NEWS

'Good news' for city in state's budget plan

By DANIEL A. KITTREDGE
Posted 12/16/20

By DANIEL KITTREDGE Lawmakers are at last on course to approve a state budget for the fiscal year that began July 1, and what is being proposed carries good news for the city and its public schools. The $12.8 billion plan approved by the House Finance

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NEWS

'Good news' for city in state's budget plan

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Lawmakers are at last on course to approve a state budget for the fiscal year that began July 1, and what is being proposed carries good news for the city and its public schools.

The $12.8 billion plan approved by the House Finance Committee last week “restores cuts that had been proposed by the governor, and in some cases temporarily instituted, to municipal aid including distressed communities and car tax reimbursements, provider rates and social programs,” a press release from the General Assembly reads.

Additionally, the budget bill “fully funds state aid to education according to the state education formula.” The plan was set for a vote before the full House of Representatives this week, after the Herald’s press time.

Mayor Allan Fung over the weekend said the budget developments on Smith Hill are “good news,” although he struck a note of caution pending final approval.

“We need to get those dollars passed so we can continue to help people in these difficult times,” he said.

The long delay in the state’s action on a budget during the pandemic has created multiple levels of fiscal uncertainty for the city. Gov. Gina Raimondo and legislative leaders

For Cranston Public Schools, there have been fears than an anticipated state aid increase of $4.1 million would not materialize, at least not fully, once the state finalized its course of action.

The roughly $300 million budget adopted by the City Council and signed by the mayor in May essentially removed that funding from the equation out of fears the city would become responsible for the money in perpetuity through “maintenance of effort” were the state not to meet the aid projection.

On the municipal side, the state’s fiscal approach to several key areas of local aid during the pandemic has drawn the ire of Fung and others for months.

As issue is what Fung and the League of Cities and Towns have dubbed a “COVID Trifecta” – lower-than-anticipated reimbursement as part of the car tax phase-out plan, reduced payment in lieu of taxes, or PILOT, funding, and cuts to the Distressed Communities program.

Fung, on the city’s behalf, filed a lawsuit in late October alleging the state’s withholding of some aid has been unlawful. The suit named Raimondo, Director and Administration Brett Smiley and General Treasurer Seth Magaziner as defendants. The governor’s administration has defended the way aid has been dispersed in recent months as authorized under state law due to the current state of emergency.

Fung over the weekend said in light of the recent developments on Smith Hill, he has spoken with the attorney handling the case and will be “bascially turning the heat down a little bit” in anticipation of the budget plan’s adoption.

The city’s complaint, at the time of its filing, put the total amount of withheld aid from Cranston at $7.5 million.

The news is also a boon to car owners in Cranston, who received car tax bills earlier this year at the expected phase-out rate. The adoption of the state budget as proposed would preclude the need for a supplemental car tax bill in the first months of 2021.

In a statement last week, the League of Cities and Towns applauded the budget agreement and noted that it carries additional funding to support municipalities with COVID-19 costs.

Specifically, the statement reads, the budget plan will provide $50.7 million in PILOT funding, an increase of $4.6 million over the previous year; $123.6 million to fully fund the fourth year of the car tax phase-out, a $11.8 million increase over what the governor proposed; $13.8 million for the Distressed Communities plan, which preserves existing funding levels with an additional $1.4 million for COVID-19 costs; and $7.75 million for a Municipal COVID Relief Fund, to be distributed on a per capita basis.

“I would like to thank incoming Speaker Joe Shekarchi and Senate President Dominick Ruggerio for acknowledging the cities and towns’ needs in the state’s FY 2021 budget,” North Providence Mayor Charles Lombardi, president of the League of Cities and Towns, said in the statement. “The budget restores aid to Distressed Communities, fully funds PILOT and the motor vehicle phase out, and creates a new COVID Relief Fund. On behalf of their taxpayers, all municipal leaders are thankful.”

According to the League, “the delay in the FY 2021 state budget process has resulted in cities and towns receiving $81.9 million less than anticipated in local and education aid, as those payments have been made at lower FY 2020 levels. Additionally, a state-administered survey of all 39 cities and towns reported $34 million in unbudgeted local costs related to COVID-19 response and lost revenues of over $75 million.”

In a General Assembly press release regarding the budget agreement, incoming House Speaker K. Joseph Shekarchi said the proposal is “about making sure we take full advantage of the federal funding available to help take care of Rhode Islanders and get us through this pandemic.” The plan includes no tax or fee increases.

“We are just a few weeks away from the start of a new session in January, and at that time we look forward to a full discussion of new policies and ideas,” he said. “For now, we need to hold the line and fully support our schools, our cities and towns, and our existing efforts to help the people of Rhode Island, and I’m proud of the way we have come together to do exactly that within the resources we have. With this budget in place, we will be able to turn our focus to the future, to economic recovery as the vaccine rolls out, and to helping provide resources as well as hope to the people of Rhode Island in 2021.”

The release states that the restoration of local aid – and the bridging of a $275 million deficit that had once been projected at as much as $900 million – “was made possible largely through full and creative use the federal coronavirus relief funding, revenue collections that turned out to be better than they looked earlier in the year, and lower-than-expected caseload costs.”

The state budget plan also calls for seven bond referenda to be put before voters in a special election on March 2.

city, state budget

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