By RUSS OLIVO

WOONSOCKET — The new residential tax rate will be $22.36 per thousand, Mayor Susan D. Menard announced Tuesday, a day after the City Council passed a $113.6 million spending package for next fiscal year in which some $2.6 million was slashed from the mayor's original proposal.

Though controversial, the cuts enabled Menard to trim $1.52 from the residential rate she initially thought would be needed to fund the budget. As a result, many homeowners will pay hundreds of dollars less next year than officials were forecasting.
For example, the owner of a single-family home assessed at  $250,000 prior to revaluation would owe about $2,755 in property taxes for the fiscal year that begins next Wednesday.
That's $279 more than the current year, but also $289 less that what officials were predicting before the cuts. The projected bill takes into account the new tax rate (the current rate is  $13.23), a 15 percent dip in the value due to revaluation, plus a 42 percent write-off of the assessment under a homestead exemption plan the City Council approved Monday.
Because revaluation affected various types of real estate differently — some multi-families plummeted in value by 40 percent — it's impossible to provide a simple snapshot of how the new tax rates will affect all homeowners.
But Menard said the owners of single-family homes, the largest class of property in the city, will be among those who see the biggest savings.
“They'll end up paying about half of what we were originally projecting,” said Menard.
In addition to the residential rate of $22.36, Menard also said commercial and industrial property will be taxed at the rate of $33.55. The current rate is $35.01.
The catalyst for such unexpectedly deep cuts was a proposal in Menard's budget that called for waiving the state-mandated cap of 4.75 percent in the tax levy, or the total amount of money raised from all classes of real estate. The state Office of Municipal Affairs had already granted the city permission to lift the cap to 11 percent, providing the proposal also received the blessing of at least six of the council's seven members.
But when Monday night's budget meeting began, the council encountered fierce opposition to the waiver from city residents, including members of the fledgling Woonsocket Taxpayers Coalition who packed Harris Hall. In these “catastrophic” economic times marked by record joblessness, housing foreclosures and creeping inflation, jacking up the levy by 11 percent was more than many residents could bear, they argued.
“There are too many people I know who are just hanging on by a thread,” said Larry Poitras of Mendon Road. “A substantial tax increase is, I think, rather frightening.”
During a break in the hearing, Menard caucused privately with members of the City Council, and when the hearing resumed, both sides unveiled a compromise budget that called for $2.6 million in cuts and stayed within a waiver-free levy cap of 4.75 percent. After more than five hours of discussion, the council, with Menard's support, unanimously voted to trim the mayor's proposed spending package of $116.5 million to $113.6 million.
But members of the administration and the council both acknowledged that the city did not solve its financial problems – it just put them on a back burner, and may have exposed the city to some legal risk in the meantime. Perhaps the most questionable cut of all was a decision to eliminate a $1.7 million cash infusion to shore up the pension system for police and firefighters. The payment represented the first installment on a five-year plan to restore assets the plan lost in the crash of stock market.
Under enabling legislation that allowed the city to fully fund the retirement plan by floating a  “pension obligation bond” several years ago, the city is required to pump capital into the system whenever the principal falls below $90 million, according to Finance Director Ted Przybyla. The $1.7 million represented a fifth of the shortfall under an audit of the plan which no longer reflects market conditions. If the plan were audited today, he said, the one-year payment would be closer to $8 million.
City officials said they cannot predict whether postponing the cash infusion will trigger a lawsuit. But Przybyla says investors who bought the bonds are unlikely to sue because they are still earning interest paid through debt service accounts, and there is still enough money in the fund to generate benefit payments to retirees – and there will be for some time.
Councilors were openly disdainful of putting off the payment, especially Council President Leo T. Fontaine, who has been arguing for months that the asset gap should be plugged quickly, before the shortfall becomes financially crippling. But he and fellow board members reluctantly embraced the plan, saying the risk of litigation was preferable to the near-term consequences of budget paralysis – the inability to issue tax bills, borrow working capital in anticipation of collections and, ultimately – municipal insolvency.
“This is not a prudent idea financially to do this thing,” said Councilman John Ward. “We're simply delaying a large problem to a time when it will be an overwhelming problem...but I'll go along with it because it's the first best solution in the long term.”
Almost as vexing for the council was a decision to scale back a five-year amortization plan to eliminate the combined municipal and School Department deficit with a $1.2 million down payment, reducing the sum to $500,000. Menard and members of the council also scoured the budget to erase another $600,000, eliminating or shrinking dozens of individual line items.
School funding is another potential time bomb in the budget. Although the package contains $62.8 million for schools, the figure is level funded – some $6 million short of what  the School Committee says it needs. School officials have already sued the city under Caruolo claiming the department was shortchanged $3.7 million this fiscal year - and the mathematics of next year's budget may set the stage for yet another Caruolo suit in the weeks ahead, some officials say.
As part of the budget, councilors also passed measures affecting homestead exemptions and property classifications that further eased the pain of tax hikes on many homeowners. While Menard had proposed eliminating the homestead exemption of 8 percent for three-family homes, the council restored it to 5 percent. Two-families will get a 15 percent exemption.
The council quashed a controversial proposal to reclassify six to 10-unit homes as commercial property, requiring the city to continue taxing them as residential real estate.