E.P. council approves switch of sync fund monies to road repairs in FY17-18 Budget

Also backed other changes aimed at reducing necessary tax increase next year

EastBayRI.com ·

EAST PROVIDENCE — East Providence’s need to address some of its worst roads was the focal point of a public hearing on the proposed Fiscal Year 2017-18 Budget at the October 3 City Council meeting.

The council, which declined to approve a previous proposal to put a $15 million bond referendum item on election ballots either this year or next, by a 4-1 vote gave the first of two necessary passages to divert $2.3 million from the fiscal year synchronization fund included in next year’s budget to the capital fund specifically for road reconstruction.

Added to the $550,000 already included for roads in the capital line item, the total rose to $2.85 to be earmarked in 2018 for repair of 11 roads across the city’s four wards. The council also voted by a 3-2 tally to take $100,000 from the Public Works Department’s capital line item to be put it into the road fund as well, upping the final total to $2.95 million.

There was a bit of confusion towards the end of the discussion once City Manager Tim Chapman said the actual estimate to fix the 11 aforementioned roads was actually $2,797,333. At-Large member, council president/mayor Jim Briden, who voted against the move, suggested the council change its position on removing the $100,000 Public Works expenditure, though his ask was not taken up for a vote. It could be readdressed at the second and final public hearing on the FY17-18 budget scheduled for the October 17 council meeting. Ward 1 Councilor Bobby Britto also dissented on the change to the Public Works line item.

The switch in expenditures from the sync fund, which is geared towards allowing East Providence to eventually match its fiscal calendar with that of the state, was initially broached by Mr. Briden. Ward 4 Councilor Brian Faria was also an immediate proponent of the change as was Ward 2’s Anna Sousa.

While he eventually voted in support of the proposal, Ward 3 Councilman Joe Botelho first expressed his disappointment with administration’s inability to pay for the road repairs through appropriations in the budget, despite the city expected to generate some $7 million in additional revenue, and with the council’s decision not to back the bond referendum.

Mr. Chapman explained most if not all of the increased revenue will be spoken for as the city and school department renegotiate the contracts of all nine collective bargaining units in East Providence as well as other expenditures like signing the city up for workman’s compensation insurance and making whole previous shortfalls in the city’s ARC (Annual Retirement Contributions) payments to past employees.

Mr. Britto was the lone dissenting vote on the change, saying he was for synchronization sooner rather than later. Mr. Britto noted it was the second year in a row the council at the time voted to remove money from the sync fund for use in other areas of the budget. Last year, Mr. Britto also voted against the previous council’s decision to take $1.4 million from the fund to provide salary increases to school and city employees along with other expenditures.

“Once you crack that seal, we all look at the sync fund and say let’s go into it or let’s not fund it at all,” Mr. Britto said, while voicing his disapproval.

The considered cost to synchronize the city’s fiscal year is approximately $40-50 million. Mr. Chapman, whose administration put together the FY17-18 Budget proposal, told the council last week at the close of the current fiscal year, October 31, 2017, the sync fund will have $13,475,851. If the council goes ahead with its plan to divert money away from the fund in FY17-18, that figure would likely remain the same next year. The fund balance means the city would likely have to borrow between $30-$40 million to synchronize if it were to do so in the near term.

When asked for his opinion on the matter prior to the vote, state-appointed Municipal Finance Advisor Paul Luba hedged a bit. Mr. Luba said if money were to be taken from the sync fund, using it for a one-time capital expense would be acceptable. Doing what the last council did, taking money for employee salaries that become a permanent part of the annual budget, isn’t preferred.

Mr. Luba also pointed out a decision on the future of East Providence High School, how a complete rebuild or renovation of the 62-year-old structure, is likely due in the next year. Having a sizable cache of money in the sync fund would be one component of keeping interest on any the loan the city would need to take out to pay for the school repairs.

In addition, he said it would be ill-advised to take any more money from the sync fund “as it is now a valuable commodity and it could help prevent a huge tax increase in the future.” Mr. Luba also indicated his position in favor of eventual fiscal year synchronization with the state, saying it takes the guesswork out of producing annual tax rates among “a lot of advantages.”

The council did find common ground on another of Mr. Briden’s proposals, that of reducing the expenditure earmarked for the legal reserve fund in FY17-18 from $500,000 to $150,000. The change would also allow the proposed tax increase in Mr. Chapman’s amended budget to drop from 2.16 percent to 1.83 percent. The council approved the change unanimously, 5-0.

The decrease in the legal reserve fund, coupled with the removal of $249,835 pertaining to the potential costs of the road bond included by Mr. Chapman in his draft budget for next year, the actual amount of tax revenue needed to be raised for FY17-18 also dipped from the initial estimate. City Finance Director Malcolm Moore said the figure would now be $108,564,686, down from the original $109,164, 521.

The council also unanimously gave first approval to the issuance of taxes to raise the $108,564,686 figure as well as the Finance Department’s ability to seek Tax Anticipation Notes (TANs) and Revenue Anticipation Notes (RANs) required to fund the city through portions of the next fiscal year as it does annually because East Providence’s budget isn’t synchronized with the state.


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