Council approves budget with maximum tax increase
Schools likely to pursue lawsuit
This article has been updated to correct tax figures for commercial property tax rates, which were incorrectly reported in Tuesday's print edition.
Identifying the condition of city streets as a top priority and an issue that will resonate with the electorate, the City Council approved Saturday morning a $316.3 million budget, an increase of $5.6 million from the “maintenance budget” former Mayor Scott Avedisian sent the council.
The Avedisian budget called for a zero increase in the tax rates.
The approved budget, however, calls for an increase in the residential property tax from $20.24 per $1,000 of property valuation to $20.80 and an increase in the commercial and industrial real estate tax from $30.36 per $1,000 in valuation to $31.19. Tangible personal property tax goes from $40.48 to $41.59
If approved by Mayor Joseph Solomon, the increase in taxes would mean a tax of $6,240 on a residential property valued at $300,000, an increase of $158 from the current bill.
The rates are the maximum levy as set by state law.
“I don't know how we can expect to balance budgets when we're faced with the situation we were faced with,” said City Council President Steve Merolla at Saturday’s meeting. “I can guarantee that no one in this room is going to be happy with what this council has to do.”
Without objection, but with discussion outlining their reasoning, the council increased city funding of schools by $1.5 million – $6.6 million short of what the School Committee said is needed to operate. Other additions to the Avedisian spending plan include $85,000 in the contingency fund, $20,000 for rodent control, $10,000for human service salaries, $35,000 for Parks and Recreation season salaries and $50,000 for building inspector salaries.
The biggest boost – $4 million – was in the asphalt account in the Department of Public Works for road repairs and paving. Avedisian had budgeted $1 million for roads. Thus with the council’s action and expected approval by the mayor, $5 million will become available for roadwork.
“This is one of the rare line items that goes right back to the people,” Merolla said of the increase. “This is something that is desperately needed.”
“Probably the loudest outcry that we've heard in budget hearings from the community is the conditions of the roads,” said Ward 5 Councilman and finance committee chair Ed Ladouceur. “This is an investment that is certainly long overdue and we need to do it. We need to take care of these roads.”
As approved by the council, the budget provides funding for raises for municipal employees and police as defined in agreements negotiated by Avedisian. With no agreement with the firefighters at the time the budget was drafted and no negotiations since Avedisian’s departure in May, the budget as approved by the council does not include any increases in salaries for firefighters.
The council did not revise Avedisian’s fund balance draw down of $3.8 million.
In a statement released Monday, Mayor Joseph Solomon, who has served on the City Council for the past 18 years, identified this budget process “as among the most difficult we have seen in recent years.” He said Avedisian’s budget posed “significant challenges for the City Council as they worked to find a balance between meeting the needs of the schools and municipal departments while keeping the tax rate reasonable.”
Solomon said Avedisian’s “maintenance budget” failed to adequately fund line items to address certain issues.
“The City Council’s decision to increase certain line items, including an additional $1.5 million in school funding, sent a clear signal that they are committed to working collaboratively to address the concerns of our residents. Their allocation of an additional $4 million for repaving our deteriorated roads and increased funding to address minimum housing issues and to improve our parks, beaches and playgrounds, for example, will allow us to take significant steps to better the quality of life in our community, improve our neighborhoods, and enhance economic development and tourism in Warwick,” he said in a statement.
“I compare the problem to a ship that has run aground,” summarized Ladouceur. “None of us, from the new mayor Solomon to my colleagues on the city council, none of us were the captains on that ship. The ship ran aground and we're the cleanup crew. We're the ones who were called on to clean up the mess.”
Schools get fraction of $8 million request
In approving the FY19 budget on Saturday, the City Council agreed unanimously through an amendment to allot the Warwick School Department only $1.5 million of its $8.1 million ask. Former Mayor Scott Avedisian had put forward a budget that level funded the schools.
Ward 2 Councilman Jeremy Rix called the school department’s request for $8.1 million, which would represent a 6.56 percent increase from last year’s allotment from the city, “disingenuous” and “absurd,” while explaining his support for the $1.5 million allotment.
Rix argued that closing Wickes and Randall Elementary Schools, and the re-purposing of John Brown Francis as a Pre-K facility, should have netted the schools more in savings than the $4.15 million as presented by school finance director Anthony Ferrucci last week during budget hearings. He argued that Warwick also receives more in state aid on average per pupil than the state average, with Warwick receiving about $18,500 per student as opposed to around $16,500 on average for the state.
“We are contributed more than enough money to ensure students have an excellent education,” Rix said. “We urge the school committee to take that money and spend it wisely so that our students have the best possible education.”
Merolla agreed with Rix and said that, by dividing the school’s budget by the total number of schools, the savings from closing multiple schools should be closer to $9 million than $4 million. He said that the schools already received $3 million for salary increases last year after the teachers settled their contract and that this additional $1.5 million should help cover rising costs, especially due to the declining student population since 2010.
“A 6.56 percent increase...is inherently unreasonable,” Merolla said on Saturday. “I hope that this is sufficient. I believe that it is sufficient.”
“If you own several houses and you cut back on those houses that you owned, you would think that your expenses would go down and not up,” Merolla added on Monday. “I'm not saying the school department’s job is easy or the school committee’s job is easy, but neither is ours. We're trying to make determinations on what's reasonable based on the facts and circumstances.”
Superintendent Philip Thornton called the decision “truly disappointing” and said that the school department and school committee would be making adjustments to the budget between now, their meeting on June 12 and their July meeting. However, he was not optimistic that the problem could be solved by simply re-evaluating the books.
“In all honesty we do not have the ability to cut $6.5 million from the operations we have right now for next year,” he said.
Ferrucci agreed with this notion. The argument from the school department is that costs including salary increases, step increases, pension liabilities and out of district costs, combined with declining contributions from the state and the continuing obligation to pay the principal and interest on debt accrued from a 2006 bond to make repairs to Warwick Veterans Middle School has driven costs up despite consolidation of schools and declining enrollment.
“I don’t know where to turn,” he said, adding that he could hypothetically lay off all 72 members of the staff who received layoff notices (which Thornton said was not in their plans), as well as all the school’s administrators and it would still not amount to the money needed to balance their budget.
Ferrucci said that, once again, the school’s ability to maintain buildings would be impacted by the lack of funding. The schools had budgeted for $1 million to go towards a few key projects, including PA systems at both high schools that need worked on or replaced entirely. The money would also be reimbursed near 40 percent by the state after 2020, a deal Ferrucci said would be irresponsible not to pursue.
“We keep getting chastised for not properly maintaining the buildings,” Ferrucci said. “That is one of the biggest communications I have gotten from council, is how horrified they are over how ill maintained the school’s buildings are.”
Ferrucci said that the council’s suggestion that there were more savings to be had by consolidating the elementary schools was inaccurate, as they failed to factor in that teachers would be relocated and the students still had to be educated and enrolled elsewhere.
“I don't understand how City Council couldn't grasp the fact that we still have children to educate, and the only savings we have are utilities, a principal, a couple custodians and that's it,” Ferrucci said on Monday.
Thornton and Ferrucci confirmed that the school committee would now be forced to discuss whether or not to award a contract to an outside auditing company to perform an audit of their finances as a step towards filing a lawsuit against the city through what is known as a Caruolo Action, which allows school departments to sue municipalities if they believe they are not given sufficient funding to provide educational standards on par with state expectations.
Merolla said that the city would be prepared to argue its case in the event that the school department went forward with a lawsuit.
“If we get sued, I think we've more than maintained maintenance of effort, and as far as we're concerned we'll defend ourselves in court if that's what it takes,” he said during Saturday’s meeting.
“I think that's a tough argument for them to make that we're not doing our absolute best to help them out,” Merolla added on Monday. “We all care. We all spend a lot of time and effort analyzing the numbers. We all came up with numbers we thought were fair and reasonable.”