WOONSOCKET â€” The City Council has posted notice of a special meeting on Wednesday during which the panel will consider legislation empowering the city to pass a supplemental tax bill to help plug a $10 million hole in the School Department's budget.
There's only one other item on the agenda: a proposed resolution authorizing the city to obtain tax anticipation notes - a type of short-term loan. The authorization to levy supplemental taxes works as a kind of collateral for the cash-strapped city, allowing it to borrow funds for a brief period on the expectation of a payoff from the collection of supplemental revenues from what some call a "fifth quarter" tax bill.
Borrowing is a last-ditch effort to keep cash flowing through city coffers. Without an infusion of capital, Finance Director Thomas M. Bruce III says, the School Department is on track to run out of money by April 6, and probably won't be able to make further payrolls after that date.
The city wants to raise up to $6.6 million with the supplemental bill, according to papers release late Friday afternoon. Of that, $4.3 would be handed over to the School Department, which is also considering a smorgasbord of program cuts, personnel reductions and contractual rollbacks to bridge the budget gap.
The schedule of rates for the supplemental tax bill is proposed accordingly: $3.15 per thousand dollars for residential property; $4.51 for commercial property; and $5.81 for motor vehicles, trailers and business equipment.
Bills will be due by June 15 and the city will have the power to assess delinquency penalties at the rate of 15 percent annually.
Notice of the meeting was posted just hours after Moodyâ€™s Investor Service placed the city on a negative watch for another possible downgrade from the city's exist Ba2 rating, already a junk-level rank. It was the second bit of bad news for the city in as many weeks following the revelation of the $10 million budget hole, coming on the heels of Fitch's lowering of the city's credit rating to BB- from BBB- last week. That's a four-notch dip deeper into junk territory on the Fitch scale.
The special meeting is scheduled for 7 p.m. in Harris Hall. Itâ€™s one of two council meetings scheduled for next week, along with a regularly scheduled session two days earlier, on Monday. A number of items are are the agenda of the latter, but none is expected to be as controversial as supplemental taxes.