Providence to realize an estimated $8.5 million operating surplus in FY19, Rainy Day Fund grows to $20 million
November 20, 2019
PROVIDENCE, RI – Mayor Jorge O. Elorza announced today that the City of Providence is expecting to report a year-end operating surplus for Fiscal Year 2019 of $8.5 million. This is the fourth consecutive year the capital city is realizing an operating surplus, growing its Rainy Day Fund to $20 million.
“It is evident that our commitment to responsible budgeting has brought stability to Providence’s short-term finances,” said Mayor Jorge O. Elorza. “Not long after facing a ‘category 5 fiscal hurricane,’ we’ve turned a new page by finding efficiencies and eliminating waste. While this is great news, we must be conscious of our long-term finances and continue to work with all Providence stakeholders to ensure we stay on course.”
In addition to a budgeted Rainy Day Fund allocation of $3.6 million, in FY19, Providence saw a $4.9 million surplus for a total of $8.5 million that will be applied directly to the City’s reserves. The surplus is a result of several factors including the adoption of more realistic budgeting practices, careful management of each department’s budget, better management of Fire Department callback and overtime, strong tax collections, and attrition. This surplus is unaudited and is pending audit by a third party.
The FY19 surplus continues a trend of multiple years of balanced operations for Providence under Mayor Elorza. At the end of FY15, the City faced a total deficit of $13.45 million, which had accumulated over several years. The cumulative deficit was reduced to $3.2 million after a $9.5 million surplus in FY16. In FY17, the City realized a $5.4 million surplus resulting in a positive fund balance of $2.2 million and establishing rainy day reserves for the first time since 2011. In FY18, the City realized a surplus of $9.1 million, further building the rainy day reserve. In August of 2019, Standard and Poor’s Corporation (S&P) upgraded the City’s bond rating to BBB+ up from BBB and assigned a Stable Outlook. In its report, the agency underscored Providence’s progress in improving finances, the correction of structural budget imbalances, as well as stronger financial controls and oversight and improvements to administrative processes.
As budgets are educated estimates of projected costs and collections and cannot account for unanticipated expenses or revenues, surpluses do occur.