September 23, 2012
But What About the Category Five Hurricane That Is Providence's Tax Burden?
When Mayor Angel Taveras took office, he discovered, very much contrary to the assertions of outgoing Mayor David Cicilline, that Providence's finances were a "category five hurricane".
Yesterday, in a Providence Journal article, Providence Finance Director Michael L. Pearis pulled down the hurricane flags.
“We turned a pretty significant thing around,” said Pearis, who was hired in late 2011. “I’m not saying there’s a pie in the sky, or a blue sky, but it’s not a Category Five anymore. It’s maybe a tropical storm, or just rain.”
No doubt, making the cuts and finding additional revenue
[Mayor Taveras] closed five schools, cut his salary, aggressively sought, and won, concessions from workers and negotiated larger voluntary payments from nearly all tax-exempt colleges and hospitals in the city
to stave off municipal bankruptcy was Job One. Mayor Taveras appears to have accomplished that, though the budget is still millions in the red. And certainly, it is a significant accomplishment.
But at the risk of appearing ungrateful or to want too much, is that where the effort ends?
Earlier this year, I pointed out that Providence's residential tax rate is the seventh highest and its commercial tax rate is the second highest in the country. In its own way, that's a category five hurricane. And remember that all of that revenue is in addition to the many millions supplied to the city every year from taxpayers around the state.
Let's review. Providence pretty much maxed out what it takes from its residents and businesses in property taxes. That still wasn't enough. Its spending, especially pension and retiree health care promises, started the city over a cliff. The current administration pulled the city back from the dive. But for Providence taxpayers, it's status quo ante the cliff: they are paying some of the highest taxes in the country.
Are those now frozen in place?
If Mayor Taveras were to say, I've done enough, let the next guy continue the job, that would be semi understandable. The problem with that, of course, is that two years remain on Mayor Taveras' term.
And let us not limit such questions only to Mayor Taveras. With state pension reform, Rhode Island's state budget was also pulled back from a cliff (though, in the absence of local pension reform, some municipalities are poised on the bankruptcy precipice). But assuming this reform stands up to legal challenges, what will our elected officials do to turn around Rhode Island's fifth highest combined state and local tax burden?