Elorza: Homestead plan too much, too late

PROVIDENCE — Mayor Jorge Elorza on Friday implored the Providence City Council to abandon its plan to implement a graduated homestead exemption in the city, and to pass the budget before July 1, which is the start of the next fiscal year.

Warning of potential impact on city finances if the budget’s passage is delayed, Elorza, speaking at a news conference at City Hall, asked council members to table their proposal until it can be more thoroughly vetted and analyzed.

The graduated homestead exemption, which the city’s law department deemed could not be implemented without enabling legislation from the state, would involve a 40% exemption for the first $350,000 of a residential property and a 28% exemption for any assessed value above that.

On Thursday night, the Senate Committee on Housing and Municipal Government passed a bill that would enable the city to implement the tax, and the City Council simultaneously voted in favor of a resolution urging the General Assembly to pass that bill.

The bill heads to the full Senate for a vote Tuesday; Elorza said it is unlikely to pass.

“It’s at the eleventh hour,” he said. “It's also tremendously complicated, and it’s unprecedented.” 

Elorza said the haggling over the city’s budget has already affected operations. The administration is withholding a $2-million pension payment it was scheduled to make, and an impasse over the budget could downgrade the city’s favorable bond rating.  

“It’s very possible that we would lose the favorable terms and the bond premium that we received,” he said. “This would ... leave money on the table.”

Providence is also depending on a $33-million payment in lieu of taxes from the state, but it won’t be deposited until the city passes a tax levy, Elorza said. Without a flow of cash, the city won’t be able to issue paychecks or fund many of its summer programs, he said.levy

City Council President Sabina Matos said the homestead exemption is a way to mitigate the impacts of the mayor’s proposed budget — which represents a $15-million increase over last year — on low-income residents. 

“Our proposal slightly redistributes the tax burden from the city's working class, which makes up close to 99% of all city residents, to the city's most affluent, or the top 1%,” Matos wrote in an op-ed published on Thursday.

But the mayor said his administration has proposed another option for lessening the burden on low-income families that would involve providing relief from property tax increases for people who make $25,000 a year or less.

The last-minute negotiations over the city’s budget, Elorza said, send a bad message about Providence to the rest of the state.

“It’s embarrassing for the city,” he said. “Introducing such a massive change to the city’s tax structure at the last possible minute is just not the way you do business.”

Matos said in a statement Friday that the council was willing to work with the administration and consider all scenarios, including Elorza's proposal to provide tax relief to low-income residents. But she disputed his comment that the council’s process has been embarrassing to the city.

“What’s embarrassing is that the mayor proposed a budget that called for $15M more in spending on the backs of the most vulnerable amongst us,” she wrote.

— mlist@providencejournal.com

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