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.
Struggling Rhode Island cities and towns faced with looming municipal-bond payment deadlines have received a helping hand from the state government: early payment of $70 million in state aid.
Cash for school construction is usually paid to state municipalities in two largely equal installments, at the end of April and October. But this year, the state sent the April payment one month early, on March 29, officials said, in anticipation of an April 1 deadline for payments on bonds issued to build schools. The payment was accelerated for all municipalities. …
Rhode Island’s move to accelerate the payments isn’t unprecedented, and states are more likely to accelerate such payments in times of fiscal strain, said John Hallacy, head of municipal research at Bank of America Merrill Lynch. However, it is unusual for a state to accelerate payments for all municipalities, as Rhode Island did with school construction aid, he said. …
“It’s one thing to ease a short-term situation, but I think it begs the question about what needs to be done for the longer haul,” Hallacy said. “Traditionally, a lot of folks were relying on economic recovery, and in the past it’s been a lot faster than it’s been developing now. And this has just made everybody so much more stressed.”
A bill in Governor Chafee’s proposed municipal aid package [pdf] would change when education aid is delivered. Basic education aid is currently handed out monthly; Chafee would distribute more cash would be front-loaded in July and August. School construction aid would be delivered as one lump sump in August.
The Rhode Island political establishment continues to close ranks around Congressman David Cicilline.
Gov. Lincoln Chafee said Friday he’s endorsing the freshman Democrat for reelection. On Thursday evening, Chafee attended a Cicilline fundraiser in Providence whose host committee included Providence Mayor Angel Taveras and Treasurer Gina Raimondo.
“A lot of the criticism leveled against Congressman Cicilline’s time as mayor I think is unfounded, because he suffered $30 million in [state aid] cuts, and that’s what we’re talking about,” Chafee, an independent who left the Republican Party in 2007, said during a taping of WPRI 12′s “Newsmakers” this morning.
“No mayor can take $30 million in cuts just like that. No organization – ‘Newsmakers’ or Channel 12 couldn’t take these kind of cuts without ramifications,” he said. “So I think some of the criticism has been unfair.”
However, the governor said Cicilline may have erred in the way he described Providence’s financial situation to voters while campaigning for Congress in 2010.
If there is one point that Cumberland Mayor Dan McKee tries to get across in an interview, it’s that he’s just looking for fairness. It’s an issue that he’s been trying to get across to the General Assembly for some time now. We’ve heard in recent years about the fair-funding formulas for our cities and towns, but a major problem exists: the towns have differing reimbursement rates. And McKee feels those rates are not “fair.”
In 1998, the General Assembly passed a law that would phase out the motor vehicle excise tax over seven years, meaning Rhode Islanders would no longer be paying taxes on automobiles by 2005.
In 2002, the economy was turned upside down and the Assembly extended the length of the phase-out. A few years later, it was suspended indefinitely. Since then, most of us have felt the pain of more recent legislation that cut the exemption in many towns from $6,000 to $500.
That cut in the minimum exemption means fewer dollars for cities and towns, because they “are paid by the state for the lost taxes due to the exemptions” [pdf]. When state officials reduced the amount they will pay the cities and towns, the municipalities lost a great deal of revenue.
Why did the General Assembly do this? The answer is simple and has never been denied: to balance the state budget.
As much as some may disagree with balancing the state’s budget using local money, let’s deem that acceptable for now. But are the towns even being reimbursed fairly and equally? When you look at the numbers, it would appear not.