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Supplemental tax increase passes at Statehouse

July 3, 2013

Tax finally passes


PROVIDENCE – It took two years of parliamentary wrangling, political gamesmanship and a seemingly endless series of meetings, compromises and amendments, but the General Assembly has finally given its permission for Woonsocket to impose a supplemental tax on its residents.

Even at the 11th hour, when Woonsocket Sen. Marc Cote announced earlier this week that he would not support the extra tax as the measure was written at that time, it looked like the proposal the state Budget Commission said was necessary to avert further fiscal woes and perhaps state receivership might languish in legislative limbo.

But compromise language was hammered out at about 11 p.m. that brought Cote back on board and the Senate passed an amended bill originally sponsored by Woonsocket Rep. Lisa Baldelli-Hunt that makes the assessment of the supplemental tax contingent on the Fontaine administration and the Budget Commission realizing at least $3.75 million in savings from negotiating with city employees and retirees.

While there were originally two different versions of the supplemental tax scheme, the one that ultimately passed originated in the House. It will add an extra 18 percent tax on automobile owners to bring in an extra $1.5 million for the 2012-2013 budget and a 4.8 percent hike on commercial and residential real estate owners – except on owner-occupied homes and condos – to add another $1 million to city coffers. The real estate increases will remain as part of the city’s permanent tax levy.

Mayor Leo Fontaine, told The Call Wednesday he is “happy that everyone was able to work out their concerns and move it through. It is certainly an important part of our five-year plan and I’m pleased we can now go forward with implementing the plan as a whole.

Fontaine, who has a seat on the Budget Commission, said a tentative agreement has been made with the police union “but their membership still has to vote and right now that is not looking completely positive, so we are waiting to see how that turns out. If we need to, we will be back at the table with them.” He said firefighters already have a contract, but we are trying to open that up and reach a new agreement with them.

The remaining group to settle with is the retirees, the mayor said, “we have some legal challenge on that front, but those three pieces will wrap up the negotiation side and at that point, it wraps up much of what we need to do from the standpoint of the current issue facing us.

“This is a difficult situation,” Fontaine said, “nobody likes to talk about additional taxing but it was a necessary piece to try to get out of this mess.”

With the passage of the tax plan, said Council President John Ward, who is also a member of the budget commission, “We can breathe something of a sigh of relief because that hurdle has been jumped over and we can keep running the race.

“I think it is good news because it will put the city in a more stable place and it will help us as we try to finish up our work on negotiations,” Ward said. “We still have the need to realize the cost savings that will make this all work. The taxpayers have basically gone all in now and it is time to finish up the negotiations so we can have the five-year financial recovery plan in place and functioning.”

Ward hesitated to predict when the last details of plan could be nailed down, but said, “I hope it is in a couple of months. It’s hard to say because we have already had one item pushed into a courtroom and courts are notorious for going slowly.”

One retiree is suing over changes being made to the health plan for former employees.

Cote said one of the biggest concerns the city’s lawmakers had was having a supplemental that did not ensure that there was shared sacrifice and accountability for making sure that happens. So we ended up structuring a bill that sets a minimal targeted savings from concessions.

“If that is not met, supplemental tax bills are not issued,” Cote said.

How the $3.73 million savings is accomplished, “is up to the Budget Commission,” Sen. Roger Picard said.

“It’s important to understand the language of the bill,” Baldelli-Hunt said, “because we don’t want people to be confused. We feel it is important that all components of the five-year plan come to fruition. The caveat in the supplemental tax is that they have to meet that target prior to the bill going out.

“The thing we wanted to avoid,” Cote said, “was people getting the sense they paid a supplemental tax, but all other parties didn’t do their share.”

Follow Jim Baron on Twitter @Jim_Baron

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