Projo: Property tax-rate hike cut

Matthew Bobola, center, the city’s internal auditor, talks with John J. Igliozzi, right, chairman of the finance committee of the Providence City Council Monday night. At left are Councilman Seth Yurdin and City Council President Michael A. Solomon. Providence Journal / Bob Thayer

Tuesday, July 12, 2011

By Richard C. Dujardin
Journal Staff Writer

PROVIDENCE — Homeowners bracing for an anticipated 13.5-percent increase in property taxes for the year that began July 1 may be able to breathe a bit easier following action Monday night by the City Council’s finance committee.

In a unanimous vote, the finance panel agreed to send to the full council a proposal that would boost the residential property tax rate slightly under 5 percent, from $30.38 to $31.89 per $1,000 of assessed valuation, and making up for the lost revenue through an expansion of the car tax.

The tax rate on commercial property would increase by 7 percent to $36.75 per thousand.

The new proposal, supported by Mayor Angel Taveras as a practical alternative to his original budget proposal, would reduce the city’s tax rate on motor vehicles from the current $76.70 per $1,000 of assessed valuation to $60 per $1,000, while dropping the tax exemption on cars to $1,000 from the current $6,000.

Council finance committee chairman John J. Igliozzi said 55,000 of the 118,000 vehicles currently registered in the city are not taxed. By taxing more motor vehicles, finance officials said, the city would be able to make up for nearly all of the revenue that would have come from raising the residential tax rate by double digits.

Under the proposal, owners of homes valued at $1 million or less would still enjoy the 50-percent homestead exemption for residents who live in their own homes, but those with homes valued at more than $1 million would see their exemption reduced to 33 percent for anything above that amount.

At a crowded meeting in the Alderman’s Chamber at City Hall, the council’s internal auditor, Matthew M. Clarkin Jr., said that, since Taveras submitted his budget proposal, he and members of the administration were able to identify an additional $3 million in savings through line-item reductions, including $571,000 from the elimination of 12 positions in the police, communications, inspection, treasury, parks and city clerk’s office that are currently vacant.

Some $95,000 in savings would come from requiring city employees who are not members of a union to take two unpaid furlough days this year.

Clarkin, along with Michael D’Amico, the city’s director of administration, cautioned that there are still a number of assumptions contained in the budget, including that the police and fire contracts will result in savings of $6 million and $5.9 million in the new fiscal year, that the School Board will gain $21.6 million in concessions from teachers and other unionized employees, and that the city will be able to achieve $8.8 in additional revenue in lieu of taxes from colleges, universities and hospitals.

D’Amico said he is very confident that the new contracts will produce the anticipated savings, and is fairly confident that the city will come within $1 million of getting what it is hoping to receive from the schools and colleges.

Gary Sasse, a former policy adviser for Gov. Donald L. Carcieri who was enlisted to advise the City Council, said the new budget is “clearly a step in the right direction” and is a significant sea change from the way budgets have been presented before.

“Its revenue estimates are realistic and there are no gimmicks,” he said. “It is an honest budget.”

The new budget was proposed by Taveras three months ago as a way of addressing a $180-million “structural deficit” he encountered soon after taking office.

Councilwoman Sabina Matos said her chief concern is that the budget does not call for the elimination of the homestead exemption, which she believes puts the city at a competitive disadvantage by making the tax rate higher than it would otherwise have to be.

Councilman Terrence M. Hassett and Igliozzi agreed that that tax structure needs to be completely reorganized, but there was little time for such an undertaking in the few weeks that were available.

Hassett said that this year’s budget process has been completely different from years past, with a level of cooperation that was missing in other years.