As the city enters budget deliberations, Mayor Scott Avedisian isn’t making any promises about holding the line on taxes, although, apart from predictable increases in pension and equipment lease payments, there doesn’t appear to be a major cost driver.
“This looks to be more of the same,” Avedisian said Friday when asked to characterize the budget for the fiscal year starting July 1. He said the city would continue to seek ways to drive down expenses. The administration is in the process of reviewing department “wish lists” as it prepares its budget for the City Council next month.
But there are needs, in the area of equipment replacement, which the mayor feels can’t be put off. He said the flood of 2010, two hurricanes and the blizzard of this winter have taxed Department of Public Works equipment.
As city finance director Ernest Zmyslinski explained, the city is looking at about $2 million in new equipment. He said existing operating funds would be used to acquire the equipment and then the package would be bundled into a 5-year lease with annual payments of about $400,000. While he hasn’t worked out all the numbers, a reduction in long-term debt payments would help offset the lease payments.
Zmyslinski acknowledged that there will be an increase in the Fire Department salary account with the addition of two recruit classes. However, the department should experience a dramatic decline in overtime spending that has been consistently over budget by more than $1 million. Also, as the city received federal funding for many of the new employees, much of the added pay and benefit costs will be covered for the first couple of years.
In years past, School Department funding has played a key role in the tax rate. The administration has level funded schools at $118.6 million for the past two years and Avedisian said Friday that school leaders are looking to bring in a budget calling for level municipal funding again this year. The School Committee is scheduled to commence the review of department budget requests tonight and complete the process by tomorrow.
An element of the school budget to be determined is whether Gorton Junior High School will close this year, as recommended by the school facilities commission. Superintendent Richard D’Agostino said the budget under consideration would assume the school stays open, however, that could change when the School Committee takes the recommendation under review. Closing the school and having those students attend either Aldrich or Winman would save an estimated $1.1 million in operating expenses.
Citing how school enrollment is declining, Zmyslinski sees level funding schools as an increase.
“It’s really like having an increase,” he said.
The city is faced with some givens. Contract agreements with the unions call for no pay increases. Based on the recommendations of its actuaries, the city should increase payments to the Fire/Police 1 pension plan by about $600,000.
The question then becomes if growth in the tax base offsets increases and can hold the current tax rate, as Mayor Allan Fung is proposing to do in Cranston for a second year?
“I never make a promise that I can’t keep,” Avedisian said when asked if this would be a year with no tax hike.
He pointed out the issue of tax rate is complicated by the statistical revaluation as of Dec. 31, 2012 used as the basis for the new tax bill. As residential and commercial values are expected to decline, the tax rate would need to increase to raise the same revenue. Yet, as values don’t evenly change across the city – some neighborhoods hold up better than others – some taxpayers could see an increase in their tax bill while others see a decline.
In effect, Avedisian said, the city would be doing “two budgets at the same time.” For comparison purposes, the budget figures will be applied to last year’s valuations and then applied to the revaluation numbers.
Looking ahead, Zmyslinski pointed out that the School Department must factor in the debt retirement costs of bonding for fire code improvements, and the city, if the decision is to go ahead, must budget to fund the capital costs of converting the former Potowomut School to a fire station. The mayor is recommending approval of a $2 million bond for the station. He sees that being repaid when the city drops its $320,000-a-year contract with the East Greenwich Fire District.
Zmyslinski doesn’t imagine costs relating to a Potowomut fire station would impact the budget until the 2015 fiscal year.
“It’s always a challenge to balance the budget,” Zmyslinski concluded.