The Woonsocket Budget Commission approved a $122 million budget Thursday afternoon that still carries a $7 million deficit.
The Commission also approved a phase-out of the city's homestead exemptions. The Homestead exemption expires for single family homes in 2026 and two-family and three-family homes in 2017.
Real estate taxes will increase by 3.91 percent, below the state cap.
"This is $4.8 million more than we're going to appropriate," noted Commission member Peder Schaefer.
After the meeting, Commission member Mayor Leo Fontaine said the budget still has a total deficit of $7 million, including a $2 million deficit reduction payment for previous school department shortfalls and a current $4.9 million deficit. The budget includes $66,939,062 for the school department.
Carolyn Dias, chief of fiscal integrity and efficiencies with the Department of Education, the fifth person to help straighten out the Woonsocket School Department's budget, told the Commission she was wrapping up two weeks of work to sort out school finances.
Dias follows Bacon & Edge Consulting, Interim Finance Director Ralph Malafronte, current Commission Member Dina DuTremble, and Robert Civetti of Braver. She said she should be finished by the week of July 16, but that the $66,939,062 figure is close. She said it would probably change, but not materially.
"I'd rather adopt a budget closer to reality," said Commission Chairman Bill Sequino, referring to the outstanding deficit.
But Commission member Council President John Ward argued for keep the budget at $122 million, and find cuts to make up the difference.
Ward said the commission should now work to see how much of the deficit they can make up through negotiations with unions and other cost savings. Should that prove unsuccessful, he said the Commission would have a good case for either asking for an emergency tax increase from the state or taking the city into receivership.
"Now we have to go out and find the savings," Ward said.
The Commission also approved a plan to phase out the Homestead Exemption for residences. Previously, the Homestead Exemption exempted the following percentages of assessed value:
- Single family/condos: 42 percent
- Two family: 15 percent
- Three family: 5 percent
- Four to 10 family: no exemption
Now, for single-family homes and condos, the exemption will be 39 percent for tax year 2012 (FY2013), and be reduced by three percent annually through 2026, when it will end.
For two-family homes, the exemption will be 12 percent and reduced by three percent annually through 2017, when it will end.
For three-family homes, the exemption will be four percent and reduced annually by one percent through FY2017, when it will end.
With the 3.91 percent tax increase, and the three percent decrease in the Homestead Exemption this year, the increase on the tax bill for the average residential home valued at $150,000 (taxed at $91,000 with the Homestead Exemption) will be $174, according to Finance Director Thomas Bruce.
The Commission amended the resolution to set the city's commercial tax rate at 27 percent of the city's total tax levy, with the balance, 73 percent, on residential property.
The Commission's next meeting will be Monday, 10 a.m. at City Hall, third floor.