With the General Assembly taking up the state’s FY2021 budget, the Rhode Island League of Cities and Towns announced its priorities for local communities, requesting a continued commitment to local and education aid.
While Gov. Gina Raimondo introduced the state’s budget in January, a great deal has changed regarding revenue estimation and the availability of aid for local municipalities. The budget as presented in January totaled $10.2 billion, and included, in part, $12.4 million in funding for distressed communities and a $35 million increase in state aid to education, among other aspects the League of Cities and Towns considered priorities for communities.
However, due to an estimated loss in revenue caused by the COVID-19 pandemic, there is uncertainty surrounding the state’s budget, and how any modifications to local and education aid would affect municipalities.
“Municipalities are on the front lines of the COVID-19 response effort, and their taxpayers are experiencing great financial hardship,” the league said in a statement. “A continued commitment to local and education aid will allow all cities and towns to provide quality services, control costs and avoid any additional burdens on property taxpayers.”
James Diossa, Central Falls Mayor and League President, said that what was already a difficult budget year has been “exacerbated even further by COVID-19.”
“Cities and towns have been hit equally as hard by lost revenues and escalating costs to fight this pandemic,” Diossa said. “The League looks forward to working with the legislature and administration to ensure our taxpayers are protected.”
The league also pointed out that, during the Great Recession that began in 2007, the state cut local and education aid by over $220 million, leading to property tax increases, layoffs and service cuts in cities and towns. Property taxes make up approximately two-thirds of municipal revenues that provide services to residents, and “every state dollar to cities and towns is effectively a dollar in property tax relief,” according to a statement released by the league.
Similar to the state, towns and cities are also facing an estimated loss in revenue and increased pandemic costs. With these ramifications considered, the League of Cities and Towns requested several municipal budget commitments, all surrounding local and education aid.
Local officials from North Kingstown, East Greenwich and Charlestown and others–all members of the League of Cities and Towns–also spoke in favor of the priorities.
The league specifically requested that the state maintain the $12.4 million in funding for distressed communities, which would go toward assisting municipalities that had high property tax burdens relative to the wealth of their taxpayers. These communities include Central Falls, Cranston, West Warwick, Providence, and others.
Furthermore, the league requested that the Payment In-Lieu of Taxes (PILOT) be level-funded at $46.1 million. PILOT funding is used to help communities cover lost revenue from hosting tax-free entities like state facilities and non-profit hospitals and colleges.
The league also requested that, if the General Assembly pauses or makes any changes to the motor vehicle tax phase-out, the decision should be made as early as possible so municipalities can anticipate tax bills and cash flow. The motor vehicle tax phase-out began in 2017, with vehicles 15 years or older no longer being taxed.
Finally, the league urged the General Assembly to fully fund the education formula as it was outlined in January, which would see an overall increase of $35 million over the current fiscal year.
In total, the state had projected over $1 billion in funding for education aid for cities and towns, though that number could change during the upcoming budget deliberations. .
In 2010, the General Assembly committed to an equitable funding formula for public education.
“Municipalities and the state have since stepped up to improve educational outcomes for our students and to benefit the future of Rhode Island and our workforce,” the league said. “To retreat from this commitment would not be fair to our students and would endanger our future economic growth. Rhode Island must stay the course on the education funding formula regardless of the roadblocks.”
North Kingstown Town Manager Ralph Mollis, who serves on the executive board of the League of Cities and Towns, said he was in agreement with the league’s priorities.
“Most importantly, I agree with the R.I. League, who is considered the voice of cities and towns, to be proactive in ensuring that the challenges faced by cities and towns are on the forefront as the General Assembly reconvenes and tackles the Fiscal Year 2021 Budget,” Mollis said.
Mollis added that the motor vehicle phaseout program and state aid to education were the biggest priorities for North Kingstown.
“Having the General Assembly make a quick decision on the motor vehicle phase-out program and ensuring that cities and towns receive the education aid that is insured within the state formula, and which North Kingstown based its FY21 Budget on, is of the utmost importance,” he said.
Like all Rhode Islanders, Mollis said, North Kingstown residents “deserve the motor vehicle tax phaseout that was promised to them,” and delaying the decision will hold up the process of sending out tax bills. And just as important, “any changes to the State Aid to Education will have a dramatic effect on the North Kingstown School Department budget.”
And other local officials, like East Greenwich Town Manager Andrew Nota and Charlestown Town Administrator Mark Stankiewicz, said that local municipalities have to be considered while the General Assembly deliberates the state’s FY2021 budget.
“As Governor Raimondo and the state legislature grapple with the realities of significantly declining state revenues created by pandemic-driven changes, we cannot afford to view those effects at just a state government level,” Nota said. “What municipal leaders and local taxpayers know all too well is that when state revenues decline, the effects are most acutely felt in the state’s 39 cities and towns and directly by Rhode Island residents.”
Stankiewicz also pointed out that “COVID-19 is having a profound effect on all aspects of our economy.”
“As we enter tourism season in the Ocean State, the loss of revenues and jobs will soon shift to loss of tax revenues and cash flow issues at the municipal level,” Stankiewicz said.“Cuts at the local level will only exacerbate the issue as businesses and residents look to cities and towns for assistance and relief.”
The state budget process is expected to begin this week with a meeting of the House Finance Committee.