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WOONSOCKET â€” If thereâ€™s a breath of life left in a House bill that would allow the city to levy a 13 percent supplemental tax bill, the Budget Commission intends to find out.
During its second meeting in Harris Hall Tuesday, the five-member, state-appointed panel now handling the cityâ€™s finances unanimously passed a resolution urging the House to pass the legislation immediately.
After reviewing school expenses, the resolution says, the Budget Commission has determined that it cannot eliminate the structural deficit in the Woonsocket Education Department with cuts alone, at least not without compromising state-mandated basic education standards. A copy of the resolution is to be forwarded to Rep. Helio Melo, chairman of the House Finance Committee, members of the committee and House Speaker Gordon Fox.
What happens after that is anyoneâ€™s guess. But the panel also passed a backup resolution that could allow for a smaller supplemental tax bill that does not require the approval of the General Assembly.
Backed by the City Council and approved by the Senate, the legislation to allow the 13 percent supplemental tax bill stalled in the House on May 24 when State Rep. Lisa Baldelli-Hunt voted to suspend consideration of the measure in an eleventh-hour change of heart. House leaders later said they would not bring the bill back to the floor unless on the explicit request of Baldelli-Hunt.
She had portrayed the bill as an insufficient quick-fix for the cityâ€™s fiscal woes, calling for a more aggressive approach to addressing the deficit, such as the appointment of a receiver.
For the Budget Commission, the problem is a $10 million deficit in the WED, which is also facing a cash crunch that could cause it to default on its last teacher payroll of the year, on June 29. The WED is also some $6.5 million in arrears to vendors.
The supplemental tax bill would raise a projected $6.6 million, much of which could still be collected in time to pay down a portion of the deficit during the current fiscal year. It would also allow the city to borrow some $3.2 million against the anticipated collection of taxes immediately, pumping some badly needed cash into the WEDâ€™s coffers.
Budget commissioners said that without supplemental taxes, it will extremely challenging to balance budgets next fiscal year, even with a big tax hit.
â€śI donâ€™t know how weâ€™re going to come close to these numbers without the supplemental tax and building the $6.6 million into a better base for next year,â€ť said Budget Commissioner Peder Schaefer, the associate director of the Rhode Island League of Cities and Towns.
Likewise, Commissioner John F. Ward, the City Council president said that death of the supplemental tax bill means the tax levy would have to increase by about 18 percent next fiscal year just for the city to close the budget gaps. That figure still falls well short of satisfying the roughly $70 million the WED says it needs to run the schools in 2013.
â€śThat projects a significant hurdle for us to overcome,â€ť he said. â€śI donâ€™t even see a receiver overcoming those numbers...to do nothing goes beyond even putting us into bankruptcy because thereâ€™s no way to close that gap, itâ€™s just physically impossible to do.â€ť
Mayor Leo T. Fontaine, also a member of the commission, said his fear now is that the House leadership is locked into to a position on supplemental taxes after putting the onus for the failure of the bill on Baldelli-Huntâ€™s shoulders. Fontaine said that without the supplemental tax bill, the WED will be on course to file a Caruolo lawsuit against the city when the new fiscal year arrives.
If a Superior Court judge sided with the WED, the result could be the same as the one the House seeks to avoid â€“ supplemental taxes, by court order.
â€śIt seems like a lot of work to get to the point we already know weâ€™re at,â€ť Fontaine said.
Even if the House ultimately fails to resuscitate the supplemental tax plan, the Budget Commission is eyeing an alternative method to issue a smaller supplemental tax bill without legislative approval. The plan involves exercising the cityâ€™s power under laws governing annual increases on the state-mandated cap on the tax levy from one year to the next. The limit currently stands at four percent.
Budget commissioners think the city could have collected $3 to 4 million over the levy cap this fiscal year by claiming certain exemptions available for declining revenues from taxes other than those derived from real estate, plus payments of debt service associated with the 2011, $11.5 million deficit reduction bond.
The panel voted 5-0 in favor of a resolution supporting such a plan, which would require the approval of the state Office of Municipal Finance.
The revenues from the more modest plan wouldnâ€™t close as much of the WEDâ€™s budget gap as the larger supplemental tax bill, but â€śIt would go a long way,â€ť said Finance Director Thomas M. Bruce.
Still uncertain is exactly how much the WED will spend, or be allowed to spend next fiscal year. Still in play is how many teachers will be recalled after 490 layoff notices were issued earlier this year.
All but roughly 94 of those teachers have already been recalled. Schools Supt. Giovanna Donoyan wants the balance of them recalled, but she told the panel Tuesday that the WED could limp along with a net cut of 42 of them.
â€śI wouldnâ€™t like it,â€ť she told the commission. â€śIt will be the biggest burden on an already crucified, crippled system. I know itâ€™s not what people want to hear.â€ť
At one point, School Committee Chairwoman Anita McGuire Forcier interrupted Donoyan, taking issue with the notion that the system could do without the personnel under any circumstances.
â€śI disagree,â€ť Forcier said. â€śWe wonâ€™t meet the basic education plan, or IEPs (individual education plans tailed for special needs students).â€ť
Chairman Bill Sequino Jr., the East Greenwich town manager, said the issue of staffing would be revisited when the panel meets again at 8 a.m. on Monday.