A $15 million obligation to cover deficits in the Providence Public School District (PPSD) may have come under duress for Mayor Brett Smiley last fall, but he posed it as a win in his fiscal 2026 budget address Wednesday at City Hall.
“This budget includes the largest investment in our schools since at least 2006, making up for a generation of underfunding of our educational system in one fiscal year,” Smiley said in unveiling his $624.1 million spending plan.
But he said the city needs $25 million in new revenue to satisfy all the terms of the November settlement with the Rhode Island Department of Education, which has controlled Providence’s public schools since 2019. The proposed budget represents a roughly 4% increase in spending over the current fiscal year that ends June 30.
The city is relying on a $29 million increase in its tax levy to support the proposed budget, with $23 million coming from new revenue sources. One of the primary mechanisms for getting that revenue, however, depends on authorization from the General Assembly allowing the city to raise its tax revenue above the 4% state cap for the next fiscal year.
Smiley’s proposed budget assumes the city will acquire the state approval needed to raise its tax levy, or total collected tax revenue, by 7.5%. The mayor’s spending plan has actually lowered tax rates for all types of properties, but recent, state-mandated reassessments of home values in Providence mean that, even with the lower tax rates, the city would still go beyond the levy.
That’s why Smiley is waiting on state approval of a city-sponsored tax levy bill. An initial version of the bill stalled in March as Providence lawmakers held off to allow the Providence City Council to make recommendations. On April 2, Providence Democratic Rep. Rebecca Kislak introduced the current iteration, which has yet to be scheduled for a committee hearing.
Companion Senate legislation, meanwhile, has yet to be introduced. Sponsor Sen. Sam Zurier, a Providence Democrat, said he intends to introduce the bill once the state legislature resumes next week.
Kislak said via text Wednesday that maneuvering the bill through the State House has been difficult because state reps haven’t had all the needed facts.
“Where the mayor and city council (unanimously) are in agreement, I think the state should give them reasonable leeway to exceed the levy cap,” Kislak wrote. “And once we see the budget, we can have concrete conversations about the policy (and levy cap) which until tonight were hard to have. We didn’t have any way to talk about what the cost would be to Providence homeowners.”
If the levy hike failed, Smiley’s budget would return to the City Council, which would need to cut and pivot accordingly to keep it under the existing cap. Should that happen, Kislak noted that the State House can help in other ways, and that proposed legislation relating to parking lot and Airbnb taxes could help plug the gaps.
Speaking to reporters after his speech, Smiley said he’s still “confident that the General Assembly would pass our request for a one-time exception to the cap. Were that not to pass, we’d be back to the drawing board, and we’re going to have to make very serious cuts. But I don’t think anyone wants to do that, and I think especially now that the actual tax rates are out, and instead of talking in the abstract, we’re talking about specifics.”
Balancing act
This year’s spending plan would have been actually $9 million less than the fiscal 2025 budget, if not for the settlement payment, Smiley said in his speech.
“We think we found that right balance,” Smiley told reporters after his speech. “At least $9 million worth of cuts is exceptional. That never happens in city government.”
The tightrope act was so successful, Smiley said, that the tax increase “we feared was necessary” became “the lowest responsible rate,” the mayor said.
The increase is a little more complicated underneath the hood: The city actually had to adjust and lower the ratios between different kinds of tax rates to comply with state laws. But, Smiley noted in his speech, “Many people’s homes may be worth significantly more than they were 10 years ago,” and for fiscal year 2026, some types of properties in Providence saw their value jump over 30% or 40%. Adjusting the ratio tax rates cushioned the increase to individual tax bills while increasing the levy overall.
After adjusting for the lowered tax rates and increased property value, the proposed rates are:
- 4% for single-family homes. The average value went up 31% to $551,881. The average tax bill would go up $161, from $4,392 to $4,553.
- 16% for owner-occupied homes with two to five families. The average value increased 47% to $585,027. The average tax bill would go up $650, from $4,176 to $4,826.
- 4% for owner-occupied condos. The average value rose 32% to $507,713. The average tax bill would go up $166, from $4,023 to $4,189.
- 5% for single-Family Homes, non-owner-occupied. The average value went up 33% to $445,385. The average tax bill would go up $287, from $6,127 to $6,414.
- 16% for non-owner-occupied homes with two to five families. The average value went up 48% to $606,365. The average tax bill would go up $1,197, from $7,534 to $8,732.
- 5% for non-owner-occupied condos.The average value went up 33% to $335,877. The average tax bill would go up $220, from $4,617 to $4,837.
- 5% for buildings with six to 10 units. The average value went up 36% to $947,975. The average tax bill would go down $1,157, from $24,382 to $23,225.
- -1% for buildings with 11 or more units. The average value went up 28% to $4,832,121. The average tax bill would go up $1,699, from $132,392 to $134,091.
- -2% for commercial Properties. The average value went up 20% to $855,368. The average tax bill would go down $401, from $25,035 to $24,635.
In the meantime, Smiley didn’t want to put the onus of this debt entirely on the city’s residents. About 96% of the city’s costs are fixed year over year, and the remaining 4% is more flexible. City accountants exercised their cleverness to reduce spending without pilfering too much from residents’ pocketbooks.
“There’s only three ways to balance this budget,” Smiley said. “Either we raise property taxes, we find other revenues, or we make cuts. The budget that I propose tonight does all three things, and it tries to do all three things and strike the right balance.”
We think we found that right balance. At least $9 million worth of cuts is exceptional. That never happens in city government.
Property tax exemptions for people over age 65 and veterans would see 25% and 100% increases, respectively, to mitigate the tax hikes.
The city expects to cut 23 positions, many of them vacant. Only two would require layoffs, and both are nonunion, city officials said. Cost-of-living adjustments will be paused for nonunion employees making over $100,000. A $3.2 million savings in public safety overtime, meanwhile, is largely possible because of increased staffing in the municipal fire department.
There’s also a $2.8 million cut in services, but these do not represent an elimination of resident-facing programs, officials said. Residents would not see reductions in direct services like trash pickup — an earlier idea to pick up garbage every other week has been nixed, for instance. The 8% reduction in services in the mayor’s spending plan, city officials said, involves more cuts to internal purchases or contracts within city departments.
Alas, life in the city will not go untouched. Take the shiny new parking kiosks Smiley mentioned in his budget address last year, which could now be bearers of bad news for drivers who forget to feed the meter.
A number of fees and fines could see some increases. Among the fee changes:
- The fine for “overtime parking” from 2 to 5 a.m. would go from $20 to $50.
- Parking at an expired meter would rise from $25 to $40.
- Parking in a prohibited area would rise $30 to $50.
- Parking in an emergency zone would rise from $100 to $250, although the city is considering raising the cost only for nonresidents.
The budget is available on the city’s website. City Council committee meetings will see the budget inspected and reviewed, and council members have the power to edit line items. The final budget will emerge in June.
This story was originally published by the Rhode Island Current.
