The City Council froze the Homestead Exemption in East Providence during the first public hearing on the proposed budget Tuesday night, Oct. 1.
It was one of several significant steps taken by the City Council to slash spending at the request of Mayor James Briden – including giving no pay increases to non-union employees.
“We have a great opportunity,” said Briden. “People need this. Residents are hurting. Some people live paycheck to paycheck.”
The Homestead Exemption had been scheduled to be trimmed by another 1 percent this year – from 13 to 12 percent. The freeze saves taxpayers who qualify for the exemption approximately $600,000.
But the freeze also means the councilors must come up with that amount in cuts with the reduction in revenue. The vote was unanimous to freeze the exemption.
The City Council also voted to give no pay increases to city workers except those mandated by union contracts to save additional money. The vote on that motion was split: 3-2.
Chrissy Rossi was particularly opposed to that motion. She said the city must match the rates paid by other municipalities to avoid losing good people.
The councilors voted 4-1 to set as a goal a final tax-rate increase of no more than .5 percent – one-half of the 1 percent boost called for in the proposed $167.8 million spending plan.
The councilors also considered cutting $200,000 from the $72.9 million school budget – preferably by trimming the proposed $900,000 legal fund line item for the schools.
But that decision would have to come from the School Committee because the City Council cannot mandate line item expenses. The school board could cut other areas to make up a $200,000 reduction.
The proposed $167.8 million budget is about 4.35 percent higher than the current fiscal year spending plan. It includes up to a $4 million surplus.
Cuts that would need to be made to achieve all the actions taken by the City Council “will depend entirely on the size of the surplus they want,” said Paul Luba, East Providence’s Financial Advisor.
The larger the surplus, the sooner the city can transition from a fiscal year that goes from Nov. 1 to Oct. 31 to one that matches just about every other municipality in the state: July 1 to June 30. East Providence voters approved that change to the fiscal year, but it will require borrowing about $25 million to cover a much longer spending year for one fiscal cycle, which will generate about $4 million in additional debt service.
The City Council scheduled another work session for next Wednesday, Oct. 9 at 7 pm to come up with the overall budget cuts needed with the actions taken Tuesday night. It must approve the city's spending plan by Oct. 24.