City Council OKs 13 Percent Tax Hike

The City Council gave their approval Monday night to a plan to raise city taxes by 13 percent this year, a move many city officials believe will save Woonsocket from bankruptcy.
 
The measure passed by six to one, with Roger Jalette casting the sole negative vote. About 150 people attended the meeting in . Prior to the vote, the Council endured a verbal water boarding from irate residents, but proceedings were far less rancorous than some recent public gatherings.

Monday night's action actually asks the state legislature to allow Woonsocket to send out supplemental tax notices, a procedure required by state law. Legislators could act on the measure as early as today. "I expect that in the morning the mayor will ask the city's state representatives and state senators to bring this to the floor immediately," said City Council President John Ward.

The tax vote will allow the city to continue paying employees and vendors through the months and weeks ahead while officials look for ways to plug a projected budget shortfall of $10 million. While it could take weeks or months to collect tax payments, the city will be able to generate immediate revenue by issuing tax anticipation notes.

Jalette said he opposed the measure because he would prefer to see the city declare bankruptcy, and turn over control of financial affairs to a state-appointed receiver. He noted a receiver, whose actions would only require approval from federal judge, could squeeze more concessions from city and school department unions.

"I would like to see a receiver come in and do some of the things elected officials can't do," Jalette said. "If a receiver comes in, property values will probably go down a little more, but so what, they're already near the bottom."

He also took a swipe at the . "One reason I support receivership is that four out of the last five years they've had a deficit," he said. "I don't trust them." 

Issuing a supplemental tax bill won't necessarily save the city from bankruptcy. Appointing a receiver is just one of several options the state has should the city's plan fall flat. The governor could name an overseer, a person who would review city finances and spending and make recommendations only. He could also set up an oversight committee consisting of the mayor, the City Council president, and three state appointees, which would have more authority.

Several city officials told the crowd there's little chance a bankruptcy receiver could avoid raising taxes, and they predicted his hikes would be higher than 13 percent. They also predicted bankruptcy would lead to other negative consequences, such as a drop in property values.

"If we don't solve this problem ourselves, it will be solved for us, and that may not be as beneficial for us as we'd like it to be," said Mayor Leo Fontaine. "If we turn our fate over to a receiver, you could receive a tax bill much larger than this."

"There will be a supplemental tax bill, whether it comes from this vote tonight, or from a receiver," added Council member Albert Brien. "Those communities that have gone into bankruptcy have seen their property values plummet. Bankruptcy is no panacea."

While they approved the tax hike, Council members also voiced reservations.

Ward said he feared a receiver would go too far when cutting benefits or pay to current or former city employees. "In Central Falls retirees have had their benefits slashed, while in Smithfield they have not," he said. "Should they have to suffer because they worked for a poor community? This is creating class warfare."

At the same time, he warned the supplemental tax bill will be a burden as well. "It could be a disaster for some of our elderly and our poor," he said.
 
Council member Daniel Gendron predicted there will still be deep cuts in city and school department budgets. "I view this as one component for getting us out of the situation we're in," he said. "Without the other elements of the total package we'll end in failure."

Council member Christopher Beauchamp said he feared a receiver might shrink the Homestead Exemption, a program that gives homeowners a reduction on their property taxes. He noted the program saves his own family about  $2,000 a year. "If a receiver comes in and says, Mr. Beauchamp, the Homestead Exemption is being cut to 20 percent, then the keys to my house will be in his hands," he said. 

Council member Marc Dubois' comments met with a few derisive snickers. "I will be supporting the supplemental tax bill," he said. "But I will never support another."

In other business, the Council voted to launch an investigation into the city's current fiscal problems, which were caused by two years of unforeseen school department budget shortfalls. The possibility of an inquiry has been controversial subject in Woonsocket in recent weeks. Last week the School Committee considered asking for a State Police probe; the proposal was dropped when three members voted no.

Every Council member voted in favor an investigation, with the exception of Dubois, who abstained. Dubois explained that he could not act on the measure because last year he served as School Committee chairman, and wished to avoid a conflict of interest. He added that while he abstained, he supports the spirit of the measure. "I was disappointed when the School Committee voted not to call in the State Police," he said. "I want my name cleared."

The City Council has subpeona power, and will conduct the investigation by using that authority to call on past and present school department employees to answer questions. School Committee members may be questioned as well. The Council plans to hire a lawyer to assist with the probe, and a stenographer to record the proceedings. The cost is expected to be less than $10,000, and will be paid using money from the Council's legal expenses fund.

Ward, who proposed the measure, said he doubts there will be any criminal charges resulting from the probe. He said he believes the shortfall resulted from state cuts to funds and "inadequate accounting."

"This will be an opportunity to bring everything out in the open and clear up misconceptions," Gendron added. "I don't think anyone believes someone walked away with the $10 million."

"I think this is superfluous, but it's necessary to quiet the suspicion and innuendo," said Brien.

Woonsocket voters will also get a chance to change the city's charter. The City Council gave the nod to putting two questions on the November ballot.

The first question would put an end to the elected School Committee, and replace it with a panel appointed by the mayor. Appointees would be required to attend state-run seminars on education policy. Last year the City Council shot down a plan to put a similar measure on the ballot, but Monday night some members said they'd had second thoughts. Only Dubois voted against the measure.

"If they're not a good committee, then the mayor will take the heat," said Jalette. "And so will the City Council for approving his appointments."

"It's very evident the current committee has no one with a CPA background who could have foreseen the problems we're having now," Beauchamp added.

The second question would give voters the power to remove elected offials from office before they finish their term. Ten percent of city voters would first have to sign a petition to put a recall measure on the ballot. The proposal passed by a unanimous vote.