Politics & Government

Budget Commissioner: Deficit Won't Be Solved This Year

Commission cautions citizens to be ready for a long haul, with a supplemental tax.

 

During Thursday's Budget Commission meeting, Budget Commission member Peder Schaefer told a sparse group of spectators the panel had made progress in figuring out how to fix Woonsocket's projected $15 million cumulative deficit.

Actually fixing it is going to take a little while longer than some might expect, though. "We're not going to get there this year," Schaefer told the audience, which seemed nearly equally spread among citizens and Department of Revenue representatives.

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"That doesn't mean you can't get there over a period of years,' though, Schaefer said, "We're making good progress in knowing what we need to do to get there."

Also, Budget Commissioner and City Council President John Ward said citizens should not expect the supplemental tax coming at the end of their process will necessarily be less than the bill pitched to the General Assembly in April. Nor, he said, is a supplemental tax hike likely to expire, since the city needs to increase its levy to adequately fund the school system going forward.

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Even with additional cuts to the city side of the budget, including negotiations with the fire and police departments to hold staffing at lower levels, an effort to bring all city employees, including police and fire personnel, under one health insurer and concessions on pensions, all currently in the negotiation stage, higher taxes will be needed.

"I just don't want people perceiving us as somehow coming up with a magic bullet that's going to slay this dragon. It's not happening," Ward said.

Also, Ward said, the advanced state aid the city has received is a loan from the state Woonsocket has to pay interest on. 

"It's insignificant," RI Director of Revenue Rosemary Booth Galoogly said about the interest. 

"It's not zero, is my point," Ward said, noting that even $90,000 spent paying the interest could mean jobs the city wouldn' be able to pay someone to do, services city residents will be denied.

"Keep an eye on us, it's going to be an interesting run," Ward said.

Commission member Leo Fontaine asked Galoogly if the recently reported $17 million state surplus would be returned to cities and towns. Galoogly said the state would likely stick with it's already-outlined FY 2013 budget plan.

Schaefer noted the city could also see some relief from the state's Distressed Community Fund. In 2012, Woonsocket received $881,782 from the fund, about 12.5 percent of the $7 million deficit the city faced this current fiscal year.

The city's cumulative deficit, according to City Finance Director Thomas Bruce, comes from a previous $8 million deficit and a roughly $7 million deficit projected for the current year, on the school department's books.

Current plans to cut costs include:

  • Putting all employees under one health insurance plan: $4 million savings OR Health savings plan (a kind of health procedure 401K): $4 million savings.
  • Pension and benefits for retirees concessions: in negotiations (a large, but as-yet undetermined amount)
  • Cost of Living Adjustments for retirees: in negotiations
  • Police and fire department staffing levels: in negotiations

Bruce said the city could also amortize its previous deficits over the course of 5 years, essentially reaching a payment plan agreement with the state. 

Bruce said the city is running out of time to decide what cost savings it can effect and make a case for a new supplemental tax bill. He said they'll need to have a plan in place in October to get it ready to present to the General Assembly in December for the next legislative session.

Commission Chairman Bill Sequino did not attend the meeting, which was led by Schaefer in his absence.


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