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House FinCom passes supplemental tax bill

May 22, 2012

PROVIDENCE – The House Finance Committee passed the Woonsocket supplemental tax bill on a 12-2 voted Tuesday allowing it to go to the House floor for a final vote on Thursday.
Two Woonsocket representatives, Lisa Baldelli-Hunt and Jon Brien told the panel they would lend their support to the bill “as a professional courtesy” to city officials, but both spoke about what they see as better alternatives for the city.
Referring to an April 22 letter to Woonsocket Mayor Leo Fontaine from four of the five members of the city’s General Assembly delegation – only Sen. Roger Picard did not sign it – both lawmakers said they think Woonsocket would be better off having a receiver appointed to temporarily manage the city’s affairs, skipping over the appointment of a budget commission altogether.
“We believe that significant and immediate structural reforms are needed to avert a financial crisis in our city,” the letter states, “and we respectfully request that as a first priority our city’s leadership should respectfully request that a receiver be appointed to work cooperatively with city leaders to effectively implement a restructuring plan that would be in the best interest of our entire community.
Beyond that, Brien said he favored the idea of borrowing from the city’s pension fund to meet its current cash flow problem and paying it back when the first quarter 2013 tax payments start coming in, rather than borrowing money from Citizens Bank and imposing a supplemental tax to pay it off.
The supplemental tax is expected to bring in about $6.6 million, with $3.2 million set aside to pay off the bank for a loan that would give the city and school department enough cash to finish out the year. The tax would hit the average Woonsocket property owner with an additional $350 tax bill, city officials estimate.
Baldelli-Hunt says she has already introduced legislation calling for a special nine-member study commission to be appointed to determine, in her words, “how did this happen and who is responsible.”
The Woonsocket City Council had been poised on Monday to pass a resolution asking that a budget commission be appointed, but the resolution was tabled instead, pending the outcome of the vote on the supplemental tax bill.
Fontaine told The Call Tuesday that if the bill becomes law and Woonsocket can implement the 13 percent extra tax, then the idea of asking for a budget commission would be scrapped.
Baldelli-Hunt told reporters after the vote that she wants to see a receiver appointed in Woonsocket because “I do not want our city to go into bankruptcy. We need to stop and we need to evaluate and we need to make adjustments, we need to make corrections and we need to have a solid plan and it needs to be identified. We need to do this, it is imperative to do it quickly and I do not want a supplemental tax bill to be a reason to not put a solid structural plan in place.”
A receiver is allowed by state law to assume the powers of various city officials and boards – including the mayor and the city council, as was done in Central Falls – but beyond that the only enumerated power of the office is to file on the city’s behalf for Chapter 9 bankruptcy. The other, implied, power that it has is to threaten unions, retirees and vendors with bankruptcy if they do not make concessions first.
“By-passing a budget commission and going to a receiver can help us prevent bankruptcy,” Baldelli-Hunt said. “We’ve been working to take this stigma away from Woonsocket and it’s very frustrating that we have a deficit of this size that just appears out of nowhere.”
Brien said his proposal to borrow from the pension fund, which he said has been brought up by some city officials as well as one of the advisors to the city’s pension board, is aimed at, “providing the city administration with as many options as we can at this point.” Brien’s bill to allow the borrowing is still being drafted and has yet to be formally introduced to the House.
During his testimony Tuesday, Brien said, “At this point I am willing to come before this committee with an incredibly heavy heart and an amazing personal reluctance, but yet the professional need to do what is done because the state has to authorize the city to give them the tax they are asking for. We here as a delegation and you as the finance committee unfortunately have the responsibility of authorizing an increase in tax but can really do nothing about it. We have no way to meander into municipal finances; we have no control over municipal finances. We just have control over the authorization that the municipal leaders ask for when they want to increase taxes. That is what happened today and in the preceding month.
“If this doesn’t work after the supplemental tax is authorized and implemented,” Brien added, “I agree with Rep. Baldelli-Hunt, it would behoove the city to go straight to a receiver. Because if this doesn’t work, it’s not going to work, and we need to take greater steps to ensure that our city, that we love and we are dug in on, definitely has a prosperous future.”
Rep. Laurence Ehrhardt, a North Kingstown Republican, said that, based on the “strength of the letter” to Fontaine that Brien and Baldelli-Hunt presented to the committee calling for receivership, “and the failure of the town council last night to act on the resolution for a budget commission scares me that we do not have a clear path before us. Only Ehrhardt and fellow Republican Rep. Daniel Reilly voted against the measure.
Just before the House Finance Committee met, Woonsocket officials were in another part of the Statehouse, lobbying for a bill that would advance the city’s school funding in a way that would allow it to re-initiate all-day kindergarten next year.
Usually, there is a one-year lag in school funding – the enrollment of the previous year is used to calculate state aid for the following year. But under that formula, this year’s Woonsocket kindergarten students would only count as one-half a pupil because they are attending only a half day.
A bill sponsored by Woonsocket Sens. Marc Cote and Roger Picard – as with the supplemental tax bill, there is no separate House version of this legislation – would allow this year’s kindergarteners to be counted as full students for purposes of state aid calculations, allowing the city to begin the all-day classes.
Speaking in favor of the legislation, besides Cote and Picard, were School Committeeman Christopher Roberts, Superintendent Giovanna Donoyan and Jeff Partington, president of the teachers union.
The committee voted to hold the bill for further study.

Comments

Supplemental tax bill = permanent tax hike..

May 23, 2012 by Marcel (not verified), 2 years 29 weeks ago
Comment: 1324

What a way to slide in a 13% tax hike, call it a supplemental tax bill. One time deal, won't hurt a bit. You won't get a supplemental bill next year, the 13% will already be part of your taxes... Now that's an accomplishment a politician can run with, promising no more supplemental tax bills.

Good news is, medical marijuanna is here and it'll help you forget come election day.

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