PROVIDENCE — As they sat around in an office on Valley Street negotiating the final details of Providence’s $770 million budget proposal late last Wednesday night, Mayor Jorge Elorza and several City Council leaders were confident they were closing in on a deal.
“I believe that we started the evening at the 1-yard line and we ended the evening at the 1-inch-yard line,” Elorza said this week.
But the agreement fell apart the next day when the mayor hopped a flight to Hawaii for a meeting of the US Conference of Mayors. Council President Sabina Matos said Elorza never mentioned he would be traveling. The mayor then accused the council of blowing up the budget to settle a personal score by cutting the salary of the city’s public safety commissioner.
Finger-pointing between the mayor and the council is hardly uncommon, but their increasingly dysfunctional relationship comes as they are being asked to confront generational challenges in Providence, including a school system that outside researchers are calling among the worst in the country and growing retiree pension costs that Elorza has warned could bankrupt the city within the next decade.
Now the inability to come to terms on a budget has left observers questioning whether Elorza, Matos, and the rest of the council have what it takes to tackle the city’s larger problems in the final three-and-a-half years of their terms in office.
“The smaller issues that you deal with only get in the way of the working entity of the city,” said John Simmons, the executive director of the Rhode Island Public Expenditure Council, or RIPEC, and a former top aide to mayors Joseph Paolino and David Cicilline.
“As opposed to the addressing the fundamental causes, it’s of political interest to do the small things, not the important, hard things,” Simmons said.
The City Council is expected to vote Wednesday on a revised $770 million budget, and the city charter requires a second affirmative vote — probably next week — before it can be sent to Elorza’s desk. The mayor is already threatening to veto the budget unless changes are made.
There are minimal immediate consequences for the city not having a budget in place for the fiscal year that started July 1, but that can change quickly. Until a tax levy — the total amount the city intends to collect in property taxes in the new fiscal year — is approved, the state won’t send Providence $33 million in aid that it needs to pay bills.
Aides to the mayor and the council agree the city could run out of money without the cash infusion from the state and a new round of property taxes flowing in.
If Elorza vetoes the tax levy, “he will put the city in jeopardy far more than what the council is doing,” City Treasurer James Lombardi, a council appointee, said this week.
The conflict between the two branches of government is fairly straightforward.
Elorza proposed a budget in April that included significant tax increases on the majority of Providence’s homeowners, based largely on a spike in property values across the city. But the mayor’s plan also cut taxes for some residents on the more affluent East Side because their property values didn’t grow as much as home values did in other parts of the city.
The council, which is comprised of 12 members who don’t live on the East Side and only three who do, attempted to construct a different tax plan that leaders claimed would be more equitable for all residents. But they failed to win approval from the General Assembly to implement a plan that would have awarded different exemptions to residents based on the value of their home.
The budget the council will vote on Wednesday would set one property tax rate — $24.56 per $1,000 of assessed value — for all homes, with a 40 percent exemption going to individuals who live in the properties they own. The proposal means anyone who was already getting a tax decrease under Elorza’s plan would get a larger one now, and residents who were getting a tax increase are getting a slightly smaller increase.
But in order to offset some of the lost tax revenue compared with Elorza’s initial proposal, the council has proposed a variety of cuts, including slashing the pay of Public Safety Commissioner Steven Pare from $165,000 a year to $126,000. Several council members have clashed with Pare in recent years, leading Elorza to claim the cut is “out of personal spite.”
Councilman John Igliozzi, who oversees the budget as chairman of the Finance Committee, brushed off Elorza’s accusation, suggesting Pare was being paid more than is allowed under the existing city’s salary structure. He said Elorza’s decision to leave the state last week forced the council to make cuts.
“We had certain sticking points, so unfortunately, once the mayor and no one showed up the following day and the mayor left for Hawaii, we have to be responsible, we have to finish up the budget,” Igliozzi said. “And so then we had to make the appropriate changes in order to achieve the goal of bringing some tax relief to folks that have the biggest economic challenges in the city of Providence.”
Elorza denied the trip to Hawaii had anything to do with budget discussions falling apart.
“These aren’t the 1800s,” he said. “I’m available at any moment via phone, via Skype, via conference call, via conference messaging. I am available 24/7.”
No matter what action is taken on the budget in the coming days, it is doubtful a final plan will address the two issues keeping city leaders awake at night: schools and pensions.
A blistering report released last week by researchers at Johns Hopkins University detailed flaws in every facet of Providence schools, from dilapidated facilities and rampant violence to a culture of low expectations for students and a governance structure that leaves teachers and administrators questioning who is in charge.
State Education Commissioner Angélica Infante-Green has vowed to make changes to the entire district, leaving some to believe the state might take over Providence schools. Elorza has said he wants to form a partnership with the state that leads to greater flexibility in the teachers union contract.
The city budget includes a small increase in funding for the school system that was proposed long before the report was released, but the Providence School Board was still forced to cut millions of dollars in spending in order to balance its budget this year.
Gary Sasse, a former state director of administration who has advised the City Council in the past, said “nothing of any consequence usually gets done” when the two branches of government find themselves in the kind of stalemate they are currently in.
“Breaking the logjam depends on leadership, but differences are usually resolved by the next election or the mayor using his authority to buy off council members,” Sasse said.
The pension system, which was just 26 percent funded and staring at $1 billion in liabilities as of June 30, 2018, has similar challenges, said Simmons, the executive director of RIPEC.
There are more than 3,000 retirees who depend on their pension check each month, but Elorza has warned that the city’s rapidly increasing annual payments to the fund could force the city into bankruptcy one day.
Elorza spent years lobbying state lawmakers to allow him to sell or lease the city’s water supply and deposit any proceeds from the transaction into the pension fund, but he gave up on the plan earlier this year after realizing it did not have the support of legislative leaders. Council leadership also opposed the idea.
The city budget is required to include just under $87 million for the pension system this fiscal year, a figure that will rise to $150 million by 2036 under the city’s current payment schedule.
“You’ve got to look at the long-term issues,” Simmons said. “Some cuts to employee salaries don’t address that.”