Mayor tells council tax rates will go up significantly, but no one knows exactly how high

By RUSS OLIVO

WOONSOCKET — Mayor Susan D. Menard last night unveiled a “work in progress” city budget that calls for raising about $2 million more in local revenue, mostly to compensate for anticipated cuts in state aid.

Seated with members of the City Council in a City Hall conference room, Menard said it is still too soon to project tax rates because the School Committee hasn’t adopted a budget, nor has the city embraced a plan for eliminating a $3.7 million School Department deficit.
But the mayor and her aides did offer some baseline data as a launching pad for discussion. One of the first points they made was that revaluation has dramatically shifted property values, and even if no additional revenue were needed next year, the current residential property tax rate would probably look more like $20.20 than what it is — $13.23.
Thus, Menard said, if all the city had to raise was an extra $2 million, tax rates would rise about $1.08. The bottom line, she said, is that it will take roughly 54 cents more per thousand dollars for every additional $1 million in revenue the city needs to raise next year — a figure that is still in flux.
“It’s a loss of revenues more than added expenses that’s driving the increase,” said Menard. “Our operating budget for practically every department will be less than it is during the current year. We’re expecting a cut of $3.2 million in revenue from the state. We just hope that’s all they’re going to chop from us.”
While next year’s tax rates are still a moving target, this much is clear: The city intends to overhaul the homestead exemption structure to compensate for the shifts in property values brought on by revaluation.
Planning Director Joel Mathews said the exemption for single-family homes will likely increase from 25 to 40 percent. For duplexes, it will decrease from 10 percent to 8 percent. And for three-families, a class of property that saw values plummet most, the existing 8 percent exemption will be eliminated altogether.
The adjustments are needed, in part, because commercial property values remained relatively stable, Mathews said. Without the changes, some residential property owners would end up shouldering an unfair share of the tax burden.
But Mathews said another factor is helping shape next year’s tax picture as well - a new law that prohibits any single class of property — homes, personal property or commercial real estate — from being taxed at a rate greater than 50 percent of the lowest rate. The city’s commercial tax rate is now some 200 percent higher than the residential rate.
Responding to the council’s criticism of excessive overtime spending in the administration, Menard said her draft budget envisions wiping out more than a dozen popular recreational and cultural programs, from “Movies in the Park” to the beautification of street corners and public squares with flowers and shrubs. It calls for closing down the ice skating facility in River Island Park, the elimination of grants for celebrations to mark Victory Day, Armistice Day, Independence Day and Memorial Day. And it abolishes the Summer Youth Program and  band concerts.
Menard said the possible cuts would save about $400,000,  about half of it in the form of overtime pay for employees called in to work off-hours to staff the programs. She  told councilors that whether any of the programs are restored is “a decision we’ll have to make as a group.”
While the budget does not yet account for a plan to eliminate the School Department deficit, Menard offered the council several options, including amortizing the shortfall over five years, at a cost of about $740,000 per year. She said the council could also revisit the idea of passing a supplemental tax bill to cover the loss in the current fiscal year, or wiping it out in one fell swoop with a hefty tax hike next year.
The School Committee has already filed a Caruolo lawsuit in Superior Court that would, if successful, force the city to make the payment in some as-yet undetermined fashion. No hearings have yet been scheduled in the suit, which was filed about two weeks ago.
As for a looming $1.7 million deficit on the city side of government, Menard’s spending package does envision a plan for that: Amortize the shortfall over four years. The draft budget includes $422,000 next year to start the process, yet Menard left the door open to other ideas, including paying it off in one lump sum.
“Obviously the budget before you is still a work in progress,” the mayor said. “There’s a lot here for you to look at and a lot for you to digest.”
With the state facing an estimated budget shortfall of $600 million, Menard said it appears there will be continued pressure on local taxpayers to pick up more of the slack. The city absorbed a mid-year cut of some $3.2 million this fiscal year by obtaining concessions on wages and benefits from city workers, personnel cuts and the elimination of programs.
Some 28 full-time positions were cut in the current fiscal year, and those will remain vacant next year, saving the city a projected $1.1 million in payroll costs, Menard said. In addition, the city forecasts taking in over $500,000 in increased or new health-care co-pays from city workers.
School officials say it could be next week before they finalize a budget, paving the way for the city to formally adopt a complete spending package. Meanwhile, the council expects to hold another budget workshop next week. It’s still unclear when the city will formally hand off the budget to the council for fine-tuning, but the fiscal year begins on July 1, and the City Charter requires a public hearing on the budget before it is approved.