Council Tables Supplemental Tax Bill
The City Council will hear from residents on the extra tax at a public hearing Monday night.
The City Council has postponed approving a plan to issue extra tax bills, but that doesn't mean Woonsocket residents have dodged a bullet.
At a Wednesday night meeting in City Hall, councilors voted unanimously to table the measure until April 2. The reason for their action: The city charter requires a 10-day waiting period before the City Council can pass such a measure.
They also tabled a motion that would allow the city to borrow money in anticipation of those tax revenues. "If you don't do one, you can't do the other," City Council President John Ward said by way of explanation.
Residents will get another chance to speak out on those issues at a public hearing scheduled for Monday night in the high school auditorium.
Wednesday night's meeting was quieter than other recent sessions, but not because taxpayers are less angry. There were no excited speeches from citizens because the City Council barred public comments. Fire Chief Gary Lataille also stood at door of Harris Hall telling latecomers they could not enter, as the fire safety code limits capacity to 147 people.
Some of those who were turned away milled about at the doorway of City Hall, exhanging remarks that denigrated Woonsocket's elected officials. "Taxes, taxes, and more taxes," one man was heard to gripe. "And this is how they treat us. They're hiding something, or hiding from us."
Among those who got into the room: Gov. Lincoln Chafee and Rosemary Booth Gallogly, director of the state Department of Revenue.
Chafee told the crowd his budget package for the upcoming fiscal year will include changes in the formula for distributing state aid to cities and towns and local school districts. If the General Assembly backs the plan, Woonsocket and other cities he called "distressed communities" will recieve more funding from the state.
Chafee also touted his proposal to hike Rhode Island's restaurant tax by 2 percent, a measure he says will raise money for local schools and spare homeowners from rising property tax bills.
"No one likes a new tax," Chafee said. "But you get to choose whether or not you go out to eat. Call your legislator and say, please support Gov. Chafee's budget package. It will mean structural changes. It will give more money to distressed communities."
Directly behind the governor sat several city residents holding angry signs, with messages reading "No more taxes," "We're mad as hell," and "Why do we have a school committee?"
For the most part, Chafee let Gallogly do the talking. She explained several options available to help the city get through its fiscal crisis.
One option would be appointment of a fiscal overseer who would review management of the city's finances and make recommendations. The overseer would not have the authority to make spending cuts or issue tax bills. The overseer would likely be a state trooper with a law degree and budget experience.
The next step would be setting up a budget commission to handle all financial matters. It would include the mayor, the City Council president, and three people appointed by the governor. They would have authority over all hiring and expenditures, and could order program cuts, layoffs and tax hikes.
Beyond that, the city could declare bankruptcy and turn over financial management to a court-appointed receiver, a single person who would handle all financial decisions. Under bankruptcy, the receiver could negotiate a plan to settle the city's debts with partial payments.
According to Gallogly, a receiver could pay off the city's $10 million budget shortfall by issuing a supplemental tax bill that would cover the full amount. The supplemental tax now being discussed would only cover a portion of that. The receiver could also put an end to the city's homestead exemption, which allows homeowners to apply for a reduction in their property tax bills.
"Once the plan is approved in court, it's done," she said. "The reciever would only have to answer to the federal bankruptcy judge."
That news prompted City Council member Robert Moreau to offer a warning. "People are calling me to say 'don't raise taxes, just go bankrupt," he said, directing his remarks toward television cameras. "We have to understand what could happen. If we have control, we can try to make this as painless as possible. If someone else comes in, they could really raise taxes."
"Why send in a receiver to take care of the whole city, when only a portion — the School Department — is in trouble?" City Council member Roger Jalette asked the revenue director.
"We have to be very careful to be fair to all creditors," Gallogly replied. "If you're in a bankruptcy situation, you have to be careful that any proposal you make is fair and equitable."
City Council members also blasted Chafee's predecessor, former Gov. Donald Carcieri, for cutting state aid to the city and the city's schools.
"This has caused a monsoon, something we can't control," Moreau said.
"They said to us, you're a poor community, so we're going to screw you," Ward added. "It's just not right.
"I chose to stay here in the city of Woonsocket," added City Council member Albert Brien. "But if I'd moved to Smithfield or Lincoln or Tiverton, I wouldn't be confronted with this problem. I think it's grossly unfair, and unconstitutional."
Tabling the supplemental tax bill won't stop paychecks to city and school employees in the weeks ahead, according to City Finance Director Thomas Bruce. Money for this week's payroll is already in the bank, and the state plans to speed up aid payments to Woonsocket to cover the payroll for April 6.
After that, however, the situation is up in the air. "April 20 could be very difficult," Bruce said.
One solution now being considered: a 10-percent paycut for all employees, which could save $1.8 million in April, May and June.
"That will be enough to get us to July," Bruce said. "And in July there will be a new round of funding at the state and local level. School Department operations will have to limp until then."