Independent Report from PFM Group Shows Continued Structural Deficits in City’s Current Course, Mayor Outlines Measures to Begin to Address Long-Term Financial Challenges
Mayor Jorge Elorza today announced the findings of a report commissioned by nationally respected independent financial group Public Financial Management (PFM) which includes a baseline forecast and financial projections for the City through fiscal year 2021.
“The report is in, and it shows us that Providence still has a structural deficit in the range of $11 to $19 million a year and that gap will continue to widen if we do not begin to immediately address the problem,” said Mayor Elorza. “We need to fix the structural budget imbalances that stand in the way of lasting fiscal strength instead of just kicking the can down the road and letting the problem grow worse.”
The baseline financial forecast shows an annual shortfall of $11.5 million in Fiscal Year 2017. It grows to $13.5 million in FY2018 and reaches $17.2 million in FY2019, before slightly declining to $15.4 million in FY2020 as revaluations increase revenue, and then starts moving upward again – reaching $19.1 million in FY2021. Escalating pension and healthcare costs, the loss of tens of millions in state aid and little tax revenue growth are among the factors that drive the City’s projected deficit over the next five years and beyond.
Mayor Elorza’s proposed budget for FY2016 begins to address the City’s underlying structural deficit with $2 million in annual revenue from expanded parking meters and fees as well as a $6.5 million deficit reduction through growth in the property values. While Mayor Elorza’s budget begins to address the structural deficit, further corrective actions will be needed in the coming year.
As a first step, Mayor Elorza and Public Safety Commissioner Stephen Paré have decided to reorganize the Providence Fire Department from four platoons to three with a condensed shift schedule, the immediate implementation of which could save as much as $5 million annually beginning in FY2017 without compromising safety.
The administration will also work with the Providence School Board to begin transforming our school department’s central office, which has an outdated staffing model and is failing to meet the needs of families and schools, and will work to find other solutions to put Providence’s finance back on firm ground.
“Change is never easy, and addressing Providence’s fiscal challenges will require innovative solutions,” continued Elorza. “But I am committed to doing whatever it takes to provide a firm foundation for our city, and I am confident that Providence’s stakeholders are up to the challenge.”