PROVIDENCE — Seeking to lessen the blow of Mayor Brett Smiley’s proposed tax increase, City Council leaders are proposing a temporary nonessential hiring freeze and some spending cuts as they roll out a revised version of the city budget.
In her first substantive remarks about the mayor’s tax-and-spending proposal unveiled in April, Council President Rachel Miller told the Globe she supports lowering the tax increase on residential homeowners compared to Smiley’s plan, while also providing a much smaller tax cut to commercial property owners.
The public will get a chance to weigh in on the proposal at a second public hearing on Tuesday, which was postponed from earlier this week because the council wanted to release its plan before the hearing. In prior years, the public was only able to testify on the mayor’s proposal, not the council’s revised version.
Miller’s new proposed tax rate is $18.35 per $1,000 for residential properties, with a 43% homestead exemption for owner-occupied properties. (The current homestead exemption is 45%, while Smiley was proposing 40%.)
Smiley had proposed raising the residential tax rate to $18.70, up from the current rate of $17.80. The plan was met with skepticism from city councilors, who said their constituents could not absorb another tax hike after last year’s revaluation drove taxes up in certain neighborhoods.
Renters and homeowners also testified at a public hearing in May that the tax hike would make it difficult to make ends meet.
According to an analysis provided by the council, the average residential tax bill would increase by about $215 this year, compared to roughly $400 under Smiley’s proposal.
While Smiley wanted to slash the commercial tax rate by $1.30 per $1,000 — from $35.40 to $34.10 — Miller said the new council version proposes a rate of $35.10, a much smaller cut for business owners.
In his initial budget address, the mayor touted the commercial tax cut as a win for renters, citing the large number of commercial apartment buildings in the city. But his administration later acknowledged that most Providence renters live in smaller, multifamily residential buildings, which don’t pay the commercial tax rate.
Still, the mayor’s administration said the city’s high commercial tax rate hurts the business environment in the city, disincentivizing growth and stymying small businesses. That argument landed better with council members, who had mostly dismissed the idea that commercial landlords would lower apartment rents in any meaningful way because of the tax cut.
“The commercial property tax is very high,” Miller acknowledged. “That’s getting in our way in a variety of ways, including small business growth.”
She said she aims to launch a tax commission in the fall to further study the city’s current tax structure.
Temporary hiring freeze
On the spending front, Miller said the council made cuts to Smiley’s plan in order to balance the smaller tax increase.
First, she said the council was unwilling to rely on the Smiley administration’s assumption that roughly $7 million would be coming in through voluntary payments from the large, tax-exempt universities and hospitals, whose payment-in-lieu-of-tax agreements (PILOT) are all either expiring soon or already lapsed.
Smiley officials have said they signed nondisclosure agreements amidst the ongoing PILOT negotiations with the colleges and universities, and therefore declined to tell members of the Finance Committee about the details during the vetting of the budget.
“We cannot pass an unbalanced budget,” Miller said.
Miller said the council is proposing to freeze nonessential hiring for vacant and new positions in Smiley’s budget, with the caveat that the positions will be allowed if and when the city reaches a deal with the nonprofits on their voluntary PILOT payments.
Miller did not immediately provide the number of jobs affected by the freeze, but said it would include many of Smiley’s proposed quality-of-life improvements such as graffiti cleanup, trash removal, and a new housing coordinator.
Public safety spending trimmed
The council’s new version of the budget will still increase spending on public safety, but not quite as much as Smiley had proposed.
After the mayor publicly expressed concerns that legislators wouldn’t approve a second police training academy this year, Miller said the council does intend to fund the 50 new police officers requested by Smiley. But she said a more realistic timeline for the academy’s start date — February, not October — would ultimately save money in the upcoming year’s budget for the new officers’ salaries.
The city typically takes more than a year to recruit officers for a new training academy, prompting skepticism from councilors about Smiley’s initial proposal to launch a new academy in October.
Recruitment for the new academy has not yet begun, but the academy that’s currently underway was only able to recruit 30 officers, despite being funded for 50.
Miller also said the council’s plan does not fund new management positions in the fire department as requested by the Fire Chief Derek Silva.
“While we respect the chief and want to see the fire department thrive, it was a lot to take on given the tax increase that was being proposed,” Miller said.
She said the council is funding one lateral fire academy — where firefighters will transfer from other departments and receive truncated training — but she doesn’t support future lateral hiring in lieu of an entry-level fire academy.
“Having an open-call recruitment increases diversity in both police and fire,” Miller said.
The budget also defunds the job of public safety commissioner, which has been vacant since the departure of former Commissioner Steven Paré. Smiley has not named a replacement, and his spokesperson said they will revisit the job in the future.
The new budget amendment is still being written and is not yet available to view, Miller said. It is expected to be released on Monday, prior to Tuesday’s public hearing.
The proposal will need to first be approved by the Council Finance Committee, followed by two votes of the full council before reaching the mayor’s desk. Smiley indicated support for the new plan in a statement Thursday night.
“I am pleased by the progress we have made working collaboratively with the City Council to invest in public safety, focus on better city services, and improve the local quality of life,” Smiley said. “In the week to come, we hope to pass a budget that will set Providence on firm financial ground and over the next year, work together to increase revenue to the City of Providence to address the serious deficit that we are expecting next year.”