The Warwick City Council unanimously approved the city’s $322,881,043, FY2020 budget Friday evening after approving over $1 million in cuts to Mayor Joseph Solomon’s proposal and applying those savings to reduce the draw on the city’s reserves from $3.5 million as proposed to about $2.44 million.
Mayor Joseph Solomon, now into his second year as the city’s top elected official since assuming the role last May, was adamant on Monday that the budget represents a step in the right direction towards a more financially healthy city.
“The work will always be to the grind stone. As you deal with one issue, another issue comes up,” he said in a phone interview. “I was very pleased to work with the city council in conjunction with the final result. This budget process has been truly transparent. I spoke to council members, they've listened to my input and I've listened to their input. Government worked and we did the optimum for the taxpayers.”
In regards to the city’s cash reserves, Solomon said that reducing the structural deficit to about $2.4 million going into next year was indicative of a “positive direction,” and said that in previous years under the Scott Avedisian administration the draw down had included numbers in the $3 and $4 million range.
“We are putting Warwick on the proper path to fiscal stability,” Solomon said.
That path still contains plenty of potential bumps though.
You can look to the city’s ever-growing other post-employment benefits (OPEB) unfunded liability, which City Council President Steve Merolla spoke about at length during one of the budget hearings after learning the annual recommended contribution had jumped from around $23 million to $35 million last year to this year. All told, the city’s unfunded OPEB liability sits at around $290 million, and no funding is being allocated towards that.
“We can't pay the ARC,” Merolla said in a recent interview. “Collective bargaining groups should be alarmed.” He added during last Wednesday night’s budget hearing that, “These issues need to come to the bargaining table and they need to be addressed…This is a math problem. This isn’t a political issue. It's a simple math problem.”
Solomon agreed with Merolla’s assessment of the OPEB problem, calling it “the 500-pound gorilla in the room” but added that Warwick is not alone in facing that problem.
“That's not an issue isolated to the city of Warwick, that's spread state wide,” he said. “But putting $50,000 or $100,000 into an account isn't going to solve that problem. I think as we address that problem, we have to do it contractually, through negotiations in bargaining with different groups.”
Solomon spoke during budget hearings about how unexpected developments led to more turmoil in the city’s operations than could be reasonably expected, including contractual disputes regarding altering the pension system for firefighters that wasn’t officially signed and resulted in an arbitration award going against the city and costing approximately $2.6 million in total, and about $600,000 this year, according to Solomon.
That the city expects more legal challenges and possible courtroom battles is reflected through a more than 115 percent increase in the city’s legal budget (primarily comprised of an increase from $400,000 to $700,000 in the professional services line). This could be reflective of the fact that the city is in lingering arbitration disputes with firefighters over their unresolved contracts for the current year and next two years, in addition to the threat of legal action from the schools. Merolla also mentioned eight active grievances that are currently filed against the city on behalf of firefighters.
And on the topic of firefighters, the council unanimously approved a $375,000 reduction to the mayor’s proposed budget for firefighter overtime, which was initially proposed at about $3.9 million. That line was budgeted at $1.2 million for the current fiscal year ending June 30, but is projected to be almost triple that cost at $3.5 million by the time that day comes.
The budget approves funding for 189 firefighters, which according to testimony is 23 firefighters short of a full complement at 212. Combining those two points, Merolla explained why the overtime budget rose the way that it did.
“I think we [the city council] agreed it was actually less expensive to pay overtime than pay new firefighters,” he said, explaining that between medical and retiree benefits, hiring more firefighters to reduce the potential overtime was not necessarily a better cost saving measure than just paying increased overtime. According to testimony during hearings, 212 firefighters would cost about $24.5 million, while 190 firefighters, including the budgeted overtime, would cost about $24.4 million.
Solomon also explained during the budget discussion for the fire department that he would not be hiring any new firefighters until the dispute over which pension system new firefighters will enter is resolved.
“As you know, overtime in the last several years was never depicted accurately. Never with a capital ‘N.’ I did my best this year to give you the true picture of what we have, so that we don’t have to deal with the unexpected. This is factual,” he said. “Until we settle that [pension] issue, we're going to make do with what we have, because those are the only resources we have.”
Finally, Solomon’s intent to fund the asphalt line at $4.5 million to continue with an unprecedented road paving program took a hit on Friday, as the council unanimously agreed to slash $500,000 from the proposal to help bring down the draw from the free cash reserves.
“I did listen to many members of the public and the council about whether we could actually get $4.5 million spent and compared that to what we have for a structural deficit, and I think it's of utmost importance that we continue to reduce that structural deficit and not rely on reserves,” Merolla said.
Still, some on the council praised the continued commitment to paving as many streets as possible.
“The previous administration was simply not making this a priority and we have all been paying the price,” said Ward 2 Councilman Jeremy Rix.
“This is a good investment,” said Ward 3 Councilman Tim Howe. “The artery of our city is these roads. That's how we get the services to where they need to go. That's what our rescue trucks, our fire trucks, our police cars, our city trucks and every commercial company that is paying taxes in the city utilizes our roads.”
The city is only projected to spend about $2 million of its $5 million budget line for road paving this current year. Solomon said this was due to the unexpected financial liabilities that the city experienced, in addition to the threat of a Caruolo Action suit from the schools, which caused the city to implement a spending freeze that temporarily including going forward with road repaving projects.
“Since that has been overcome, the freeze has been released and we are commencing with our asphalt program,” Solomon said during the DPW budget hearing last week. “We look forward in going forward with a program that this city has not seen for a multitude of years.”
Never shy to offer his opinion, Warwick resident and financial watchdog Rob Cote said that the city will not be able to spend close to the budgeted amount of money for next year.
“Although I like to see the initiative, I would like to see that the initiative was realistic and that initiative was based on some historical data,” he said. “It's not going to happen. The reason I'm saying this is not to be negative. I'm trying to be realistic in terms of the taxpayers' money.”
Regardless, DPW Director Mathew Solitro said during budget hearings last week that, between the city’s $1.9 million spent on paving to date and the approximately $875,000 reimbursement in paving costs born by National Grid – which they pay after tearing up and re-paving streets to do maintenance on their utilities – the city had paved close to 10 miles of road this past year. Solitro said he didn’t have doubts about being able to spend the budgeted money.
“To put it in perspective, over an 18-week period we spent the $2.6 million that reflects in the budget and that was a pretty aggressive time going into the winter,” he said. “Now we're coming into better seasons for paving. So, I could effectively pave from now up until December 17, restart in March or April 17 and then go until the end of the fiscal year. I'm pretty confident when I say I could spend $4.5 million, unless you want to give me more.”