Warren could require state permission to exceed tax levy limit

By Ethan Hartley
Posted 4/17/24

If nothing changes between now and the final budget approval deadline in May, the Town of Warren will need to seek permission to raise the tax levy by 5.7% for the next fiscal year.

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Warren could require state permission to exceed tax levy limit


The Warren Town Council voted 3-1 (Council Vice President Steve Calenda was absent until later in the meeting) last Tuesday evening to approve a preliminary budget for the fiscal year beginning July 1, 2024 amounting to $27.6 million.

That projected increase over last year’s budget would require a 5.7% increase to the town’s total tax levy (and a roughly 5.7% tax increase on residential property, from 13.66 last year to a proposed 14.44 for the upcoming fiscal year).

While the budget could still in theory be changed between now and the deadline to approve a final version on May 14, the passing of a preliminary budget with a proposed tax levy increase above the 4% limit allowable by state law will now prompt a review from the Rhode Island Auditor General.

According to R.I. Gen. Laws 44-5-2(d)(4), a city or town may qualify to exceed the tax levy limit if they experience an “emergency situation,” however it remained unclear at press time as to whether or not the Town of Warren — which finds itself in turbulent financial waters following a $13 million lawsuit settlement agreed to in December, of which the Town is on the hook to pay $8 million of — qualifies as an emergency under the definition provided in the law.

“In the event of an emergency or an anticipated emergency, the city or town shall notify the auditor general who shall certify the existence or anticipated existence of the emergency,” the law reads. “Without limiting the generality of the foregoing, an emergency shall be deemed to exist when the city or town experiences or anticipates health insurance costs, retirement contributions, or utility expenditures that exceed the prior fiscal year's health insurance costs, retirement contributions, or utility expenditures by a percentage greater than three (3) times the percentage increase as specified in subsection (a) or (b) of this section.”

DePasquale takes a last minute stand

The lone nay vote against approving the preliminary budget came from Councilman Joe DePasquale, who showed up to the meeting with a list of cuts to the budget amounting to $337,172 that he had identified, and asked for support to enact, in order to drop the necessary tax increase to 4%.

“We have to look at this long-term. We know we’re in this for three years,” DePasquale said, alluding to the three, $1 million payments that the Town must make towards the settlement over the next three budget cycles. “That’s without a sewer break, a boiler break, without any glitches. I went home and realized that we really haven’t done the preparation that we need…Nothing is getting better unless we cut so deeply that the minor increases we may be able to afford in the next three to four years will feel great. But we’re not there, and I think we’re fooling ourselves if we don’t really do some draconian cuts.”

Among the list of cuts DePasquale proposed included cuts to areas such as insurance and health benefits for employees (which he saw as estimated numbers that could come in below their anticipated budget), a $38,000 stipend to the Town Solicitor’s salary, around $50,000 in cuts to the Recreation Department (including a large cut to the director’s salary, cuts to the number of park supervisors and the assistant director position entirely), $17,000 in fire company fees and $12,000 that would go towards fire station “upkeep”.

His proposition also included utilizing other sources of funding outside the budget to purchase an $80,000 police vehicle and $22,500 in document management for the clerks office, along with $35,000 in cuts to part time Town Clerk employees heading into an election year.

Council President John Hanley said what Councilman Brandt Heckert and Councilwoman Keri Cronin ultimately agreed with in response to the list of proposed cuts.

“I’m not comfortable making changes to something we’ve spent two months on, especially considering I just got it 15 minutes ago,” Hanley said.

DePasquale’s motion to approve the budget with his list of cuts went without a second, and the preliminary budget was approved immediately after.

As part of his effort to advocate for his list of cuts, DePasquale said he worried if the Auditor General would take the Town’s request to exceed the levy cap seriously if they didn’t show a willingness to go above and beyond making uncomfortable cuts and venture into the range of truly painful cuts.

“This would still be a 4% [tax] increase. It’s not bare bones, it’s a tough cut,” he said of his budget, adding later, “If we don’t do these cuts now, and we don’t show the Auditor General that we have the ability to make these cuts, I don’t believe we’re ever going to get approved on a 5.7% increase. And I don’t think the taxpayers deserve it right now. If we make these cuts now, they can be temporary…I think if we reduce the weight and we learn how to live with it, hopefully in three or four years, we’ll be a position where we can start to add again. But if we don’t make these changes, and if we don’t show the capability of cuts, I believe somebody else is going to do it for us, and if that happens, it’s going to be even uglier.”

Council caught off guard by school bond schedule

Among one of DePasquale’s primary reasons for initiating more cuts stemmed being informed by new Town Manager Brian Sullivan that the Town would be on the hook for school bond payments during next year’s budget cycle in FY26, rather than when they believed those payments would begin, in FY27.

“They’ve [The Bristol Warren School Department] been telling us something different up until now, and now they’re telling us this and we have no recourse?” asked a frustrated Keri Cronin. “So we entered into an agreement with false information and now we’re being told we’re responsible for debt service that we had budgeted further down the line?”

Town Solicitor Anthony DeSisto seemed to agree that the school district had advertised bond payments beginning in FY27.

“I’m just hearing about this now, so I’d have to take a look at it,” he said. “But I do know the representations made were that it would be three years out, and that was one of the factors we used in the decision for the settlement. So this comes as a complete surprise to me.”

Contacted on Monday, school district finance director Danielle Carey said that the district had communicated from the beginning of the bond process that bond anticipation notes (BANs) would be taken out in the initial years while the full cost of projects were assessed, prior to the full bond being taken out in FY27.

“What I think maybe was taken out of context was BANs versus actual bond payments,” she said. “I think we’ve been very transparent about the schedule.”

At the Joint Finance Committee meeting on March 21, the school department asked for permission to take out a $6.3 million BAN to pay its architects and project managers and initialize two smaller projects at Rockwell Elementary and Hugh Cole, which was unanimously approved by the board without discussion.

At that same meeting, Superintendent Ana Riley directly stated to the board (which includes Keri Cronin and Council President John Hanley), that the district would need to take out another, much larger, BAN in FY26 to begin construction work on other projects. She explained that while the interest on the $6 million BAN could be covered by the school department’s capital budget, the FY26 BAN (which Carey indicated would be in the range of $80 million, and generate around an estimated $2.5 million in interest depending on the borrowing rate), would require assistance from the two towns.

“Right now we’re still in schematic design. So we’re not doing a lot of the big work,” Riley said. “So I guess I will just forewarn you that in Fiscal Year ’26, you will probably see an ask for interest payments above whatever the district can afford in its own capacity as we move towards larger BANs to get through the next bigger set of projects.”

It should be noted that prior to any BAN, the district will require permission from the Joint Finance Committee and full School Committee. So when that $80 million BAN is sought next year, there will be an opportunity to express the types of concerns voiced by Cronin and DeSisto regarding what the expectations were when the bond was passed last November.

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