Prov. budget gets OK, but councilors divided on property tax plan

PROVIDENCE, R.I. (WPRI) — The Providence City Council approved the city’s budget in a special meeting Monday night, though the members were divided on how the city should levy taxes on its residents and businesses this year.

The vote was 8-6 in favor of the property tax side of the budget and 9-5 in favor of the $568 million spending side. The plan covers the new fiscal year that begins July 1.

The budget ordinances must pass a second time before reaching Mayor Jorge Elorza’s desk.

Several of those who voted against the tax plan said they did so because the Council Finance Committee increased the commercial tax rate compared with Elorza’s original proposal, a cost they argued could get passed on to renters. (Residential buildings with more than five units are considered commercial properties for taxation purposes.)

Elorza had proposed lowering both the residential and commercial rates in response to the recent property valuation that sent home values skyrocketing.

Even with the lower tax rates, a majority of homeowners would have seen higher tax bills this year under the mayor’s plan due to rising property values.

The Finance Committee, in amending Elorza’s proposal last week, opted to lower the residential rate even further, while raising the commercial rate above Elorza’s proposal — but still below the current tax rate.

The new rates under consideration are $17.80 per $1,000 for the residential rate, with a 45% tax exemption for owner-occupied properties, and $35.40 per $1,000 for the commercial tax rate.

“I’m thrilled about the prospect of single-family homeowners getting more relief,” said Councilman John Goncalves, D-Ward 1, who voted against the tax plan. “We have commercial properties that are inhabited by renters, and a higher commercial tax rate is going to make our city more unaffordable for those renters who want to live in the city.”

Joining Goncalves in voting no were Councilors Helen Anthony, Pedro Espinal, Kat Kerwin, Nirva LaFortune and David Salvatore. (All 15 members of the City Council are Democrats.)

LaFortune, in explaining her vote against the budget, noted the increasingly unaffordable rental market. She said there is a racial disparity between homeowners — who she said are more likely to be white — and renters.

“What I would encourage us to do is for us bring this back to committee, bring the people to the table who this would impact, have a robust conversation and figure out how we can come up with a decision that works for all people,” said LaFortune, who is also a candidate for mayor.

Councilman Nicholas Narducci shot back at that argument.

“Not every white person is rich,” Narducci said. “I sit here and hear how it affects Black families. No it doesn’t, it affects all families.”

He said it was “about time” the commercial property owners were hit with a tax increase, after being spared in recent years.

Councilwoman Jo-Ann Ryan, D-Ward 5, the chair of the Finance Committee, said the panel ran “many models” to determine which tax rates to propose, aiming to reduce the tax increase for as many property owners as possible.

“This was a particularly difficult budget year and we worked very, very hard,” Ryan said. “We were able to pass on a reduced tax burden for over 32,000 families.”

She said there are 500 apartment buildings that are considered commercial properties because they have more than five units.

“We considered that, and it’s not an easy thing,” Ryan said. “We returned a budget that I think is sound, and lessens the tax burden for the majority of the families in the city of Providence.”

According to the council, the value of residential properties in Providence increased by an average of 46%, while commercial properties increased on average by 15%.

Councilor Rachel Miller, D-Ward 13, said after the meeting she shares concerns about rising rental prices, but said commercial property owners are raising rents regardless of their tax rate.

“Commercial property owners are doing OK right now,” Miller said. “The same apartment that was going for $1,100 four years ago is on the market for $1,800 today. Taxes are not going up that much.”

She said the city should instead prohibit landlords from hiking rents dramatically. Providence doesn’t currently set a cap for how much a landlord can raise the rent on a tenant.

“I live in fear that I’m going to be priced out of the neighborhood I represent,” Miller said. “I do obviously care deeply about affordability, but this is not the way we challenge affordability.”

Miller, Ryan and Narducci voted in favor of the tax plan, as did Councilors Carmen Castillo, John Igliozzi, Oscar Vargas, Mary Kay Harris and James Taylor. (Councilman Michael Correia was absent.)

Anthony, who represents Ward 2 and is a member of the Finance Committee, said the council should have taken testimony from the public after changing the tax rate proposal.

“I can’t support this budget due to the lack of process and transparency,” Anthony said. “We don’t allow our residents and businesses to participate in this process.”

She pointed out that there were only a few days in between when the new proposal was released in committee and when the full council took up the budget at a special Monday meeting. (The council usually meets on Thursdays.)

Elorza’s office did not immediately respond to an inquiry about whether he’s committed to signing all of the budget ordinances when they reach his desk. Enough councilors opposed the tax plan to sustain a veto if Elorza rejected the proposal.

When asked about the council’s new plan last week, Elorza’s office said there was “agreement on 99.9% of the budget.”