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Posted on: May 7, 2020

Local Leaders: RI State Budget Must Safeguard Vital Services, Protect Property Taxpayers

COVID-19

FOR IMMEDIATE RELEASE
May 7, 2020
Contact: Lauren Greene, 401-965-3972

Local Leaders: RI State Budget Must Safeguard Vital Services, Protect Property Taxpayers

Budget Should Support Communities on the Front-Lines of COVID-19

PROVIDENCE, R.I. – The Rhode Island League of Cities and Towns announced the priorities of local communities for the State’s FY2021 budget. Municipal leaders have been closely following the General Assembly’s revenue estimating conference, which will conclude later this week. Municipalities are on the front lines of the COVID-19 response effort, and their taxpayers are experiencing great financial hardship. A continued commitment to local and education aid will allow all cities and towns to provide quality services, control costs and avoid any additional burdens on property taxpayers.

“Rhode Island is facing a very difficult budget year exacerbated even further by COVID-19,” said Central Falls Mayor and League President James Diossa. “Cities and towns have been hit equally as hard by lost revenues and escalating costs to fight this pandemic. The League looks forward to working with the Legislature and Administration to ensure our taxpayers are protected.”

During the Great Recession, the State cut local and education aid by over $220 million, leading to property tax increases, layoffs and service cuts in cities and towns. Property taxes make up approximately two-thirds of municipal revenues that provide vital services to residents. Every state dollar to cities and towns is effectively a dollar in property tax relief.

“As Governor Raimondo and the state legislature grapple with the realities of significantly declining state revenues created by pandemic-driven changes, we cannot afford to view those effects at just a state government level,” said East Greenwich Town Manager Andrew Nota. “What municipal leaders and local taxpayers know all too well is that when state revenues decline, the effects are most acutely felt in the state’s 39 cities and towns and directly by Rhode Island residents.”

Cities, towns and schools have faced new costs from the pandemic response, including personal protective equipment, emergency services, enforcing statewide orders, information technology for education and essential service delivery in town halls and schools, and higher personnel costs as staffs are stretched thin. While some of those costs may be covered partially by the Federal Emergency Management Agency in their disaster response effort, this new type of disaster has impacts broader than FEMA has ever encountered. In addition,

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municipalities expect to see lost revenues from the hotel tax, meals and beverage tax, license and permit fees and other revenue sources.

“Cranston is one of many municipalities that has already started making cuts as we prepare our budgets for next year,” said Cranston Mayor Allan Fung. “If the state short changes cities and towns in terms of educational and municipal aid, we will be forced to make drastic cuts to our services for seniors, cut vital educational programs for our children in our schools, layoff or furlough more staff, and reduce our ability for our first responders to respond to these heightened COVID-19 demands. The state needs to focus on the priorities of our local residents so that our kids, our citizens who need job retraining, as well as our vulnerable seniors and disabled get the services they deserve.”

The League and its members have worked closely with Rhode Island’s Congressional delegation to demonstrate the need for additional Federal stimulus funds for state and local governments, but those efforts cannot be guaranteed at this time, especially to recoup lost revenues from the economic downturn and business closures. Similar to the State, cities and towns are experiencing lost revenues and increased pandemic costs.

“COVID-19 is having a profound effect on all aspects of our economy. As we enter tourism season in the Ocean State, the loss of revenues and jobs will soon shift to loss of tax revenues and cash flow issues at the municipal level,” said Mark S. Stankiewicz, Charlestown Town Administrator. “Cuts at the local level will only exacerbate the issue as businesses and residents look to cities and towns for assistance and relief.”

Municipal Aid

The League of Cities and Towns requests the following municipal budget commitments:

  • Maintain $12.4 million in funding for Distressed Communities. This program assists communities that had high property tax burdens relative to the wealth of their taxpayers, including Central Falls, Cranston, North Providence, Pawtucket, Providence, West Warwick and Woonsocket. Not only do these communities have many residents below the poverty line, they also have among the highest rates of COVID-19.

  • Level-fund the Payment In-Lieu of Taxes (PILOT) at $46.1 million. With 15 communities hosting tax-free entities like State facilities and non-profit hospitals and colleges, PILOT bridges the gap between lost tax revenues and the necessary local services, like police and fire, that are provided to those institutions.

  • The motor vehicle tax phase-out has become an important tool to lessen the burden on taxpayers, with the State reimbursing municipalities for foregone revenue. If the General Assembly pauses or makes any changes to the phase out, the decision

should be made as early as possible so municipalities can anticipate tax bills and cash flow.

Education Aid

In 2010, the General Assembly committed to an equitable funding formula for public education. Municipalities and the State have since stepped up to improve educational outcomes for our students and to benefit the future of Rhode Island and our workforce. To retreat from this commitment would not be fair to our students and would endanger our future economic growth. Rhode Island must stay the course on the education funding formula regardless of the roadblocks. For that reason, the League urges the General Assembly to fully fund the tenth year of the education funding formula for FY2021 – an increase of more than $35 million over the current fiscal year.

Nearly 30 years ago, Massachusetts committed to increased education funding in concert with high standards and accountability. Massachusetts’ consistent education agenda and strong fiscal support for schools, even during the Great Recession, has been an overwhelming success. Rhode Island’s schools and students would benefit from the same consistency and support that Massachusetts showed. Schools serve as a central hub for a number of services for students and their families. Those needs are only going to increase in the aftermath of COVID-19. The League urges a strong state commitment to our schools.

Founded in 1968, the Rhode Island League of Cities and Towns is a municipal membership organization that serves as the unified voice of local government in Rhode Island.

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