Taveras speaks at City Hall today

The final 24-page report from Providence Mayor Angel Taveras’ emergency fiscal review panel probably won’t rival the 9/11 Commission’s report as a popular bestseller. But for anybody who follows government closely, it sure makes for a fascinating read.

The broad conclusion of the report – that Providence’s “existing fiscal foundation is crumbling and is not sustainable,” to use the mayor’s words – is now well-known. The city’s $639 million annual budget could be as much as $29 million short this year and $110 million short next year.

The culprits cited are many: a lack of revenue from sources beyond the property tax, notably nonprofit institutions; an overgenerous compensation structure, particularly on pension and health benefits as well as overtime; poor financial management; and a lack of planning.

Here are a few of the more interesting statistics, examples and suggestions included by the report’s authors, sorted by topic. All quotes come directly from the report. Continues after the jump.

Mo’ money.

• The report argues Providence isn’t getting its fair share of state aid considering how many people who work in the city are employed by nonprofits like colleges and hospitals. “Those employees contribute significantly to income taxes paid to the state, yet minimal benefits accrue to the city due to the employer’s exemption from the property tax,” it says.

• More parking tickets? The report argues Providence should increase its enforcement of parking and traffic violations, “especially at night, to enhance safety and serve as a revenue generator.”

• The city refunds its fee for reviewing a building project’s plan if the project gets denied – even though the staff does the review no matter the outcome. The report says that should stop.

• The car tax rears its unpopular head. The report says the city should look at reducing its $6,000 exemption since the state no longer makes up the difference. (See my story from last year for background.)

• “The city should consider an on-street overnight parking permit fee as a new revenue source. Residents could purchase a monthly or quarterly pass that would allow overnight parking in permitted areas.”

Higher ed and hospitals

• Colleges, hospitals and other tax-exempt institutions own about a third of the city’s total property by assessed value – nearly $3 billion worth. That’s after deducting exemptions.

• Tax-exempt groups paid the city $1.9 million last year, which the report argues is “a disproportionately small amount” considering the services they use.

• Tax the co-eds! “College students should be required to register their cars with a special student registration for the nine months they are Providence residents by virtue of attending a university or college in the city.” The report also says students should pay a city housing fee as part of their tuition bills.

• Strip the property-tax exemption from some nonprofit-owned buildings depending on how they get used, like dormitories and medical office buildings rented to physicians by hospitals.

Schools.

• Providence teachers “can use up to five sick days and still be considered eligible for a perfect attendance bonus.” They get a total of 20 sick days a year, plus bereavement time and two personal days.

• Up to seven schools could be closed without impacting school department operations, according to the schools’ acting chief financial officer. But the costs of securing and mothballing vacant classroom space should be taken into account when making decisions in that area.

• School choice, which raises transportation costs, may be “unwarranted” in Providence considering the relatively minor differences in the quality of different schools, the report suggests.

Parks and rec.

• The report suggests the city should consider privatizing Roger Williams Park, partly to cut costs and increase concession revenue. It also questions whether the city needs 12 park rangers (11 assigned to Roger Williams) since all 12 share one city vehicle, which limits their security presence.

• DPW and Parks Department equipment is in “poor condition” and much of it needs costly repairs or flat-out replacement. “Private snow plowing vendors are required largely because the city truck fleet cannot meet the need.”

Pensions.

• The City of Providence Retirement System – the main pension plan for city workers – is already severely underfunded at 34%; it had $428m in assets to cover $1.3b ($1,256m) in liabilities as of June 30.

But that actually overstates its current financial health, because that asset value is a five-year average. The assets’ fair market value was actually $316m as of last June. That drops the pension system’s funded ratio down to just 25%.

• If the City of Providence had contributed the full annual required contribution to its pension and retiree health funds last year (which it didn’t), the total amount would have been $150m – equal to 24% of the annual city budget and 51% of its annual property tax revenue.

• Nearly 27% of city retirees – 775 total – still receive a compounded cost-of-living adjustment, or COLA, of 5% or 6%. Their yearly pensions double in value every 16 or 13 years, respectively, thanks to the effect of compounding.

• The city contributes to not one, not two, but three separate retirement plans for members of its largest union, Local 1033, which represents roughly 1,900 workers: the City of Providence Retirement System, a union-administered pension plan, and Social Security.

• The city assumes its pension fund will earn a long-run average investment return of 8.5% – even higher than the state’s already rosy 8.25% expectation. Lowering that would increase the pension fund’s liabilities and therefore the amount the city has to put in annually to keep it adequately funded.

Health insurance.

• The city’s long-term unfunded liability for retiree health care is $1.5b ($1,497m). It has put aside next to nothing – just over $1 million – to cover those future costs and basically funds retiree medical on a pay-as-you-go basis.

• “Many employees have lifetime medical coverage for the employee and their spouses,” the report says, whereas at the state level spouses are generally required to pay to purchase coverage and the benefit is not available to either one until age 59. Also, annual copays for retirees top out at $400.

• The medical benefits the city offers retirees are far more expensive than those the state offers, which is reflected in their unfunded retiree health liabilities: the state’s is $36,546 each while the city’s is $156,686, more than four times as much.

Miscellany

• Providence has issued almost 400 cell phones to city employees, which costs about $275,000 a year. About 140 of those are to workers outside public safety departments.

• The city property department lacks up-to-date information on how many cars are taken home at night by employees. “Over 50 vehicles go home within the Police Department.”

• Targeting the Providence Fire Department for cuts? The reports calls for a review to figure out “the appropriate number of fire vehicles and personnel required to adequately protect the city.” (Steven Pare hinted at the same thing when he appeared on WPRI 12′s “Newsmakers.”)

• Winter weather may be costing the city more than it needs to. Fewer than 40 DPW vehicles are available for plowing, which leads to more use of pricier contractors. Plus: “The overtime costs may be affected by the practice of calling in city personnel well before the snow event.”

• Providence spends $500,000 annually to dispose of mattresses dumped on city sidewalks.

Behind-the-scenes

• The budget the City Council passed last month – seven months into the fiscal year – “did not reflect current estimates of revenues and expenditures.” Waiting that long to adopt a budget is, as the report delicately puts it, “problematic.”

• “We also observed that routine budget monitoring is not performed.” It was “challenging” for the authors to get forecasts of how much city departments expect to spend and take in for the rest of this fiscal year, which ends June 30.

• Why are bad budget assumptions reused? “Many items that were not realistic and contributed to the deficit in Fiscal 2010 were once again included without modification in the Fiscal 2011 budget,” including inaccurate forecasts for fire callback, utility costs, investment earnings and collection fees.

• The city apparently gave up on a number of financial planning tools during the Cicilline administration, including conducting monthly budget monitoring and submitting a Five-Year Financial Plan to the City Council.

Still not enough for you? We’ve posted the full report as a PDF here on WPRI.com.

(photo: Tim White/WPRI)