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Providence faces limited budget flexibility while trying to avoid bankruptcy

February 9, 2012

Part of the challenge facing the Taveras administration as it tries to avoid bankrupcty is how discretionary spending represents a relatively small part of the current $613 million budget.

Of that amount, says spokesman David Ortiz, $318 million goes to city schools; $78 million is for debt service; $60 million is for pensions;  and $30 million goes to retiree medical and drug costs.  The remainder — about $148 million — is what City Hall uses to run the city through employee salaries, filling potholes, and the like.

The fiscal year is about half-over, so the city has flexibility with roughly $72,5 million. Closing the current $22.5 million deficit would require cutting that $72.5 million, Ortiz says, by about 31 percent. 

“At the very least it would mean shuttering libraries and community centers, cutting back on services drastically,” he says, “and at the same time, the cost of pensions will continue to rise every year if we don’t address the root problem” of unsustainable pension costs and the volume of tax-exempt property in the city.

In related news:

— Taveras is slated to deliver his State of the City address at 7 pm Monday at City Hall.

— The RI Supreme Court won’t be issuing an order today on whether it will take up an expedited appeal in the city’s Medicare case, says court spokesman Craig Berke.

Ortiz notes the administration at City Hall has already reduced the size of the budget and cut Providence’s workforce by 200. “We’re looking at everything we can do to save on the budget,” he says, “but you can’t get there from here without the bigger pieces the mayor has identified.”

One Comment leave one →
  1. Mister Guy permalink
    February 10, 2012 10:08 pm

    The current budget deficit is less than 3% of the City of Providence’s budget. All this talk of “bankruptcy” is pure bunk, and all it will end up doing is needlessly rattle the confidence of the City’s creditors, which basically control more than 3 times the budget amount of this current deficit. Close more libraries (and schools?) & cut the obvious graft in the City’s political & personnel infrastructure.

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