City posts FY2016 surplus but still carries deficit from past years

DESPITE RUNNING AN OPERATIONAL SURPLUS in fiscal 2016, Providence Mayor Jorge O. Elorza's city government saw increased spending for long-term obligations and still has a cumulative deficit in its general fund. / PBN FILE PHOTO/STEPHANIE ALVAREZ EWENS
DESPITE RUNNING AN OPERATIONAL SURPLUS in fiscal 2016, Providence Mayor Jorge O. Elorza's city government saw increased spending for long-term obligations and still has a cumulative deficit in its general fund. / PBN FILE PHOTO/STEPHANIE ALVAREZ EWENS

PROVIDENCE – The city of Providence ended its fiscal year with a $10.3 million operating surplus, buoyed by increases in revenue, according to an audit released Dec. 29 by accounting firm BlumShapiro.

This was slightly higher than the $9.5 million surplus projected in October by the administration of Mayor Jorge O. Elorza, and includes $4.3 million in a deficit reduction payment.

The net increase was swallowed up, however, by a running deficit in government operations. It means the general fund, the chief operating fund for the city, finished the year at negative $3.2 million as of June 30, 2016, the close of the fiscal year, despite the application of the aforementioned operating surplus to the cumulative deficit.

The city was successful in fiscal 2016 in increasing its tax collections, which rose by $2 million, and in collecting another $2 million in building-related permits and fees, according to an administration overview. Elorza, on projecting the surplus in October, attributed the stronger year-end to a realistic budget, a freeze on hiring for nonessential employees and more efficient tax collections, among other measures.

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The city’s overall net position (as opposed to the general fund), which includes capital assets, infrastructure and all government funds, decreased by $29.8 million in fiscal 2016, according to the audit. This figure includes an increase in tax collections and higher than anticipated department revenues, but also an increase in expenditures in health care and pension costs.

(A more detailed examination of long-term obligations is posted HERE.)

The largest expense for government functions is public education, which cost $430 million in fiscal 2016, nearly half of the total expenses of the city agencies. Public safety, which includes police and fire services, absorbed another $219.5 million, according to the audit.

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