Elorza committed to ‘fix the city’s finances’

PROVIDENCE – In his first ever state-of-the-city address, second-year Mayor Jorge O. Elorza on Tuesday talked broadly about his first-year accomplishments and mapped out his future goals in a city poised for economic growth but also facing financial challenges.
“I said we were going to build a new Providence – a city that works for all of its residents, a city committed to innovation, and a city that provides opportunity for all,” Elorza told City Council members. “Over the past year, we’ve come a long way in achieving that vision, and while there are still many challenges, I’m proud of what we have accomplished together to position Providence for a better future.”
Elorza spent much of his first year trying to find efficiencies and promote innovation in city government. He hit the ground running with initiatives aimed at streamlining city services and integrating new technology into everyday business.
He’s responsible for collaborating to host the city’s first-ever International Arts Festival, which – along with WaterFire – attracted an estimated 100,000 people to the city.
Since taking office, Elorza has also made a public push to attract more millennials to come and stay in Providence, developed a plan to eliminate roughly 600 abandoned homes in the city within the next six years and move administrators into city schools in an effort to better support students, parents and teachers.
But all of Elorza’s first-year initiatives, however, have been made with a backdrop of fiscal challenges. In October, R.I. Auditor General Dennis E. Hoyle sent a letter to the city urging it to adopt a plan to reduce its accumulative deficit of $13.4 million calculated upon the conclusion of fiscal 2015.
Hoyle estimates about $5 million was added to the deficit in fiscal 2015 alone, which ended two consecutive fiscal years of running a surplus, according to the letter. Providence has run a deficit in five of its last seven fiscal years, according to Moody’s Investors Services.
“Our city has its share of financial challenges, but I’m committed to being financial responsible to fix the city’s finances,” Elorza said. “I refuse to rely on one-time fixes and I refuse to kick the can down the road. This is critical to ensure Providence’s long-term stability.”
Elorza’s Tuesday address didn’t include a budget proposal, which is typically revealed in the spring. He did say the city plans to spend more than $20 million over two years on repairs and maintenance to school buildings and is “developing a long-term plan to invest even more.”
In a deficit-reduction plan sent to the state on Jan. 26, the administration committed to reducing its deficit by $8.7 million in fiscal 2016 and fiscal 2017 and by $4.7 million in fiscal years 2017 through 2021.
Savings have been identified in nonrecurring revenues – $4.1 million – along with a one-time incentive rebate of $2.5 million the city expects to receive after it purchases the city’s streetlights and converts them to LED lighting. The city also hopes to find additional savings in noncontractual spending, a possible citywide hiring freeze, and its ongoing attempt to reduce spending on public safety personnel, which has been a point of political contention for Elorza.
Hoyle has also recommended the city increase revenue from one-time sources, new additions to assessed property values, or incremental additions to taxable property values within tax stabilization agreements, which the city is considering.
“While we are continuing to explore other alternatives to tax increases in [fiscal 2017], certainly it will require a further in-depth analysis, which will be predicated upon the results of the city’s current statistical revaluation efforts,” Finance Director Lawrence J. Mancini wrote to Hoyle last month.
The city’s revaluation of property values would go into effect in July and revenue collected through property taxes could be counted for fiscal 2017.
Elorza is also seeking state help in collecting more taxes from the city’s largest nonprofits for nonmission properties, including parking lots that generate revenue or sites leased to businesses, which are currently tax exempt.
Despite the financial struggles, however, Elorza remains bullish about his city’s future prospects, especially in the area of economic development, where the city has struggled to make gains in the past.
The city estimates there are more than 30 major construction projects, worth almost half a billion dollars, expected to break ground in 2016, with “even more on the horizon,” Elorza said.
“Providence is turning an important corner. We were hit hard by the Great Recession and we have been too slow to recover,” he said. “But everywhere you look, there are encouraging signs. Businesses are hiring, people are buying homes, and developers are beginning to invest and build in Providence again.”
His administration projects new development could generate $8 million to $9 million between 2016 and 2020, with a potential windfall existing within the former I-195 land located along the Providence River downtown. Last year, the city passed a tax-stabilization plan for the former I-195 land, which maps out how the city could benefit financially from development projects on the vacant land, although proposed development projects to date have been minimal.
“The people of Providence are ready to see cranes in the sky and workers on the job. We are ready for our resurgence and that resurgence begins now,” Elorza said on Tuesday. “When Providence plays to its strengths and is united as one city, we can accomplish any goal. And I know that with the phenomenal partners we have in government and throughout the community, Providence’s best is yet to be seen.”

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