Rankled that he learned of cuts in state funding from the news media rather than the governor, and in a quandary as how to make up $8 million in revenue losses to the city and schools, Mayor Scott Avedisian said last week a panel will look at measures to balance the current fiscal budget. He did not rule out raising taxes as a means of closing the gap.

In an effort to avert a $219 million shortfall in the current state budget, Gov. Donald Carcieri has proposed a supplemental budget that would eliminate the last two quarterly reimbursements to cities and towns for the phase-out of the motor vehicle tax and further reduce aid to education. Largely because of its fleets of rental cars, Warwick has the greatest number of registered vehicles in the state. The city would lose $7 million in reimbursements if the legislators approve the governor’s budget as proposed. Schools would see a $1 million cut under the governor’s plan.

“Everyone is being given the assignment to look at what could be saved,” the mayor said of the panel that is scheduled to meet for the first time tomorrow.

He said the group consists of the same people who came together last winter when the governor and legislators chopped $2.8 million in state aid to the city. Among members are Personnel Director Oscar Sheldon, Finance Director Ernest Zmyslinski, acting Public Works Director David Picozzi and City Solicitor Peter Ruggiero.

The mayor has already made a mental checklist of possible reductions in service, but no one thing jumps out as offering a solution. To illustrate the magnitude of savings needed, Avedisian said the city would have to furlough all workers for a total of nine weeks to save $7 million.

Conversely, piecemeal cuts in services don’t produce significant savings. And some consolidations of services between municipalities that the governor says needs to happen to reduce the overall cost of local government could require upfront investments. As an example, Avedisian cites efforts for Warwick to assume dispatch for the East Greenwich Fire District. While East Greenwich will pay Warwick for the service – an agreement is expected after the first of the year – Avedisian said both municipalities would need to invest about $100,000 to make it happen.

As for cutbacks, Avedisian said the city would actually lose revenues if it were to close the skating rinks. Closing McDermott Pool is an option, but the mayor said the net savings “would be very little.” Closing branch libraries would realize about $30,000, he said.

“The four-day work week, we will look at that,” he said. “Taxing is the last option.”

In preparation for tomorrow’s meeting, Zmyslinski has done the numbers.

Of the $116.2 million city budget, $60.6 million remained unspent as of Dec. 23. That amount drops to $50.1 million when principal and interest payments are deducted. Pension contributions account for another $11 million and when federal programs – community development – and economic development that is funded by the hotel tax are taken out, the city is left to come up with $7 million in cuts from $41.2 million.

“It’s an impossible number,” says Zmyslinski. “You can’t lay off enough people once you factor in [the costs] of unemployment.”

Observing that the city reduced budget costs by $1.3 million in the current year, Zmyslinski adds, “There’s no ability to go in and make substantial cuts.”

Zmyslinski finds irony in the fact that the governor is looking to make up shortfalls by reducing reimbursements on the phase-out of motor vehicle taxes. Cities and towns had no option but to participate in the program that froze the tax rate.

“This is the largest state program,” he said, “and he’s partially funding the largest program we have. Talk about state mandates. This is a whopper.”

Avedisian said he wouldn’t consider the sale of city assets, as the governor has proposed doing at the state level. Such assets are the skating rinks, pool and wastewater treatment plant.

“I don’t want to rely on gimmicks,” the mayor said.

Further, he noted, such sales would generate a one-time injection of income that the city would then need to make up the following year. The same can be said for use of city reserves that stands at $5.8 million. Patching gaps in state revenues with reserves leaves the city that much more in the hole in the next budget. At some point the reserves, like a savings account, is depleted.

Avedisian plans to meet with the city’s legislative delegation and the City Council in January. A supplemental city budget would require council approval.

“The wild card is what is the state legislature going to do,” observes Zmyslinski. He’s not alone in questioning how it could shake out.

School business affairs director Leonard Flood said yesterday the governor’s supplemental budget calls for a $2.6 million cut to Warwick schools. Of this the department would make up $1.6 million in reduced pension costs based on Carcieri’s plan to eliminate a 3 percent cost of living pension increase.

“We will do what we have to do to balance the budget,” assured Flood. “It’s going to be very tight. We’re clamoring for $1 million out of nickels and dimes from the operating budget.”

Flood said the department implemented a spending freeze on all but essential purchases on the first of November and that the process of identifying further cuts will start after the first of the new year.

Flood is not optimistic looking ahead. He believes more state supplemental budgets will be forthcoming as revenue projections fall short of forecasts. And he says schools will face added pressure next year from the loss of $1.9 million in federal stimulus funds; a $500,000 reduction in Medicare reimbursements and a contracted 2.5 percent pay increase for teachers amounting to $2.5 million.

As for direction from the governor’s office, Avedisian says there hasn’t been any.

“We don’t get any communication from the governor. I’ve expressed my frustration that there isn’t any dialog,” he said.

Gnawing at him is the manner in which the governor released his supplemental budget. Municipal leaders were to have been briefed on the plan, but that was canceled after highlights of the budget were mistakenly e-mailed to members of the news media.

“We asked her,” Avedisian said of the governor’s press secretary, Amy Kempe, “how we were supposed to know what was coming. There’s no communication, that’s part of the problem.”

Kempe, who takes responsibility for the snafu, finds it difficult to believe municipal leaders couldn’t have anticipated cuts in local funding as part of the overall plan to come up with $219 million in savings.

“The governor has been very open in stating we have to reset the spending on the municipal side,” she said. “I would be hard pressed to say that anyone is surprised.”

Kempe said the governor has sought to offer municipalities relief by lifting mandates requiring expenditures for certain programs, cost sharing, tying into health care contracts and siding with municipalities when challenged by school committees that they haven’t received sufficient municipal funding according to the Caruolo Act.

“If Scott would like a meeting with him [the governor], he would more than like to,” said Kempe.

Avedisian is not alone in feeling the governor has overlooked the predicament faced by municipalities.

Johnston Mayor Joseph Polisena, who faces making up a $3.2 million loss in state revenues, said last Wednesday that the situation “is totally unacceptable.”

He said the governor went along and signed the budget in June knowing that “it had holes in it.” And, he observed, cities and towns planned their budgets anticipating they would receive such funding.

“He’s disingenuous,” Polisena says of Carcieri, “when he says he’s not raising taxes.”

Polisena argues the governor has failed to make cuts in his budget and has left social programs untouched.

Kempe doesn’t see it that way. She said the governor has cut 1,800 state jobs to reduce the state work force of 13,500.

“Everything is being looked at and considered in light of the recession we’re in,” she said.

“We have to reset the spending level,” she added.

Kempe said the governor “welcomes any idea, but so far we’ve heard a lot of political posturing and complaining.” In particular, she said the governor is seeking “constructive ideas that don’t include raising taxes.”

Polisena said municipal leaders plan to get together to discuss options after the first of the year.