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In Providence mayor’s budget, tax bills will rise

Providence City Hall.
Providence City Hall.Lane Turner/Globe Staff/Globe Staff

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PROVIDENCE — Providence Mayor Jorge Elorza unveiled a $772.6 million budget proposal Tuesday that includes a steep tax increase on homeowners in order to cover the costs of the city’s ever-increasing pension obligations as well as raises for most employees and the first phase of a universal pre-kindergarten program.

The second-term Democrat is asking the City Council to approve a tax-and-spending plan that relies on a $12 million windfall of new property tax revenue fueled largely by skyrocketing home assessments throughout the city.

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In fact, home values have increased so much that Elorza’s budget reduces the tax rates for both owner-occupied ($15.35 per $1,000 of assessed value) and non-owner-occupied ($24.56 per $1,000) homes in order to comply with a state law that caps the amount municipalities can raise in new tax revenue at 4 percent each year.

Even still, the actual tax bill for property owners — especially landlords — is slated to increase, in some cases by more than 30 percent. For example, the owners of one Vinton Street triple-decker will see their tax bill grow from $5,140 last year to $7,326 under the mayor’s proposal after their property value jumped from $161,100 in 2018 to $298,300 this year.

Elorza himself will pay $3,550 in taxes on the single-family home he owns on Deborah Street, an increase of $400 from last year. His property value spiked from $167,900 to $231,300 between 2018 and 2019.

The mayor did not acknowledge the proposed tax increase in his budget address. Instead he focused on what he calls a plan that invests in schools, families, and neighborhoods.

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“We know that being part of a community means that we’re both investing in each other and invested in each other’s success,” Elorza said. “When the most vulnerable among us, such as children, immigrants, the homeless, and new parents succeed, our entire city succeeds along with them.”

The City Council will spend the next six weeks vetting and tweaking the mayor’s budget, with the goal of approving a final plan by mid-June. First quarter tax bills are typically due by the end of July.

Elorza’s proposal sets aside $86.7 million for the city’s annual contribution to its pension system, a 4 percent increase from the current year. The mayor has warned that the rising yearly costs to cover the monthly retirement benefits for thousands of former police officers, firefighters, and municipal employees or their spouses could one day bankrupt the city.

The city currently has just 25 percent of the $1.3 billion it owes current and future retirees, and the annual pension payment is projected to reach $100 million by 2025. Elorza recently backed off a proposal to lease or sell the city’s water supply and deposit all proceeds into the pension fund after facing overwhelming opposition from residents and elected officials throughout the state.

As for new spending, Elorza and the council have already guaranteed pay increases to most of the city’s 5,000 employees, including firefighters, teachers, and laborers. Non-union employees, including the mayor’s staff, would receive 2 percent raises. Elorza did not budget for raises for police officers or school clerical workers.

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The mayor’s proposal sets aside $750,000 to begin implementing a universal pre-kindergarten program, although city officials say their timeline depends heavily on whether state lawmakers approve Governor Gina Raimondo’s proposal to offer free schooling for 4-year-olds throughout the state.

Other new initiatives in the mayor’s budget include $75,000 to craft an affordable housing strategy, $50,000 to place washing machines in certain schools to allow students to clean their clothes, and $20,000 to train and support doulas, who assist women with their pregnancies.

The school department is projected to receive $394 million, a third of which comes from the city.

The rest is covered through the state education funding formula. Outgoing Superintendent Christopher Maher has said the city was able to close a projected $12 million shortfall with minimal impact on students, but he has warned the city still faces large deficits over the next five years.

Elorza has agreed to partner with Raimondo on a full review of the city’s struggling school system, but the proposed budget doesn’t fund any significant reform efforts. The mayor has also not said whether he intends to appoint a permanent school chief to replace Maher.

The mayor’s budget does not include any additional parking meters, school-zone speed cameras, or red-light cameras, although a spokesperson for Elorza said the city may move some of the existing cameras to new locations next year.

When it comes to other taxes, Elorza is proposing to hold the line on commercial rates at $36.70 per $1,000 as well as the tangible tax, which will remain $55.80 per $1,000. In order to comply with the state’s long-term plan to phase out the motor vehicle tax altogether, Elorza is seeking car tax rate of $35 per $1,000 with a $3,000 exemption.

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Dan McGowan can be reached at dan.mcgowan@globe.com. Follow him on Twitter at @danmcgowan.