Mayor Joseph Solomon is scheduled to release today his budget overview for the fiscal year starting July 1 which, if approved as is by the city council, would result in a 3.46 percent overall tax levy increase and, depending on how your property was revalued during the recent revaluation, higher property taxes for most and lower property taxes for others.
The $322,881,043 budget represents a 2.07 percent increase in expenditures balanced by a 2.07 percent in revenue, although a significant portion of that revenue is non-recurring, with $3.5 million to come from the city’s cash reserves and another $2.88 million that is proposed to come via transfers from enterprise funds that are accrued through the city’s water and sewer departments. Increased taxes would bring in an additional $7.5 million.
As explained in a release provided by the mayor’s office, the revaluation raised the net tax base within the city by approximately 14.8 percent over FY19 levels. “To address this, the budget reflects tax rate reductions of almost 10 percent from the current fiscal year.”
What this means is that the revaluation increased the overall taxable value of all property in Warwick by nearly 15 percent, which prompted actual property tax rates to decrease. The residential rate dropped from $20.80 per $1,000 of assessed valuation to $18.73 in the proposal. Commercial and industrial rates dropped from $31.19 per $1,000 to $28.10, and tangible property decreased from $41.59 per $1,000 of value to $37.46.
To further clarify the new rates, if the assessed value of your home went down, so will your property taxes. However, if your home went up in value, the amount you pay in taxes may increase, depending on the amount it increased in value. The proposed amount of aggregate tax increase that residents will collectively face falls below the 4 percent maximum allowable as mandated by state law.
In the release Solomon states that, “the revaluation project confirmed that Warwick continues to be an affordable and desirable place to live.” The release indicates that houses valued in the $200,000 to $350,000 saw higher revaluations due to high demand, while there was less demand for higher-valued homes and commercial and industrial property.
“According to the revaluation firm that performed the analysis, these results are similar to their findings in other Rhode Island Municipalities,” the release states.
Despite reportedly facing cost increases feared to be as high as $12 million in the coming fiscal year, and with no solutions proposed to cover the structural deficit that would be created by the recent arbitration award that instructed the schools to close their current $4 million deficit for this year with WISE pension funds, the mayor’s budget includes a proposed increase of just $508,499 to the school department. Schools asked for a $174 million budget; the mayor is proposing $165.9 million.
The budget proposal also includes a provision to commit to paying the $1.7 million in principal and interest costs related to a 2006 school construction bond, but school administrators and school committee members will likely disagree with the mayor’s assessment put forth in the press release that this will result in $1.7 million-worth of “savings” for the department.
This is because, as school personnel have explained in the past, the schools have already zeroed that principal and interest line from their budget, meaning the $12 million in projected cost increases does not include that $1.7 million as an expense. They argue, therefore, that the shouldering of that burden by the city does not actually translate to money saved by the department, it merely satisfies a known encumbrance.
In flat numbers, the school allocation of $165,900,428 represents a 0.31 percent increase in funding over last year’s budget, which allocated $165,391,929.
Some other noteworthy items in the budget proposal include:
The release states that:
“This budget followed a directive that began shortly after the Mayor took office, when he established a budget reduction line item in every department. This practice, along with hiring only crucial personnel positions, resulted in significant savings to the taxpayer. This austerity position continued in the proposed FY20 budget. Department heads were requested to submit their budget based on the concept of zero-based budgeting along with an ‘austerity budget’ with even greater cuts. The result is a budget reduction of $10,209,534 to arrive at the proposed FY2020 budget.”
Budget hearings will commence at 4 p.m. on Tuesday, May 28 at Warwick City Hall and will continue on Wednesday, May 29. The School Department budget will be considered on May 28.