More budget reminders with the latest Carcieri proposal as reported by the Times.

Governor plans huge aid cuts

on 12-15-2009 02:00     By JIM BARON PROVIDENCE — Residents of the state’s 39 cities and towns, and its 36 school districts, should expect to see either property tax increases or a sharp reduction of municipal services as Gov. Donald Carcieri is proposing to lop about $125 million in state aid in the middle of the fiscal year as part of his plan to plug a $220 million budget hole. Also taking a hit are the state employees, school teachers, State Police and judges who would lose the cost of living allowance (COLA) in the pensions they plan to receive upon retirement, a move that would save the state about $25 million in the current year. The governor delivered his revised budget plan to the House of Representatives Monday and the House Finance Committee will hold its first hearing on the document this afternoon. Future hearings will be held each day for the rest of this week and Monday and Tuesday of next week. The automobile excise tax, which has survived two separate legislative attempts to phase it out, would be back under Carcieri’s plan. The governor had already proposed withholding the fourth quarter reimbursement of the automobile excise tax from cities and towns, with an estimated savings of about $32.5 million. He now wants to withhold the third quarter reimbursement as well, for a total savings to the state of $65 million. Budget Director Rosemary Booth Gallogly said the plan is to eliminate the car tax reimbursement entirely in the 2011 budget, which would give the state about $135 million a year to spend elsewhere. That means cities and towns would once again be sending tax bills to owners of automobiles valued at $6,000 or less. Residents who had been receiving tax bill for more expensive vehicles with the first $6,000 of value exempted will now have to pay a tax on the total value of the car, unless the municipality can do without the state reimbursement, an unlikely scenario in most, if not all communities. The communities could also send tax bills to vehicle owners for the last two quarters of the current budget year, running from January 1 to June 30. If the tax would not increase the total hike of the tax levy by more than the state cap of 4.5 percent, the tax could be imposed by a simple majority vote of the city or town council. If the hike would make the municipality exceed the cap, a four-fifths majority of the council would be required. Carcieri also proposes a 3 percent across-the-board cut in state aid to each of the state’s school districts, for an estimated savings of $20.5. If the General Assembly goes along with the plan to eliminate the cost of living from pensions, it would save the cities and towns $18.5 million, but the state is going to “scoop” that, too. Gallogly said that because the school districts are not going to have to spend that $18.5 million, the administration doesn’t consider it a cut to take it away. Total school cuts, which do include that $18.5 million, will affect local communities as follows: Pawtucket will lose $3.3 million; Woonsocket, $2.3 million; Central Falls (100 percent state funded), $2 million; Cumberland, $952,000; Lincoln, $725,000; Davies, $07,000; North Smithfield, $377,000; Burrillville, $749,000; Glocester, $189,000, and Foster-Glocester, $360,000. No specific figures were available for how much each community would lose from the withholding of the car tax reimbursement. Administration Director Gary Sasse acknowledged that “there is no doubt this will create challenges for localities,” but both he and Carcieri spokeswoman Amy Kempe denied that the cuts will require property tax increases in the cities and towns. Sasse said the municipalities can “take steps to restrain costs.” He added that it is “not necessarily” an increase in a Rhode Islander’s tax burden because “state government held the line on taxes by making tough choices” and “there is room at the local level to make the same tough choices. While the governor’s proposed budget allows a process for cities and towns to levy a supplemental tax, Sasse said that should be considered “a last resort.” Among the steps communities could take, Sasse said, are “pay reduction days” similar to those bargained with most state employee unions, and renegotiate labor contracts to realize other savings, including requiring workers to co-pay at least 25 percent of their health insurance premiums. The revised budget also includes several legislative articles, most of which were included in his original budget proposal this year but subsequently rejected by the General Assembly. These include: --- Suspending the so-called “Caruolo Act,” which allows a school committee to sue its city or towns if they believe they were inadequately funded, in any year when there is a reduction in state aid. --- Requiring city and town councils to approve teacher contracts bargained by school committees before the contract can be ratified. --- Eliminating minimum manning provisions from police and firefighters contracts. --- Along with eliminating pension COLAs, changing the rules for a disability pension to include a smaller payout for those not totally disabled from taking other employment, and to establish a minimum age at which a retiree may actually receive pension benefits. --- Require a minimum 25 percent co-payment for health insurance premiums by all municipal employees.

Every city and town is in the same bad situation. I don't see how this means artists will be leaving the city. Even Ms. Andelloux is being relentless in her efforts to set up shop here, despite the city's best efforts to drive new business away.

The Doggie Day Care owner had perserverance and got a 50 dog limit ok from the council and will open next year in an Esten St Mill, so maybe we could say the city will be going to the dogs.....as part of an economic renewal.

Vacant shops could have songs playing like....The Doggie in the Window"

Looks like Pawtucket Residents will not only get tagged for trash but tagged for buying new cars to replace clunkers too. Will it be legal to have a Car supplemental tax? Why discriminate for the $6000 plus car owners?

Car owners may foot the bill for city's new aid cut

PAWTUCKET - Merry Christmas, car owners.

City officials indicated this week that Pawtucket's 56,000 car and truck owners may be forced to make up the $5 million shortfall created if Gov. Donald Carcieri's plan to withhold the year's second-half car tax payments is approved.

Each resident with a vehicle valued at $6,000 or more could be obligated to contribute a one-time additional supplemental fee of $160, according to early estimates, with descending payments for cars worth less.

The new fee would be in addition to any excise taxes residents are already paying.

That means that a resident who was paying no taxes on a car worth $3,000, perhaps someone who presumably can least afford another tax increase, could now be asked to pay an estimated $75 based on a half year at $53.30 per $1,000 of assessed value. A disproportionate number of Pawtucket's residents own cars that are worth less than $3,000, according to the city's finance office.

Local officials say they are open to all ideas when it comes to dealing with Carcieri's "devastating" supplemental budget proposal revealed last week, but will not rule out collecting vehicle excise taxes themselves.

"The finance director is putting together some numbers and we're going to look at it," Pawtucket Mayor James Doyle told The Valley Breeze. "It's something we really haven't dug into yet."

(See Doyle's letter to the editor, page 17.)

Doyle said that he and other government officials are in the very preliminary stages of evaluating how to deal with Carcieri's budget-saving ideas, but he said the proposed cuts may not leave them any other choice than to send out supplemental tax bills mid-way through the current fiscal year.

"This is the governor's way of saying, 'No, I'm not going to have any more taxes,' and then he puts his hands on our shoulders and says, 'You do it,'" stated Doyle.

Carcieri has proposed phasing out about $65 million in motor vehicle excise tax reimbursements to municipalities as part of his plan to fill a $220 million shortfall in this year's state budget. An additional $125 million in aid to school districts would also be withheld, pushing Pawtucket's total new 2009-2010 shortfall close to $7 million.

Currently Pawtucket receives more than $10.3 million in car tax reimbursements back from the state each year based on a $53.30 tax rate per $1,000 of value. Until now the state has taken care of cars with values less than $6,000.

It is currently unclear how fast a community like Pawtucket could impose such a tax itself, or whether it would count against a legally mandated cap on this year's municipal tax increase.

Excise tax rates on vehicles were frozen all the way back in 1998, meaning a city like Providence has been getting Rhode Island's highest reimbursement for the past 11 years based on a $76 tax rate. Pawtucket's rate of $53.30 was second highest when the rates were frozen, meaning the city has been receiving the second highest rate of reimbursement in the state during that time, or about $10.4 million a year.

Compare that to a town like Cumberland, where a vehicle tax rate of $19.87 means that the town has not only gone without the money many other cities and towns have been getting for more than a decade, but will also lose the amount they do receive in the last two quarters of the fiscal year.

Cumberland leaders have already indicated their intention to institute a supplemental car tax plan like the one Pawtucket is now considering to fill the resulting deficit.

Earlier in December, Pawtucket Finance Director Ronald Wunschel told The Breeze that Carcieri's threat at the time to withhold just the fourth-quarter car tax reimbursements would mean about "60 cents we don't have in our tax rate" of $17.78 per $1,000 of assessed residential property.

Sixty cents on the tax rate is equivalent to approximately 50 more city jobs cut, according to Wunschel, or about another 14 percent reduction in personnel, he said, making running the city nearly impossible.

Carcieri's latest plan to fill the state's ballooning deficit, which will need approval by the Rhode Island General Assembly, is equivalent to 28 percent of Pawtucket's municipal workforce or an additional $1.20 on a property tax rate that already jumped significantly last year due to both a revaluation of city properties and an end-of-the-year funding increase to schools.

That $5 million figure doesn't even account for an additional $1.8 million proposed to be cut from Pawtucket schools by Carcieri under his new supplemental plan. The city has already been taken to court by the Pawtucket School Department as school officials try to force an additional $4 million in funding for the current year. Combine that $5.8 million total with the $5 million in car tax reimbursements, said Wunschel, and taxpayers could be facing "an $11 million hole."

Pawtucket officials wiped clean the city's reserve funds when they balanced the School Department's budget books last year and they say there are few-to-no new revenue sources on the horizon. Dozens of municipal layoffs have already happened, other positions have gone unfilled, and health care savings have been achieved, among other cuts. Some City Council members have indicated their opposition to any supplemental tax bills in the current year.

In that case, says Doyle, he's looking at instituting more pay decreases for municipal unions in the form of furlough days, but said the measure will most certainly be challenged in court.

City officials will also soon start the process of evaluating what services, or even entire departments, can be cut.

"We'll need to start looking at services, seeing what services we can eliminate," said Wunschel.

A controversial new contract extension reached by the School Committee with the Pawtucket Teachers Alliance in September means no pay increase for the current fiscal year, but grants raises in the next two. Carcieri has called on leaders in municipalities like Pawtucket to force the issue with local education unions to obtain 3 percent pay cuts within the union ranks, but according to a statement from Pawtucket Teachers Alliance President Charleen Christy last week, the union will not participate in further negotiations.

"We reopened our contract, we surrendered our raise for this year, and we have no plans of reopening it whatsoever." she told The Breeze.

"There's your answer Don (Governor Carcieri)," said Doyle, responding to Christy's statement. "I have no control over my education department."

Carcieri has shot back at some of his biggest critics, local leaders like Doyle and Cumberland Mayor Daniel McKee, by asking them to offer him constructive alternative suggestions to address the state's new budget crisis. Carcieri said in a number of interviews last week that he has received no such suggestions.

Doyle took exception to any suggestion on the part of Carcieri that he and other municipal leaders should come up with budget-saving suggestions.

"I don't think it's incumbent on me to offer him suggestions for his budget," said Doyle. "He has to do what he has to do as governor."