2009-12-24 / Front Page

Cuts in state aid would sting Jamestown

By Phil Zahodiakin

Raising the prospect of painful budget decisions for Jamestown, Gov. Donald Carcieri has formally asked the legislature to slash state aid to R.I. municipalities. The cuts, which would help the state plug its $219 million budget deficit, were included in the supplemental budget plan released by Carcieri last Tuesday.

The budget plan targets fi- nancial assistance to cities and towns, and also proposes the sale of state-owned land and the elimination of cost-of-living increases for state pensioners. If the legislature approves the plan, the cuts would kick in halfway through 2010.

All told, the state would eliminate $125 million in municipal aid – $41 million of which goes to public schools. The state would also eliminate $70 million in motor vehicle excise tax reimbursements to towns.

The annual Jamestown reimbursements amount to $440,000 per year, all of which is used for operating expenses. Town Administrator Bruce Keiser said that the loss of $220,000 for the third and fourth quarters of fiscal year 2009-10 would “force us to choose between cutting expenses or issuing a supplemental motor vehicle tax or some combination of those options.”

Keiser said the outlook for Jamestown schools is less grim because they would lose about $12,000 – much less than the losses faced by other districts because Jamestown’s share of that assistance is proportionately small. However, the proposed reduction in the aid that helps support non-school expenditures would be much more difficult to absorb.

“Losing $220,000 this year, and $440,000 in each of the subsequent fiscal years, would be a very substantial hit because we’ve kept operating expenses for our various departments as lean as possible to eliminate the need for tax increases,” he said. “Our non-personnel line items are already bare bones. So if these cuts became effective at the end of the second quarter, we would have to look at the personnel side – which costs the town $11,000 a day – for wage or benefi t concessions. Or, we would have to look for opportunities to reduce staffing, and we’d have to consider furlough days.”

Keiser said $220,000 represents about 3% of the total municipal operating budget – but the fact that its loss would hit the town in the middle of the year makes it a significant challenge for a community the size of Jamestown.

Nevertheless, he believes that Jamestown would be able to manage the trauma of the cuts, adding, “But the cities simply cannot. The amount of the motor vehicle tax reimbursement – for us – is equivalent to $86 per car. Providence receives a reimbursement equivalent to $450 per car, and the city could not possibly recoup that amount by increasing its property tax or adding a motor vehicle tax. In East Providence, the city manager says he would have to ‘eviscerate’ city services if the cuts go through.”

From his perspective as a municipal administrator, Keiser said the plan to close the state budget deficit through this means “has not been thought through very well in terms of its viability.” Keiser also said the state cannot continue implementing cutbacks in state services – as it has for several years – to achieve its fiscal goals.

“It is clear that the state has made substantial staff reductions in the last couple of years – to the point where some departments are unable to fulfill their missions,” he said. “I don’t see any more options for the state to cut expenses. They have to look for opportunities to raise revenue. While the governor is on record as opposing an increase in income or sales taxes, by eliminating aid to cities and towns, he will force the residents of those cities and towns to consider property tax increases of their own.”

While not necessarily advocating a sales tax increase, Keiser said that the R.I. sales tax per capita is ranked among the lowest 10% of the states – while its property taxes are ranked among the highest 10% of the states. However, any statewide tax increases would not restore the full measure of cuts in municipal assistance for quite some time, so the town must assume, and prepare for, less dependence on outside aid.

That includes raising the potential loss of state aid during the collective bargaining that will start early next year, Keiser said, adding, “The unions are aware of the economic climate we’re in and understand that adjustments to the normal course of business have to be examined. I also think that looking at the balance between public and private sector total compensation and benefit levels is appropriate.”

Decisions to reduce staff would affect the level and quality of Jamestown services. “Do we decrease the size and scope of our recreation or library programs?” Keiser said. “Should we consider staffing DPW with fewer people and cut back on road and drainage activity?

“Our largest department is the police department,” Keiser continued, “where we are staffed to provide two police officers per shift to ensure public safety and the safety of the officers. I don’t think the community should support a change to just one officer per shift, as some have advocated. I’ve had discussions with neighboring communities about their ability to provide backup support in the event of emergencies, and they have said, ‘No.’ They are downsizing where possible and do not have excess staff capacity to guarantee mutual aid on a moment’s notice when response time may be critical.”

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