By Tom Shevlin
NEWPORT – After three months of budget hearings and deliberations, the City Council on Wednesday voted to finalize Newport's FY2012-13 budget.
The budget, which will go into effect July 1, calls for a 2.5 percent tax increase, level funding of the city's schools, and no increase to the motor vehicle tax.
The proposal also recommends that the city transfer the beach and parking funds back into the city's general operating scheme, with the former designated as a special revenue fund.
According to the administration, rolling the enterprise funds back into the general fund, will not change the practice of treating the operations at the beach or within the parking division as separate activities, but it will bring back to the council an ability to manage them. It also should provide a "sustainability" to the beach while at the same time eliminating the need to subsidize other funds through the parking fund.
"Incorporating these changes have enabled the staff to present a balanced budget proposal to the council which has minimized the tax levy increase," Howington wrote in a message to councilors back in April.
Mayor Stephen C. Waluk thanked the city adminstration - especially those in the Finance Department for their work in presenting a well balanced plan that minimizes the burden on taxpayers while at the same time addressing the city's outstanding capital needs and pension liabilities.
The plan was also applauded by Ron Becker, a member of the Alliance for a Liveable Newport, who has been following the city's budget process for the past seven years.
This year, he said, "I find myself in an unusual position, offering my support for the budget." Describing it as a fair budget for a tough time, he added, "The bottom line: this is a good proposal."
Members of the School Committee, however, likely felt differently. After making a last-ditch appeal for more than $400,000 in additional funding, council members ultimately voted to hold the school's allocation at the same level as the previous year.
School Committee Chair Patrick K. Kelley recognized that recent deficiencies outlined in an independent auditor's report released last month, highlighted the need to improve the school's finance department, but he also suggested that some positive steps have already been made.
Without additional funding, he said, staff reductions and program cuts would likely ensue.
His sentiments were echoed by fellow committeeman Charlie Shoemaker, who noted that "one of the main reasons we're in trouble" is because of the roughly $400,000 in anticipated cuts to federal Title I and Title II programs.
He argued that the cuts, which are unlikely to be restored, will have a negative impact on three groups: children that have reading and learning difficulties; high achieving students who might be disrupted by the lack of supervisory teachers for special needs children, and the teachers who might be laid off.
"We're in a big recession," Shoemaker said. "To lay these people off and to give them unemployment is not going to help the economy."
However, councilors held to the proposed budget with the notation that additional funding can be allocated during the course of the year should the school department request it.
In the end, property owners can expect to see a tax increase of 2.50 percent on their next tax bills – far below the maximum 4 percent allowed under Rhode Island law, but slightly higher than the rate of inflation.
All told, the city's proposed combined expenditures for the coming fiscaal year will amount to just over $115,700,000 – a more than 15 percent decrease from last year due primarily to the removal of capital spending attributed to the city's $30 million Claiborne d. Pell Elementary School project.
And while overall spending will decrease by roughly $20 million, general fund expenditures actually increase from $81,407,687 to $83,415,150 – or 2.47 percent.
That's the same percentage increase that was proposed for FY2011-2012 budget, and actually falls below current non-commodity inflationary trends.
Taxpayers can expect to see their property taxes, as equalized from the recent revaluation, rise to $11.10 per $1,000 in assessed value for residential property and $15.38 per $1,000 for commercial property.
The car tax, meanwhile, remains unchanged at $23.45 per $1,000 in assessed value, with vehicles worth less than $6,000 exempt. It's also worth noting that funding commitments to the city's Other Post Employment Benefit (OPEB) program will continue to be met in full.
Stimulative initiatives were also factored into the proposal, including increased economic development programs, improved communication systems, expansion and deployment of technology, and a general review of the sustainability of the city's various enterprise funds.
Under state law, property taxes can be raised by a maximum of 4 percent, or in dollar figures, an additional $2.5 million.
Of particular significance is the change from firefighting personnel to civilian positions in the Fire Department's dispatch operations.
Capital costs and equipment replacement have also been reviewed, and Howington notes a decrease in some proposed capital improvements projects will also help realize additional savings.
The biggest change, if only structurally, comes in the form of the aforementioned enterprise funds.
Initially created to be self-sustaining, their operations have in recent years become muddled – used as both a source and a depository for for one-time revenue transfers.
Given their mixed results, and the implications it would have on the bottom line, councilors could well be receptive to the idea of rolling the beach and parking funds back into the general revenue stream.
Among the assumptions guiding the 440-plus page document:
• The housing market will continue to struggle, resulting in continued low revenues for the realty conveyance tax and recording fees
• A slowly improving economy will result in higher meals and hotel tax revenue
• Historically low interest rates will persist, yielding stagnant investment income
• And rising commodity prices will increase the impact of city purchases of supplies, materials, contracts, and utilities.
With the administration's recommendations in hand, the City Council will begin the first of a series of public budget workshops within the coming weeks. Newport residents are encouraged to attend. A full copy of the proposed FY2013 budget can be found online at www.CityofNewport.com.