The Cicilline Budget Address

For those who missed Providence Mayor David Cicilline’s annual budget address last night, here’s the abbreviated version: We need to raise taxes on the rest of Rhode Island to provide more money for Providence. The Mayor essentially touted a plan to reduce property taxes while raising income taxes that has long been popular in progressive circles.

Mayor Cicilline attempts to use the flatness of the property tax to justify the proposed tax-shift…

A senior couple with a retirement income of 35,000 dollars a year who own a home valued at $250,000 pay about $300 a month -- that’s over 10% of their income in property taxes.

On the other hand, a wealthy working couple making $200,000 a year and who own a $500,000 home pay about $700 a month, which is just 4% of their income.

But if the Mayor really sees his city's property tax system as the problem, there are in-community solutions that can be explored. Some Rhode Island communities freeze the property tax amounts that senior citizens are required to pay. Some states determine the tax liability of properties based on their assessed values at the time of purchase, protecting long-time, fixed-income residents from constant tax increases. Another possibilty would be exempting a certain amount of property value, say the first $50,000 of the value of a residential home, when determining tax liability. None of these solutions are perfect. But Mayor Cicilline isn’t interested in investigating their pros and cons anyway; his interest lies solely in finding a way to grab money from the rest of Rhode Island that can be spent on Providence, an option that will require either a statewide tax increase or service cuts in other Rhode Island cities and towns.

Simple mathematics dictate that…

• A revenue neutral plan (where overall income tax collection is raised by the amount exactly matching a property tax cut) cannot deliver to Providence a bigger share of state aid than the city receives now unless other communities have their revenues reduced and are forced to cut services.
• An income tax hike bigger than a property tax cut (making Rhode Island’s fourth highest tax-burden in the nation even worse) is needed to increase Providence's share of state aid without forcing service cuts elsewhere.

(This math, incidentally, is why a Cicilline-for-Governor campaign faces an uphill battle. Higher taxes on everyone to increase subsidies to Providence isn’t a platform plank that is going to win a lot of votes outside of Providence.)

I don’t think we’re yet at the point where shutting down the rest of Rhode Island in order to increase funding to the urban core is getting serious legislative consideration. Rhode Island State Senate Majority Leader Teresa Paiva-Weed, for instance, has recently stated that she sees the goal of a new state education aid funding formula as providing more aid to “second-tier” urban and suburban communities. But if we do reach the point where plans to increase Providence's already generous share of state aid begin to take shape, a fundamental issue of governance comes into play.

The Providence school system already receives about 2/3 of its funding from state sources. Already, everyone in Rhode Island is paying for Providence, but only the government of Providence – and its appointed school committee – decides how the money is spent. If the state of Rhode Island is going to be paying for 70% to 80% or more of the Providence school budget, an oversight authority with a substantive role in budget matters representing the interests of the broad base of Rhode Island taxpayers who will be paying for Providence’s schools will need to be created.

The government of Providence doesn’t have the right to tell the people of Rhode Island that their place is to just pay and go away.