Providence to Realize Estimated $10.2 Million Operating Surplus in FY17
PROVIDENCE, RI- Mayor Jorge Elorza announced today that the City is expecting to report a year-end operating surplus for Fiscal Year 2017 of $10,206,604. This is the second year in a row that the City is realizing an operating surplus at the close of the fiscal year.
“This is a good day for the City of Providence,” said Mayor Jorge Elorza. “While we still have a lot more work to do, we’ve turned an important corner and are seeing the results of our hard work and new budgeting practices pay off. We have eliminated the cumulative deficit three years sooner than expected and will establish a ‘rainy day fund’ for the city.”
Just over six years after Providence finances were described as a “Category 5 Fiscal Hurricane,” the City is expected to realize an estimated surplus of $4,106,604, in addition to a $6,100,000 deficit-reduction payment that was made over the course of the fiscal year. The total estimated $10,206,604 operating surplus is applied directly to the cumulative deficit and is a result of new budgeting practices, savings from earlier pension payments, lower salary expenditures and better departmental revenue, among other factors.
“This is the second year in a row of an operational surplus. This is an example when we work together, we yield the best results for our residents,” said John J. Igliozzi, Chairman of the Providence City Council Finance Committee. “However, we need to remain vigilant on expenses and disbursements. The City has additional fiscal challenges to address, and I look forward to continuing to work with the administration.”
“I thank the City Council for their partnership and look forward to continue working together for our long-term fiscal resiliency,” added Mayor Jorge Elorza.
At the end of FY15, the City faced a total deficit of $13,445,000, which had accumulated over the previous several years. The cumulative deficit was reduced to $3,158,000 after the FY16 surplus; the FY17 surplus will completely eliminate that remaining cumulative deficit, leaving the city with a positive fund balance (“Rainy Day Fund”) of $7,048,604 subject to the completion of the year-end audit. This will be the first time the City has realized a “Rainy Day Fund” since 2011. In addition, Mayor Elorza budgeted 1 percent of the City’s FY18 budget (without school appropriation) to be added to that reserve.
“As Mayor of a neighboring city that just six short years ago was on the verge of bankruptcy, I applaud the work of Mayor Elorza, the Providence City Council, and their dedicated employees to bring the city to a position of financial surplus,” said Mayor Donald R. Grebien of Pawtucket. “Just as my administration inherited operating deficits when I first came into office in 2011, Mayor Elorza had a massive financial problem to tackle. While there is always more work to be done, the proof is in the numbers and the progress that the City of Providence is making is great for the city, its neighbors such as Pawtucket and Central Falls, the entire Blackstone Valley, and all of Rhode Island.”
As budgets are educated estimates of projected costs and collections and cannot account for unanticipated expenses or revenues, surpluses do occur. This year’s significant surplus, which will be applied to the City’s cumulative deficit, can be attributed to:
- Realistic budgeting (virtual elimination of one-time fixes)
- Continued strategic cash management
- More efficient and robust tax collections
- Better departmental revenues
- Attrition savings in salary expenditures
- Savings due to earlier pension payments
- Reduced spending on operational expenses, where opportunities existed