providence financial crisis

Providence pension lawsuit looming, trial this fall

July 24th, 2014 at 10:09 am by under Nesi's Notes

By Tim White

PROVIDENCE, R.I. (WPRI) – A pending lawsuit by a group of retirees over changes to Providence’s pension system could cost the city more than $11 million over 10 years if the retirees prevail, according to data reviewed by the Target 12 Investigators.

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Providence admits actuary questioned its pension math

July 1st, 2014 at 12:54 pm by under Nesi's Notes

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Lawyers for Providence Mayor Angel Taveras have rewritten bond documents to acknowledge that its actuary disagrees with the way the city reported how much money is in its cash-strapped pension fund.

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Cianci defends 1991 decision that ballooned pension debt

June 26th, 2014 at 9:45 pm by under Nesi's Notes

By Tim White

PROVIDENCE, R.I. (WPRI) – Providence mayoral candidate Vincent A. “Buddy” Cianci Jr. on Thursday defended a decision he made during his second administration that resulted in generous pension benefits for hundreds of municipal retirees.

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• Related: How ‘comedy of errors’ torpedoed Providence pension fund (Nov. 28, 2011)


Taveras budget would keep city tax rates the same

April 29th, 2014 at 6:13 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – Read his lips: no new taxes.

Providence Mayor Angel Taveras on Tuesday proposed a budget that would hold the line on all city taxes while investing $10 million on its crumbing public schools, providing more high school students with bus passes and putting 60 new police officers on the streets by October.

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Chart: Comparing Raimondo, Fung and Taveras on pensions

February 18th, 2014 at 12:39 pm by under Nesi's Notes, On the Main Site

Three of Rhode Island’s major candidates for governor this year – Treasurer Gina Raimondo, Cranston Mayor Allan Fung and Providence Mayor Angel Taveras – have all struck deals with union members and retirees over the last two years to reduce the shortfalls in the pension funds for which they’re responsible.

So how much did they save?

In dollar terms, Raimondo obviously achieved the highest savings: a $3.9 billion cut in the state’s unfunded liability under the terms of last week’s proposed settlement, compared with a $186.4 million reduction from Taveras’s settlement and a $37.4 million reduction from Fung’s settlement. But that’s not really a fair comparison, since the two mayors were dealing with significantly smaller total liabilities.

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New WPRI/Projo Poll: 46% of primary voters back pension law

February 11th, 2014 at 5:00 pm by under Nesi's Notes

By Ted Nesi and Tim White

PROVIDENCE, R.I. (WPRI) – Fewer than half of Democratic primary voters in Rhode Island support the 2011 pension overhaul championed by one of the party’s leading candidates for governor, Treasurer Gina Raimondo, an exclusive WPRI 12/Providence Journal poll released Tuesday shows.

The new survey of 503 likely Democratic primary voters also shows 70% of them think it’s important that a candidate for governor has prior elective experience, a key question for Raimondo rival Clay Pell, while 55% think Providence’s financial problems have been only somewhat solved by Mayor Angel Taveras, another Democratic candidate for governor, since he took office in 2011.

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• Interactive: Dig into the full results and crosstabs for the new WPRI/Journal poll

Tomorrow at 5 a.m. – find out whether Raimondo, Taveras or Pell holds the lead among primary voters.


Taveras touts accomplishments in final State of the City

February 11th, 2014 at 4:59 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – Providence mayor and Democratic gubernatorial candidate Angel Taveras said during his final State of the City address Tuesday he will leave the city better than he found it when he took office three years ago.

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Taveras: Providence ended 2013 fiscal year with $1.6M surplus

January 13th, 2014 at 5:47 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – Providence is still living “paycheck to paycheck,” but Rhode Island’s capital city ended the 2012-13 fiscal year with a small surplus, according to the city’s annual audit released Monday.

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Taveras moves $11M of city pension assets out of hedge funds

October 30th, 2013 at 2:18 pm by under Nesi's Notes, On the Main Site

Providence’s pension fund has moved quickly to reduce its exposure to hedge funds this year, but a spokesman for Angel Taveras said Wednesday it’s not an effort by the mayor to get an advantage over Treasurer Gina Raimondo in their expected gubernatorial campaign.

“The mayor if anything is acting in a methodical, prudent manner,” Taveras spokesman David Ortiz told WPRI.com. “When concerns started being raised in Rhode Island and across the country, and financial experts like Warren Buffett and others started talking about their concerns with hedge fund investments, the mayor as chair of the Board of Investment Commissioners has a fiduciary responsibility to investigate that.”

The Providence pension system’s hedge-fund investments totaled $40.6 million on Oct. 22, down from $51.3 million on April 23, a reduction of nearly $11 million over six months, financial documents show. The share of total assets invested in hedge funds dropped from 19% in April to 14% this month. The change came to light when Ian Donnis of Rhode Island Public Radio mentioned it in a tweet.

Hedge funds have become a potent issue in Rhode Island politics in recent months, as Raimondo faced heavy criticism for moving more than $1 billion of the state’s pension assets into the higher-fee alternative investments. WPRI.com revealed in May that the city fund, which is overseen by Taveras, had an even larger share of its assets in hedge funds at the time; city officials said the investments dated back to David Cicilline’s tenure.

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Providence sees balanced budget after tapping rainy day fund

September 9th, 2013 at 4:54 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – Providence officials say Rhode Island’s cash-strapped capital city ended the 2012-13 fiscal year with a balanced budget after finishing in the red for the previous two years.

In a quarterly report filed with the state, the city projected it would close the fiscal year that ended June 30 with a $1.5 million shortfall, but a spokesman for Mayor Angel Taveras told WPRI.com the city would tap its rainy day fund to avoid running a deficit.

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Study: Providence commercial taxes again highest in the US

August 19th, 2013 at 12:51 pm by under Nesi's Notes

prov_commercial_tax_lincoln_2012

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Taxpayers in Providence paid the highest commercial property taxes charged in any of the nation’s 53 biggest cities for the second year in a row in 2012, according to the new edition of a much-cited study by the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.

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• Related: Analysis: Taveras cut pension deal in a bid to avoid bankruptcy (April 12)


How city property taxes wallop LaSalle Bakery, Old Canteen

June 5th, 2013 at 5:00 am by under Nesi's Notes, On the Main Site

LaSalle Bakery and Joe Marzilli’s Old Canteen are two favorite places for Providence residents to get a bite to eat – though the food might be cheaper if the eateries paid property taxes in Cranston, Warwick or Smithfield.

With the Providence City Council giving its final OK on Monday to Mayor Angel Taveras’s proposal to freeze the commercial-property tax rate at the highest level in any major American city, a recent report the council commissioned offers some examples of how Providence’s high taxes impact familiar local businesses.

The 41-page report by the nine-member Commission on Revenue Sustainability and Effectiveness took a look at how Providence’s commercial tax rate – which will stay at $36.75 per $1,000 of assessed value in 2013-14 – compares with those of its surrounding towns. Take a look:

tax_rate_comps_Prov_2012

At the high end, One Citizens Plaza pays Providence $1.38 million annually, $238,204 more than it would in Cranston and $782,778 more than it would in Smithfield. At the low end, LaSalle Bakery pays Providence $14,005 a year, $2,423 more than it would in Cranston and $7,965 more than it would in Smithfield.

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Providence Council OKs budget; East Side faces tax jump

June 3rd, 2013 at 8:19 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – The Providence City Council gave final approval Monday to a 2013-14 budget that will increase residential taxes in nearly every neighborhood while freezing commercial tax rates across the city.

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• Interactive: Map of Providence property revaluations, by neighborhood (WPRI.com)


Study: Providence commercial tax rates highest in the US

May 10th, 2013 at 5:05 pm by under Nesi's Notes, On the Main Site

Providence has topped a set of national rankings, and Mayor Angel Taveras probably isn’t happy about it.

Taxpayers in Rhode Island’s capital city paid the highest commercial property taxes charged in any of the nation’s 53 biggest cities in 2011, according to the latest edition of a widely cited comparative study by the Lincoln Institute of Land Policy and the Minnesota Taxpayers Association.

The previous edition of the study listed Providence as having the second-highest commercial property taxes among big cities, behind only Detroit – a statistic that’s been widely referenced locally ever since Governor Chafee cited it on Newsmakers and then had his research confirmed by PolitiFact.

But the tax burden on commercial property in Providence grew even heavier in 2011, when Rhode Island’s cash-strapped capital slapped a tax bill of $4,975 on commercial property worth $100,000 – $69 more than second-ranked Des Moines and $75 more than third-ranked Detroit. Here’s a chart:

prov_commercial_tax_lincoln_2011Taveras has proposed freezing the commercial tax rate for seven years – apparently at what has been the highest level in any major U.S. city, according to this study. Even that may not happen: City Council members have expressed skepticism about the proposal, suggesting they may raise commercial taxes even more.

The study said Providence also charged the fifth-most on apartment buildings among the 53 big cities in 2011, with a tax of $21,765 on a $600,000 property, behind Des Moines, Detroit, New York City and Buffalo. In addition, Providence ranked 11th-highest for homestead property taxes on the median-value home and 9th- and 10th-highest for industrial property taxes on machinery, equipment, inventories and fixtures.

The latest edition of the study was cited Friday on Twitter by Gary Sasse. “Rhode Island’s economic health is linked to more competitive business taxes in the Capital City,” he commented (in abbreviated tweet form). Not coincidentally, the owner of the now-vacant Superman building wants a tax break to redevelop it.


Taveras invests 20% in hedge funds, more than Raimondo

May 8th, 2013 at 4:20 pm by under Nesi's Notes, On the Main Site

raimondo_taveras_common_cause_2011It turns out that the Democratic gubernatorial hopeful who has the biggest chunk of pension money invested in hedge funds isn’t Treasurer Gina Raimondo – it’s Providence Mayor Angel Taveras.

Providence has invested 19.75% of its total pension assets in hedge funds, the Taveras administration disclosed Tuesday after WPRI.com requested a breakdown of its investment portfolio.

Rhode Island’s state pension system has invested somewhat less in hedge funds – 14.6% of assets as of April – under a new investment strategy implemented by Treasurer Gina Raimondo soon after she took office in 2011.

Providence’s Board of Investment Commissioners, which is chaired by the mayor and oversees the city’s pension portfolio, started investing in hedge funds on the advice of its longtime financial consultant, Boston-based Wainwright Investment Counsel, Taveras spokesman David Ortiz told WPRI.com. The investment board meets roughly once a month.

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Internal Auditor: Providence faces $10.8M deficit

May 2nd, 2013 at 1:51 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – Rhode Island’s capital city is on pace to end the 2012-13 fiscal year with a $10.8 million deficit, but it can balance its budget with additional help from the state, according to Internal Auditor Mathew Clarkin.

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Taveras proposes 6% tax hike on residents to balance budget

April 25th, 2013 at 8:59 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – The average Providence resident would see his or her property taxes increase by 6% and the city would eliminate its structural deficit by asking the state to boost municipal aid under a budget proposal introduced Thursday by Mayor Angel Taveras.

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Analysis: Taveras cut pension deal in a bid to avoid bankruptcy

April 12th, 2013 at 3:39 pm by under Nesi's Notes, On the Main Site

taveras_NM_5-11-2012_smallProvidence Mayor Angel Taveras won a historic court victory on Friday, as a Superior Court judge approved the first-term Democrat’s landmark settlement with retirees, immediately reducing the city’s long-term liabilities for pension and health benefits. Bloomberg News has described the outcome as “practically unheard of.”

But for a city that was openly considering bankruptcy just 14 months ago, does the deal save enough money?

Privately, Taveras aides don’t dispute that Providence will still be spending a lot of money on retirement benefits after the settlement. What they argue, however, is that they got just about everything they could outside Chapter 9 – and the long-term economic consequences of having Rhode Island’s capital city file for bankruptcy might have dwarfed any additional savings on retirement costs allowed by a judge.

There’s no doubt the settlement already saves quite a bit of money. According to the Taveras administration, the deal shaves Providence’s unfunded pension liability by $170 million, a roughly 20% decrease, and cuts its retiree health costs by $40 million over the next 10 years.

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Providence owed $31 million for unpaid parking tickets

April 3rd, 2013 at 4:19 pm by under Nesi's Notes, On the Main Site

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – Rhode Island’s capital city is owed more than $31 million for parking tickets that have gone unpaid for at least 30 days, according to a review of data obtained through a public records request.

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• Related: 443,000 city parking tickets currently unpaid and past due (April 3)


442,894 parking tickets now unpaid and past due in Providence

April 3rd, 2013 at 5:00 am by under Nesi's Notes

By Dan McGowan

PROVIDENCE, RI (WPRI) – Hundreds of thousands of parking tickets issued in Providence have gone unpaid for at least 30 days, shorting the cash-strapped capital city out of millions of dollars in potential revenue, WPRI.com has learned.

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Moody’s: Providence retirement liabilities still huge after deal

March 19th, 2013 at 1:08 pm by under Nesi's Notes, On the Main Site

Moody’s Investors Service says Providence will benefit from winning approval of its deal with retirees to reduce pension and health care costs, but warns the agreement will still leave the capital city facing huge unfunded retirement liabilities.

“Providence’s total unfunded liability for pension and OPEB will be reduced to $2.1 billion, or 20.7% of its property tax base, still one of the largest unfunded liabilities in the state, exceeding those of the financially distressed cities of Central Falls and Woonsocket,” Moody’s analysts Vito Galluccio and Geordie Thompson write in a report Tuesday. (OPEB stands for other post-employment benefits, primarily retiree health care.)

To demonstrate their point, Galluccio and Thompson put together this chart:

Moodys_Prov_pension_OPEB_comps_3-2013

R.I. Superior Court Judge Sarah Taft-Carter’s March 11 ruling on the fairness of the deal “is a credit positive for Providence because it signals that the court is likely to approve the pending agreement,” Galluccio and Thompson write. If the deal wins final approval on April 12, it will reduce Providence’s unfunded pension liability by $196 million and its unfunded OPEB liability by $400 million, according to Moody’s.

Providence spent more than a quarter of its budget on pension contributions, retiree health benefits and debt payments in the 2011-12 fiscal year, Moody’s notes.

• Related: Chart: The decline and fall of the Providence pension system (Jan. 25, 2012)


Providence passes Wall Street’s test with $40M road-bond sale

March 6th, 2013 at 4:13 pm by under Nesi's Notes, On the Main Site

Mayor Angel Taveras got a vote of confidence from Wall Street on Wednesday.

Providence sold $40 million in road bonds and the market reaction was positive. Demand for the bonds was two to seven times higher than supply for different maturities, and the final interest rate was about 3.66%, below their original projections, Taveras spokesman David Ortiz told WPRI.com. The city was able to reduce the yields below the initial price set this morning, he said.

The lower interest rate will save Providence taxpayers about $200,000 a year on debt payments and is a sign of confidence that Taveras has “put the city on a sustainable fiscal path,” Ortiz said. The road repairs that the borrowed money will fund will start this spring. Voters approved the proposal last fall.

Robert Cusack, a portfolio manager at the Providence investment firm WhaleRock Point Partners, said Providence’s borrowing costs were consistent with what others who have similar credit ratings are paying. “The important thing is that despite all of its troubles, the city retains access to the credit markets to do the borrowing it needs to do at a reasonable cost,” Cusack told WPRI.com.

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Providence pension deal nearly finalized

March 6th, 2013 at 1:43 pm by under Nesi's Notes, On the Main Site

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – The city is still managing its finances “like a family living paycheck to paycheck” and any retiree seeking to opt-out of a proposed pension settlement “becomes a problem,” Providence’s director of administration Michael D’Amico told a R.I. Superior Court judge Wednesday.

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Providence sues consultant for $10M pension ‘miscalculation’

February 26th, 2013 at 9:58 am by under Nesi's Notes, On the Main Site

​By Tim White

PROVIDENCE, R.I. (WPRI) – The City of Providence has filed a multimillion dollar lawsuit against its longtime actuary Buck Consultants, charging them with “miscalculating” the estimated savings from pension reform, according to court documents obtained by Target 12.

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• Related: Taveras, retirees strike landmark deal on pension changes (May 30)


Providence will seek up to $5M from General Assembly

February 5th, 2013 at 4:17 pm by under Nesi's Notes, On the Main Site

​By Dan McGowan

PROVIDENCE, R.I. (WPRI) – City officials have asked the General Assembly to increase municipal aid to Providence by between $4 and $5 million to help cover the city’s remaining structural deficit, Director of Administration Michael D’Amico said Monday.

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Providence retirees get deadline to opt out of pension deal

January 25th, 2013 at 1:32 pm by under Nesi's Notes

By Dan McGowan

PROVIDENCE, R.I. (WPRI) – R.I. Superior Court Judge Sarah Taft-Carter on Friday approved a timeline for Providence police and fire retirees to opt out of a settlement on pensions and healthcare benefits negotiated with the city.

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Raimondo to headline Bond Buyer municipal conference in RI

January 23rd, 2013 at 10:33 am by under Nesi's Notes, On the Main Site

Raimondo speaks at a Bond Buyer dinner

Here’s a rare silver lining to Rhode Island municipalities’ financial troubles: it’s made so much news that a two-day conference on distressed communities is coming to the capital city.

The financial newspaper The Bond Buyer will hold its 2nd Annual Distressed Municipalities Conference on March 18 and 19 at the Omni Providence Hotel (formerly the Westin). Treasurer Gina Raimondo, who received an award at a Bond Buyer dinner in December, is one of the headliners.

Bond Buyer publisher Michael Stanton told WPRI.com its major events are usually held within the Northeast Corridor, where institutional investors are concentrated, and in places that are geographically accessible to government leaders.

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Moody’s criticizes Providence (and Taft-Carter) for $15M deficit

January 18th, 2013 at 12:12 pm by under Nesi's Notes, On the Main Site

Moody’s Investors Service is criticizing Providence leaders – and, implicitly, Superior Court Judge Sarah Taft-Carter – for running a $15 million operating deficit during the 2011-12 fiscal year, but softened its criticism based on other steps the Taveras administration has taken.

“The shortfall is credit negative as the city’s financial position has weakened considerably over the past four years,” Moody’s analyst Vito Galluccio wrote in a note to investors. “However, its balanced budget for [fiscal] 2013 indicates some progress toward restoring fiscal stability.”

Galluccio cited two big drivers of the $15 million operating deficit: Taft-Carter’s mathematically flawed ruling last year that the city didn’t need to move its retirees to Medicare, and various types of tax revenue failing to meet the city’s projections. The deficit would have been even larger if the city hadn’t shorted its 2012 contribution to the Providence pension fund by $5.4 million, he said.

“The 2012 results follow several years of operating deficits that have left the city in a precarious financial position,” Galluccio said. He blamed the fiscal crisis on a $125 million reduction in state aid during former Mayor David Cicilline’s second term and “rapidly growing expenditures related to employee salaries and benefits.”

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Chart: How Taveras closed most of Providence’s $110M deficit

January 10th, 2013 at 5:00 am by under Nesi's Notes, On the Main Site

Well, in the end Providence didn’t file for bankruptcy – an outcome that loomed as a very real possibility last winter when the city’s cash flow crisis was most acute (and a confused Judge Taft-Carter made things worse). The final audit shows Providence finished fiscal 2011-12 with an $11.4 million deficit.

The Taveras administration acknowledges the city budget still has a built-in $4 million structural deficit, though that’s way down from the $110 million shortfall his fiscal review panel originally found. So how did the mayor eliminate 96% of the structural deficit? Here’s a chart from the city with their breakdown:

(“Revenue enhancements” has to be one of my least favorite bits of political spin. I don’t expect press shops to switch to “Job-killing tax hikes,” but what about plain old “Revenue increases”?)


Local 1033 spars with Taveras on pension deal as cops vote

December 13th, 2012 at 1:16 pm by under Nesi's Notes

​By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Providence police officers will vote Thursday on whether to approve a landmark deal on pensions negotiated with Mayor Angel Taveras, but another key union leader says he isn’t ready to schedule a vote.

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• Related: Local 1033 wants out of city pension system; Taveras opposed (March 13)