Woonsocket Budget Commission May Tax On $4.6M Debt Service in Lieu of Supplemental Tax

The Woonsocket Budget Commission approved a $128.7 million Fiscal 2014 budget Monday afternoon, but not before discussing a $4.6 million alternative to the stalled $2.5 million supplemental tax it depends on.

Should the two stalled supplemental tax bills fail to make it out of this year's legislative session, scheduled to wrap up some time within the next two weeks, they'll have to be re-introduced next year. Sen. Marc Cote (D-Dist 24), and Rep. Lisa Baldelli-Hunt (D-Dist. 49), sponsors of S820 and H6103, have asked that their bills, which have passed their respective chambers, not be sent to the opposite chamber, waiting on negotiation of union concessions needed to make the 5-year-plan work.

Council President and Budget Commission member John Ward asked his fellow Commission members what their plan was if the $2.5 million in the Fiscal 2014 budget never materializes. Ward said he wanted to know whether the plan they were about to vote on was realistic. Although Finance Director Thomas Bruce said a $12 million state aid advance has bought the city time on cash flow, the budget, and tax bills that will be sent out based on it, still rely on the Supplemental Tax bills held on their chambers' respective desks.

As it stood, Ward said, "We're passing a budget based on hope."

Should the supplemental tax bills pass, the timing of the bills, originally scheduled to arrive in May/June for the supplemental (to be due June 30), and then in July for the regular levy, will now arrive roughly simultaneously.

Commission member Peder Schaefer said if the supplemental tax isn't passed this year, the Commission can tax against the $4.6 million debt service payment due on Pension Obligation Bonds this year instead. 

Bruce said the suggestion was a shock, but it could work, pending judgement from Budget Commission Counsel Edward Alves. The General Assembly's 2002 pension obligation bond enabling act is strictly worded to force the city to fund its pension plan, Bruce said. That includes a passage instructing the city to tax to raise the funds if necessary. Bruce said that since the $4.7 million is already funded, the Commission would have to pass a resolution moving the money out of that account. Then, he said, the city would be able to tax to fund it again — in effect compelled by law to do so.

"That's not what I want to happen. It's a loophole that I don't want to use at all," Schaefer said.

Ward suggested another option to replace the $2.5 million in the budget. "What's that as a percentage pay cut for everybody?" he asked.

Mayor Leo Fontaine agreed that while he appreciated legislators' efforts to ensure everyone in the city was contributing to the plan to solve the city's deficits, he thought Schaefer's plan was an option they should consider. If the supplemental bills aren't passed, he said, "There needs to be drastic action taken."

Regarding union negotiations, Fontaine said, "I can say with some optimism there has been a great deal of work that has been done." 

At least two ratification votes for local unions are brewing this week. Afscme Council #94 - Local # 1137 representing the Woonsocket School Department secretaries and custodians, has a ratifcation vote scheduled for June 28, 10 a.m. The Woonsocket Teachers Guild will hold a vote to ratify their agreements with the city on Wednesday, June 26, 3 p.m. 

The Budget Commission will meet Friday, 5 p.m., to discuss this week's developments with union agreements and in the General Assembly.