House Finance Committee Tables Supplemental Tax Act

The House Finance Committee has tabled the act authorizing a supplemental tax bill after hearing city and state officials speak for it and two citizens opposing the measure.

The act, S2872, would authorize officials to raise as much as $6.6 million for the financially strapped city. Without it, Woonsocket will be out of money by the end of the month. A hearing on the matter aired today during a Capitol TV broadcast.

After the Committee heard from and questioned Woonsocket Mayor Leo Fontaine and Woonsocket City Council President John Ward, the cause for the supplemental tax got support from the state, but testimony from two Woonsocket citizens ended the hearing on a note of opposition.

Susan Greschner, chief of municipal finance for the Department of Revenue, told the Committee the state was in favor of the act. "...the department is supporting the supplemental tax that is before you." 

Dennis E. Hoyle, the state's auditor general, also spoke in favor of the act. "I think probably the most compelling reason is that we've seen in other communities when these deficits aren't addressed on a timely basis, it only gets worse," Hoyle said, "I think the more quickly it can be dealt with the quicker the city can get back on its feet." 

But John McLaughlin, a teacher for 33 years in Woonsocket and a former school committee candidate who said he supports education, wasn't interested in the solution. "I don't have any confidence in my local government," McLaughlin said, particularly after seeing Monday night's School Committee meeting on the school budget. The School Committee, he said, is in total disarray. "They don't even know what they're spending it on." 

Jim Cournoyer, a member of the Woonsocket Taxpayer's Coalition, also spoke against the measure. "I'm here to oppose the legislation and request that you reject it." Cournoyer said, "The plan is to send out the supplemental tax bill and hope for better days, and hope is not a strategy."

Though he said he expects to see a supplemental tax bill eventually, the current plan doesn't call for what he referred to as "shared sacrifice", including concessions from retirees and unions, which he said has yet to materialize. Instead of the supplemental tax bill, he said, the city should move into receivership, hopefully avoiding bankruptcy. A receiver will be able to make the dispasionate decisions that need to be made, he said.

Earlier in the meeting, Fontaine responded to a question from Rep. Laurence W. Ehrhardt (R-North Kingstown), who noted the Committee had only just received the proposal, about whether the receiver process would be permanently put to rest by the supplemental tax.

"I don't know that we can ever say that it's (receivership) completely avoided with any certainty. It certainly stablilizes the situation," Fontaine said. However, working closely with the state and staying in communication with the Department of Revenue as the city works to remain solvent is a good ward against state intervention.

Rep. Daniel Patrick Reilly (R — Middletown, Newport, Portsmouth) was also concerned about the long-term effect of the supplemental tax. "What's driving labor to the table?" he asked. He said without a receiverhip process in place, there's nothing to address major costs to the city's budget such as contracts. Also, he said, a supplemental tax doesn't address unfunded pension liabilities. "So we pay our bills for three months and then the receiver starts, is that it?" Reilly asked.

Woonsocket Finance Director Thomas Bruce said the supplemental tax bill, combined with the newly approved state aid formula, will be sufficient to keep the city out of the red in the future. "As long the financial management element in there (the school department) starts to develop in a prudent manner compared to what we've had in there, that's all we need," Bruce said.

After hearing the last speaker, the House Fiannce Committee voted to table the matter for further study.