Mayor Jorge Elorza announced today that the City is expecting a combined year-end operating surplus for Fiscal Year 2016 of $9,472,618. This is the largest operating surplus that the City has realized in over twenty years.
“This is good financial news for the City of Providence. Providence has gone through some trying financial times in the past decade, but we have turned a corner,” said Providence’s Mayor Jorge Elorza.
Just over five years after Providence finances were described as a “Category 5 Fiscal Hurricane,” the City is expected to realize an estimated surplus of $5,142,464, in addition to a $4,330,154 deficit reduction payment that was made over the course of the fiscal year.
The total $9,472,618 operating surplus is applied directly to the cumulative deficit and is a result of an increase in revenues, dramatic savings in expenditures and a modest school district surplus over the assumed budget.
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
• Non-essential hiring freeze
• Better cash management
• More efficient tax collections
• Better departmental revenue
• Lower salary expenditures
• Reduced spending on operational expenses, where opportunities existed.
• Reduced medical claims, due to cost containment as a result of further coordination of benefits implementation, plan design changes and greater pharmacy rebates.
“Providence’s FY16 surplus is a step in the right direction, and I credit the Elorza administration’s work to address the City of Providence’s structural deficit,” said Rhode Island Department of Revenue Director Robert Hull. “Though we remain concerned that the city cannot arrive at long-term sustainability without difficult work to address unsustainable pension and retiree healthcare obligations, the reduction of year-over-year deficits reflects the administration’s proactive efforts to address Providence’s fiscal challenges. The Raimondo administration will continue to meet regularly with the city to ensure Providence continues on a path toward fiscal health.”
At the end of FY15, the City faced a total deficit of $13,445,000, which has been accumulated over the past several years. However, this surplus would lower the cumulative deficit to $3,972,382.
“Due to our proactive efforts, we are pulling ourselves out of a significant deficit faster than anticipated,” added Elorza. “This is a significant step in our long-term approach to stabilizing our finances.”