on 01-23-2009 02:42 
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Doyle, others testify that proposed cuts in aid would devastate communities
By JIM BARON
PROVIDENCE - The city of Pawtucket will be bankrupt - defaulting on a bond payment and unable to meet payroll - by April 15 if proposed mid-year cuts in state aid are approved, Mayor James Doyle told the House Finance Committee Thursday.
Doyle was one of seven municipal leaders to appear before the committee decrying the cuts recommended by Gov. Donald Carcieri in his revised budget for the current year, which they say carve too deeply into their already tenuous budgets and come too late in the year for them to make up the losses in revenue they have depended upon. Every one of the mayors and town administrators - including Cumberland Mayor Daniel McKee and Lincoln Town Administrator Joseph Almond - used the word "devastating" to describe the effect the cuts in revenue sharing and school aid will have on their communities.
"If last year's mid-year cuts in state aid dug a hole for Pawtucket, this year's total elimination of (revenue sharing) aid will certainly bury us in that hole," Doyle testified.
The alternative, he warned, is a supplemental tax increase - an extra tax payment to be due before the fiscal year ends June 30 so the city can meet its obligations.
"Ladies and gentlemen of the finance committee, this supplemental budget proposal absolutely increases broad based taxes. For anyone to suggest otherwise is disingenuous at best," the mayor said. "The only question is will it be the sales tax, the income tax or the property tax, which is the most regressive because it is the only tax that doesn't increase or decrease based on one's ability to pay," he noted. "Already this year, the city has turned to our strapped taxpayers for an increase of nearly $180, almost all of which went to the school side of our city's budget. Pawtucket is already suffering with over 550 foreclosed homes and raising the property tax could only spike that number even higher.
Doyle said he is pleading for a stop to the cuts, which are slated to cost Pawtucket $5.4 million between municipal and school aid, "not to do glorious things; it's just survival mode." Restoring the cuts in revenue sharing, he said, would allow the city "to pay off bonds and make the payroll."
Under questioning from committee members, Doyle said, "the other side of the coin, and this is really scary, is that if bankruptcy were to occur, not only in Pawtucket but any other city or town, the chief executive is required to go before a judge and you have to explain the reason for it. Quite obviously, the judge would simply say, ‘you have the wherewithal, go out and raise the taxes.'"
Asked if he knew of another way for the state to save $55 million besides cutting revenue sharing, Doyle responded, "I'm just a mayor, not a magician."
Other city mayors, Providence's David Cicilline and Cranston's Allan Fung, joined Doyle in telling the committee that other provisions included in the governor's supplemental budget, calling for statewide school transportation and health care contracts, removing issues such as minimum manning from municipal collective bargaining contracts, eliminating the mandate to have monitors on school buses transporting students in grades K-5 and pension reforms, would be a great help to cities and towns in future years, but would not do enough in what is left of the current budget year to defray the drastic cuts.
Revenue sharing, Cicilline stressed, is not a gift to cities and towns. "The principle that cities and towns share with the state the revenues that are generated from economic activities in their communities is good public policy. This is sharing in revenues we helped generate."
Cicilline said he has instructed his staff to "deal with whatever cut is imposed on Providence without an increase in taxes. There is no way I could propose increasing taxes."
Finance Chairman Steven Costantino asked if Pawtucket could absorb the elimination of revenue sharing in next year's budget if it was restored in the current year. Doyle said, in effect, yes.
"Give us some time and we'll adjust to 2010. Right now we are bobbing in the water."
Asked after the hearing if bankruptcy is a real possibility and not an exaggeration or threat, Doyle said, "If the worst scenario happens, we sure as hell will go bankrupt."
Cumberland's McKee and Lincoln's Almond made a pitch to allow communities to spread the cuts beyond the municipal budget to the school budget.
Currently, Almond said, the municipal side of the budget must absorb all of the mid-year cuts. "Education budgets have been passed, are in place and have to be funded," he pointed out. "Therefore Lincoln would be hit with a $2.3 million cut out of less than a $17 million budget. "That will be devastating to our community. It will destroy our capital investments and it will destroy our bond rating."
Almond said the supplemental budget is "shifting the budget burden to towns and local taxpayers. Even if I do adjust (to the cut) this year, I won't be able to do it every year."
McKee agreed, saying that 75 percent of Cumberland's budget goes to education, so the cuts proposed by the governor would have to be absorbed by 25 percent of the budget. And since the year is more than half over, it would actually be only 12.5 percent of the budget that would take the hit.
Woonsocket Reps. Jon Brien and Lisa Baldelli Hunt announced Thursday that they would introduce a resolution asking the U.S. Congress to include state and local governments in President Obama's proposed stimulus package.
"We understand the importance of propping up American companies because those businesses keep Americans working," Baldelli Hunt said in a joint press release. "But if money is going to be given out to help the economy, why not give it to the organizations that affect every man, woman and child - their local and state governments, who are struggling just as much? If the money goes to private companies, we can only hope the effect eventually trickles down to the American people. If we give it to struggling local governments, it will result in the saving of vital services that people depend on but are currently on the chopping block due to a lack of funding."
"Yes, we must rescue corporate America," Brien added. "Yes, we must rescue our financial institutions. But to do so and exclude our taxpayers is unconscionable. Personal, state and municipal pension systems have been eroded and, in some cases, destroyed. For the new administration and Congress to not consider the impact to the average taxpayer is unimaginable."
Carcieri spokeswoman Amy Kempe said that the governor "for months" has sent signals to cities and towns that state aid would be cut in the current year and that they would have to "tighten their belts."
One of the things Carcieri has said to municipal executives, repeated during a meeting in the governor's office Thursday morning, is, "they need to go to their labor unions and say we need to go back to the (bargaining) table because the situation is dire."
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