasi-public agencies in the governor’s budget plan.

Daniels, during his testimony, also made the case for maintaining current funding levels for the Distressed Communities program.

“Even though the state’s economy has gotten better, it hasn’t hit all communities equally, and so that’s why we still really need to invest in Distressed Communities,” he said.

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