Budget to get citizen review

Formal City Council hearings start next Tuesday at City Hall

Posted

The Warwick City Council will hold hearings to discuss Mayor Solomon’s $322.8 million FY20 budget proposal next week, but some financially active residents have scheduled their own meeting to interpret the numbers and raise points of concern.

“Bottom line, I'm not happy with this budget because it’s a reactionary budget,” said former city councilman and former school committee member Bob Cushman, who has also been a long-outspoken critic of Warwick’s financial strategies in the past. “It's the same old ‘crisis of the moment’ budget and it doesn’t do anything to solve our long-term problems, in my opinion.”

By “crisis of the moment,” Cushman is referring to how he believes Solomon’s budget seeks to plug short-term deficits while not addressing long-term fiscal concerns, which he believes to be rooted in unsustainable pension and retired employee healthcare costs.

“I don’t see any type of strategic planning in this budget,” he said. “Mayor Solomon basically came out in February and said we have a major, Category 5 storm, that we’re facing an $18 million deficit. Does this solve that? I don't think so. I think this kicks the can down the road for another year.”

Cushman was also critical of the city’s proposed funding to the schools. The budget calls for and additional $500,000 to be provided to the schools over last year, equivalent to a 0.37 percent increase. The schools have requested $8.5 million from the city council, with much of that need coming in the form of anticipated, contractual increases for staff. The proposal does include covering $1.7 million of principal and interest payments for a 2006 school construction bond, but that money was excluded from the school’s budget forecast as an expected burden of the city, so it does not actually move their anticipated need.

On top of these facts, the school department has indicated that the actual proposed allocation from the city side has been level-funded from last year, at about $123 million, while the $500,000 increase actually came from an approximate $1 million increase in state aid and Medicaid reimbursement balanced by a loss of funding resulting from fewer out of district students coming to Warwick.

“From our perspective, the local contribution is level funded and the increase in the budget is from other revenues like state aid and Medicaid,” said school finance director Anthony Ferrucci.

Cushman said that the school department and school committee need to find ways to bring their cost per pupil down, which sits at around $19,000 per student – among the highest in the state – but that the city needs to be more collaborative in working with them to figure out a good strategy moving forward.

“I don’t have an issue with the Solomon administration or anyone else going to the school department and saying we need to reduce the per pupil cost. I think that's a valid request to be made,” he said. “My problem is not joining with them and forging a direction as to what they need to do. Instead, you basically pull the rug right out from under them and level fund them again.”

Superintendent Philip Thornton maintained on Monday that the school department has taken steps to reduce their expenses, but that their expressed need for next year’s budget is accurately represented.

“Over the past several years, the district has reduced staff in terms of teachers, support staff and administrators, the district has closed schools – the budget as approved by the school committee is what we truly need to operate moving forward,” he said. “A large part of the budget request for next year reflects the contractual costs that we know we have.”

Those contractual costs include $3 million for professional staff raises, $2.2 million of which comes from Warwick Teachers’ Union members, and $4 million in anticipated fringe benefits increases. All told, the school department estimated as much as $12 million in increases during a February meeting for the upcoming fiscal year, which begins July 1.

Ferrucci said the school department was still “looking into” the arbitrator’s decision that would require them to take $4 million from the Warwick Independent School Employee (WISE) Union’s pension to cover their existing deficit for the fiscal year that ends June 30. If that gap is not filled, it is not certain at which point the state Auditor General would become involved in the reconciliation.

“Whatever his remedies are, we're open to,” Ferrucci said when asked what would happen if the situation came to that. “We'll provide unlimited access and if he wants to meet with us, we're more than happy to meet with him.”

Talking more generally, Cushman said that preparing and presenting a budget without either a year-end fiscal audit being finalized or an official five-year financial outlook is not in the best interest of the city’s financial health. Cushman’s own forecast of city finances targeted a “snapshot” showing a five-year deficit ranging in the $78 million range, assuming maximum tax increases each of those years.

“It's like, I'm going to go drive to California with no maps or GPS, I’m just going to wing it, and wherever it leads me, maybe I wind up in Niagara Falls before I realize what's going on,” he said.

Cushman said he has not been contacted by the city to ask questions about his analysis, and Mayor Solomon has denied seeing Cushman’s report during a recent interview.

“The question is why wouldn't you want to look at it?” Cushman asked. “Maybe because you don't want to know the answer.”

“I want to see more transparency and I want to see a strategic plan,” he continued. “And I don't see that right now, I see more of the blame game.”

Resident committee gears up

In advance to the public budget hearings set for Tuesday, May 28 and Wednesday, May 29 starting at 4 p.m. both days at City Hall, the recently formed Warwick Financial Crisis Committee will meet this Thursday at 6:30 p.m. at the Warwick Public Library.

Peter Buongiovanni, who founded the group in the wake of the revaluation completed in April, said Saturday the purpose of Thursday’s meeting is to review the mayor’s budget and prepare for the hearings. Citizen advocate Rob Cote, as well as Cushman, have been invited to give their perspectives of the proposed budget.

Given the mayor’s budget and tax rates, Buongiovanni said, “People are really upset.”

He said he is personally troubled by “a lack of guidance” and a five-year plan to deal with mounting city legacy costs of pensions and health care costs of retirees. He notes that those costs exceed those of active members of some departments.

“There’s got to be a way to address the legacy cost,” he said.

He said the meeting is open to the public.

“We welcome anyone who has an interest in the life style in Warwick,” he said. He said he would welcome the mayor to attend.

Solomon responds

Reached on Monday by phone, Mayor Solomon indicated that he believed the city was headed in the right direction.

“You can't turn an aircraft carrier around as quickly as you'd like to, but we're turning in a direction that's going to be positive for the taxpayers, it's going to be positive for the employees,” he said. “People are going to continue to receive the services that they deserve and are entitled to. Change sometimes can be radical and painful, but services will continue.”

Solomon confirmed that the city had still not received its finalized audit for the FY18 fiscal year, which would provide insight on what exactly was left in city cash reserves, of which Solomon is tapping into for another $3.5 million in his FY20 budget proposal. He said that he was hopeful the city would not be entering the “danger zone” in terms of what is left in reserves, but did not provide further information on what that means or how much he anticipates the reserve account will be left with.

“I'm hoping that once we have a more solid handle on things as we go forward, and we're heading in that direction, that we will be able to act with certainty,” he said. “But right now, it's day to day. Fortunately, we're headed in a good direction day-to-day.”

Solomon said that he was proactive to ask departments to reduce their overall budgets by 5 percent, but he needed to include figures in the budget that account for worst case scenarios, such as the fire department union turning down a tentative agreement that would have provided no pay raises for the 2020-21 contract, and allocating roughly $4 million in overtime for firefighters due to being in a position where the city cannot hire more firefighters until the issue regarding the pension system can be finalized.

“I am not in a position, until that Tier II [pension] issue is resolved, to hire any additional firefighters or personnel,” he said. “That would not be the prudent business decision to make. That's still a variable that's out there.”

Solomon said he would be awaiting advice from “outside financial advisors” to provide more information regarding fiscal liabilities moving forward.

“I will leave that to them because, let's face it, you cannot plan for the things that we've incurred,” he said. “We've incurred a lot of things that could not have been planned for.”

Ward 5 Councilman and city finance committee chairman Ed Ladouceur did not respond to a call requesting comment on this piece.

(With reports from John Howell)

Comments

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disappointed

Mayor Solomon has been a big disappointment. Joe knows what has to be done regarding employee costs and yet after a year he has done nothing. The only thing he has done is curry favor with the unions to to insure his political future. Shame on you Joe.

Let's not forget Joe has been First Officer on the aircraft carrier for 20 yrs. and he didn't have a plan to turn Warwick around. Disgraceful.

We all know Joe signed Scottie's contracts with the municipal and police dept. when he should have sent them back to be re-negotiated. I guess his election took precedence over doing what was in the best interest of the taxpayers.

Joe knows the only thing that will save this city is receivership but he has taken that off the table. Why ???

If Joe isn't careful there will be a petition drive to bring Scottie back.

Tuesday, May 21
KeepCalmandCarryOn

Avedesian needs to be held accountable for the mess he left this city when he ran out before his term was up. Now we know why. what an absolute disgrace! the teachers and all the unions need to start looking at the fact that this is 2019, they're crushing us.

Not sure how this is sustainable......

Tuesday, May 21
had enough

It is time to stop kicking the can down the road. All of the contracts signed by the current and prior Mayors and Councils are completely unsustainable when combined with the unfunded retirement benefits. The only real option is BANKRUPCY, why won’t anybody admit it. There is no other option, maximum tax increases from now to eternity will not fix problem. Anything we do now just prolongs the inevitable. Someone needs to step up and act like a leader and be accountable to the taxpayers and employees. We now know that will not be the one hiding from Beacon reporters as if they are Woodward and Bernstein. So does anybody on the Council have what it takes to get the job done?

I understand that it is unfair to all of the public employees who bargained in good faith. Unfortunately, they were bargaining with a bunch of snakes and liars who would agree to anything, knowing they would be gone by the time it came to pay for what they agreed to. If a private sector CEO did this to his employees, he would be taken away in cuffs.

What has been done is done, we need to move forward and start over, and the sooner we file for bankruptcy the sooner we can emerge on solid financial footing. The City has so much potential to be a great place to live and work but we need leaders who will bargain in good faith with the employees and represent the best interest of the taxpayers at the same time.

Tuesday, May 21
ThatGuyInRI

I can't speak of the larger city budget but I do have kids in the schools and this is an area of concern for me.

So-called "level funding" isn't level at all, it's a defacto cut.

By that I mean, if you have budget X one year, and have budget X the next year, it's actually less money. The cost of running the system goes up every year. Maintenance and energy costs go up, bussing goes up, salaries go up, if the budget doesn't go up that means things get cut.

Maybe some teacher's aids get cut. Maybe a few teachers get laid off, or books, computers, etc. don't ge bought. Something has to go to make the budget work when it's "level funded." Granted, the half million increase is an increase but it's not coming from the town and it's only .37%, costs go up more than that.

So whatever the situation is, whatever the resolution is, let's all at least agree to acknowledge that "level funding" isn't level at all, it's a budget cut.

Wednesday, May 22
Ben Dover

"Had enough" has this fairly well covered...The whole MO for the State has been "kick the can down the road", or have you forgotten RISDIC and the credit unions? How many went to jail? They converted their assets into Florida real estate and escaped..

I totally disagree with bargained in "good faith"...Nothing could be further from the truth...If anything it was BAD FAITH...A handful of people on both sides approved this stuff and the big lie was to the taxpayers and average rank and file...The warning signs were sounded, repeatedly, before Dennis Hoyle going back to Ernie Almonte, the previous Auditor General...He testified before the House Finance committee, year after year, warning about unfunded liabilities and contracts that were unaffordable and unsustainable...NOBODY LISTENED, and the can kept getting kicked down the road...and here we are, at the cliff that Mr. Almonte warned about...The Mayor and Council have gonads the size of a squirrel and are not capable of addressing this issue...Chapter 9 is lurking in the background.

Wednesday, May 22
Get Real

The budget is about maintaining the status quo for city workers and retirees. The taxpayers again do all the heavy lifting.

We expected this of Avedisian but we thought Joe would finally represent the taxpayers. Boy were we wrong.

Wednesday, May 22
wwkvoter

No judge will allow bankruptcy relief unless the city cant raise tax rates to pay its bills. The city will simply raise taxes (a lot).

Wednesday, May 22
wwkvoter

ALSO, the 2010 Fiscal Stability Act describes what can trigger state oversight and intervention, and the levels of intervention possible:

Triggers (6)

Any two can warrant State intervention:

• A municipality projects a deficit in the municipal budget in the current fiscal year and again

in the upcoming fiscal year.

• A municipality has not filed its audits with the Auditor General by the deadlines required by

law for two (2) successive fiscal years (not including extensions authorized by the Auditor

General).

• A municipality has been downgraded by one of the national statistical rating organizations.

• A municipality is otherwise unable to obtain access to credit markets on reasonable terms.

• A municipality that does not promptly respond to requests made by the Director of Revenue

or the Auditor General, or the chairpersons of the House or Senate Finance Committees for

financial information.

Authority (4)

• Allows the Director of Revenue, in consultation with the Auditor

General, to appoint a receiver in the event of a fiscal emergency,

in circumstances that do now allow for appointment of a fiscal

overseer or a Budget Review Commission.

• Prohibits municipalities from filing for judicial receivership and

clarifies that the Superior Court has no jurisdiction to hear such

matters.

• A fiscal overseer, Budget Review Commission or receiver is not

allowed to reject or alter any existing bargaining agreement, unless

through collective bargaining, during the term of such collective

bargaining agreement.

• Provides a mechanism for the Director of Revenue to pay interest or

principal on bonds, notes or certificates of indebtedness when it is

unlikely that a city, town or regional school district will be able to pay

this debt. Allows the State to charge these costs against state aid

(excluding school operational aid) due to the city, town or regional

school district

http://www.ncsl.org/Portals/1/Documents/fiscal/Fiscal_meetings/Daniel_Da_Ponte_Presentation.pdf

Wednesday, May 22
Hepdog

"citizen's review" ...roflmao!

These same goobs vote straight Dem every election knowing full well that keeping unions bloated with money is priority #1,2 and 3 for every Dem in office in this state. Non-union taxpayers are way down the list.. maybe #8 or 9.

Thursday, May 23
Rhode Island Freemason

Ahh.... Now that is what I am talking about!!! I was a little worried about the absence of The Taxpayer's Mayor, but I think we will be just fine...

As a conservative, I despise ALL unions... I think at one time they were necessary (50 or 60yrs. ago), but not anymore. We pay $1,000's and $1,000's of dollars in numerous taxes to the city and the state, and what are the benefits? Is it our schools??? No, they are underperforming... Is it our infrastructure??? No, our road and bridges are a mess... Honestly, what is our Return on Investment? And it is not just municipal and state unions... Look at healthcare? Look at public utilities? For example... My brother, who has a high school diploma, works for National Grid. He has worked for NG for about 15yrs. Over the last 7yrs. or so, he has made in excess of $160,000 annually!!! He will brag to me at times that he was just paid over $300 an hour for 8hrs. to sleep... You don't want to know how much he gets paid if he is on call on Christmas Day and he has already worked his normal 40hr. work week!!! It makes me sick! My brother's intentions are to retire in about 12yrs. at the very young age of 59 as a millionaire!! Am I happy for him? Yes, very much... Am I jealous??? Absolutely!!! I have my undergraduate degree and my MBA in Finance... I have had a very successful career in Banking and Finance, my base salary is a little north of $110,000 prior to a year-end bonus (which I will only receive if I've done my job and I've earned it). With the help from some good investment decisions I made earlier in my career and my contributions to my 401K (which my company will match 100% up to 5%), like my brother, I too will retire most likely retire as a millionaire when I am around 70yrs. old.

As I said earlier, I am a conservative and as a conservative, I refuse to continue to pay excessive taxes to make people in unions; like my brother, extremely wealthy while they are paid $300 per hour to sleep at home in their beds and are guaranteed annual raises every year whether they've earned it or not. And when their contracts expire and they go a little while without a raise they get retroactive pay so they are all caught up and living the dream once again!!!

So rather than complaining and making myself look like a fool and basket-case like Mr. Cote, I decided to get in touch with a recruiter, sell my house and leave RI. While I still call myself Rhode Island Freemason, I am now proud to say I am the Florida Freemason! My family and I have been down here for almost 3yrs! Living in a non-union friendly state is great! My real estate taxes are almost a 1/3 of what they were when I lived on Warwick Neck, we have no car taxes, yet our roads are amazing! And my children's school is performing! And my utilities you ask??? Running our A/C almost non-stop costs us a little over $300 per month (on a 3,400 sq. ft. house with an inground pool)! Do I miss RI? Of course! It is my home, it is where I grew up! I think it is one of the prettiest states in the country!! But do I miss the politics? No! Excessive taxes... No! Unions... NO!

My only fear is that when all these union folks and politicians retire and when THEY come to realize RI is not a retirement friendly state, they too are going to want to pack up and leave RI for the Great State of Florida! My only request is you PLEASE leave your liberal politics and union-friendly ideology in Rhode Island!!!

Rhode Island Freemason err... Florida Freemason...

The Taxpayer's Freemason

Thursday, May 23
taxedgirl

The REAL "citizen review" is the tax bill, and any services that get cut or diminished. And there will be both. But thank god they cant touch the free blue cross health insurance for life that some will always have!

Friday, May 24
Cat

disappointed -

We didn't have a great field to chose from so Solomon won because of name recognition and the fact that people figured he was a good choice because he was already intimately aware of how the city functioned. Only a handful of people sounded the alarm that he was part of the problem, not the solution. Can you honestly say you think Richard Corrente would have done a better job than Solomon?

Tuesday, May 28