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Budget talks focus on property tax values

May 21, 2012

NARRAGANSETT—The Town Council held a work session Monday evening to further discuss the upcoming FY 2012-13 town budget. The town discussed a number of concerns and issues regarding decision-making on the proposed budget which was presented at the April 23 Town Council meeting, namely the rise in property tax values and the need for the town to maintain its current operating and capital fund levels where possible.

“I am very pleased, and Finance Director [Donald Goodrich], the department heads and myself did a super job of sharpening our pencils,” said Town Manager Grady Miller at the April 23 meeting. “We are submitting not only a balanced budget, but one which provides for the community’s needs.”

The proposed budget totals $50,763,907 for operating and capital expenses, including a reduction of $647,744 from Miller’s originally submitted budget proposal. Annual debt obligations, both from general obligations bonds issued by the town and $21.5 million in school bonds approved by voters in 2009, are estimated at $2,219,278 for FY 2012-13. The largest revenues supporting the proposed budget will be provided from current property tax levies, which total $45,120,214 of the total proposed budget.

The most pressing issue for the Town Council is to agree upon a tax collection rate. Goodrich estimated that the town needs to create $44,519,214 in property tax revenue for the upcoming fiscal year, which would represent a tax rate of 98.5 percent. Last year, the tax rate was 97.845 percent, but with rising property values, and thus more tax dollars coming into town, Council members discussed whether or not to keep last year’s tax rate or raise it.

 Goodrich also presented comparable figures for residential and commercial property values, demonstrating significant variability in the property reevaluations which took place this past year. Some owners have seen their residential properties go down or slightly up, but a number of businesses will endure high taxes because of the reevaluation. The Rite Aid plaza in the North End, for example, will pay $15,321.46 more in taxes than in FY 2011-12, a change of 82.46 percent.

“The key is that if anyone’s assessed property value  went down by seven percent, they will see no decrease or increase in taxes. ” said Goodrich. “Anything below seven percent, there will be a reduction in taxes, and the less a property value went down, there will be an increase in taxes. The tax value on one Ocean Road property, for example, went up 30 percent, so they will pay more taxes.”

The Town Council debated the merits behind adjusting the tax collection rate, expressing their concern on the one hand the need to keep tax rates manageable for residents and, on the other, to resist town service reductions if  current tax revenues are maintained.

 “The discussion was, should be pursuing is with this 98.5 collection rate, which would give us a greater surplus, or should we be conservative because we are hearing about a delaying effort of potential foreclosures that have yet to reach South County?” said Town Council President Glenna Hagopian. “Do we preserve a low mill rate, which would require [the town] to cut services? That decision depends on how you cut your service rates.”

Members also discussed the financial burden placed on residents as the economy remains stagnant and numerous state and local fees are rising. Town Water fees, for example, will be increasing 41 percent from last fiscal year, and Governor Lincoln Chafee has enacted taxes on meals and beverages, as well as lodging activities, which would cut into the revenues for small businesses in South County that depend on tourism and visitor dollars.

“We know sewer rates, state fees, and everything is going up, so how much more can people take?” said Town Councilman Christopher Wilkens. “The first priority is public safety, bar none.” 

Harris Chorney of the Finance Committee was on hand Monday evening to provide his input.

 “The Finance Committee believes that, given the environment we are in today, there is a lot of uncertainty out there and we think it is best to be a little more conservative on the tax side and go with what has been budgeted in the past,” said Chorney. “That would mean you would have to reduce the budget by around $400,000.”

“There are places where [reductions] could be done, and we really need to have the critical things, but how the town is run is something fundamental that needs to be looked at,” he added. “That gets into things like privatization. We haven’t had discussion on these structural [questions], but things like OPEB issues will continue to grow. Those things should be put on the table to see how they impact the town going forward, because it is not going to get any better with pensions and OPEB funding.”

 The Town Council ultimately agreed upon 98 percent as a reasonable figure.

"The residential mill rate is 9.6 percent based on the changes [the Town Council] made in lowering the collection rate and cutting the $400,000," said Goodrich. "That will probably be the mill rate, but I have to check with the Tax Assessor, who said he didn't think the Grand List figure would change. The commercial/industrial mill rate would be 14.4 percent."

Council members also discussed expenditures that will need to be reduced in order to find the $400,000 to balance budget figures.

 "The reduction is a transfer from the Major Maintenance Fund, so the Council has to find $400,000 worth of projects that will not be funded," said Goodrich. "We have to go to the department heads and figure what will not be done, and that automatically reduces the need for increased property taxes."

The Council tentatively agreed to cut the Economic Development Coordinator position, a post which is currently filled by Maureen Crowley.

“The coordinator position is the nerve-control center of everything the EDC does, so basically we will fire her after the America’s Cup regatta event is done,” said Councilman Wilkens. “It is a shame and will be so discouraging for the Committee. I don’t know what their reaction will be.”

 “It is disappointing, and the people on the EDC will be disgusted,” said Councilwoman Susan Cicilline-Buonanno.

 On May 21, the Town Council will hold another public hearing on the budget and the budget ordinance first reading. A second reading will occur on June 4.

Southern Rhode Island Newspapers
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