Town Council Approves $72.8 Million Budget; Schools Get $431K More

by | Jun 23, 2020

Residential taxes will go up by just under 1%; commercial, tangible rates are higher. 

By Elizabeth F. McNamara

Facing an unknown but near certain loss in state aid next year, the Town Council Monday night voted 5-0 to approve a $72.8 million* budget for fiscal year 2021, which begins July 1. The budget passed last night gave the schools an additional $431,000 and the town an additional $230,000, which could help stave off anticipated layoffs.

The residential tax rate increase was held to 0.95 percent – which was achieved by leveraging the Town Council’s relatively newfound power to differentiate tax rates between residential, commercial and, most significantly, tangible property. The General Assembly approved the Town Council’s request last year to split the tax rate in 2019 (read more HERE).

For homeowners, the new budget will increase taxes by $0.22, bringing the new tax rate to $23.43 per $1,000 assessed value. The average house in East Greenwich, valued at $455,000, will see a $10,660 tax bill, $153 over 2020.

On the commercial side, the tax rate will go from $23.44 to $23.90, a 1.96 percent increase. The real change, however, comes in the rate for tangible personal property (the value placed on all the furniture and equipment owned by a business), which will jump from $23.44 to $29.25, an increase of 24.79 percent. But – and it’s a big “but” – there’s an $2,500 tangible property exemption. With that exemption, of the 674 businesses in town that pay tangible taxes, 51 percent will pay the same, less or no tangible taxes in 2021. 

Alternatively, the businesses with the largest tangible property holdings will pay hundreds or, for the top 75 businesses, thousands more in 2021. The largest bills by far will go to National Grid, which will see a total increase of around $105,000 for its gas and electric lines in East Greenwich. Find the entire list, with what each business paid in tangible tax in 2020 and what it will pay in 2021 here: 2021 Tangible Tax Rates.

That is by design. It turns out Warwick and West Warwick both have significantly higher tangible tax rates than East Greenwich, $37.46 and $36.28 respectively. Alternatively, North Kingstown’s tangible tax rate is $17.09, South Kingstown’s rate is $14.45, and Narragansett’s rate is $14.33.

For the EG Town Council, the higher tangible rate made sense. “The goal was to keep the residential rate stable,” said Council President Mark Schwager Tuesday. “We felt our tangible tax rates were low compared to our neighbors.”

“There simply is no reason for the pipelines National Grid has running down Route 2 that when they cross into East Greenwich all of a sudden, we give them a discount of hundreds of thousands of dollars,” said Vice President Mike Donegan Monday night. Donegan was the one who introduced the idea of the tiered tax rate. “It helps us to raise the funds precisely to give to the schools without burdening the residents at all. And it still leaves the businesses in all respects well below the market.”

In thanking Donegan for introducing the tiered tax rate idea, Councilor Renu Englehart noted, “Of the 39 towns, 21 towns have a higher tangible tax than the residential rate. And 19 towns have a higher commercial rate.”

Schwager and the other councilors lauded Nota and Finance Director Trish Sunderland for their work on the budget. Last week we asked them to take the budget and modify it, to go back and try to support education and to restore some town services,” said Schwager Tuesday. “In order to do that, we asked the town manager to propose a way to use tangible and commercial rates to keep the residential rate down. That was a really difficult thing to do.” 

The School Committee will meet virtually Thursday at 7 p.m. to decide how to reconcile the $42.1 million budget they drew up in April with the reality they now face in June – $382,411 less in town funding than budgeted and huge unknowns about how much state aid they will receive. The April budget had state aid at $3.4 million but all indications point to a percentage decrease (because of the pandemic and resulting fiscal constraints facing the state) of anywhere from 10 percent ($340,000) to 25 percent ($800,000+). Because of an anticipated shortfall, the district has identified more than $1 million in possible cuts, including $431,000 in layoffs (read more HERE).

While the town appropriates money for schools, it is up to the School Committee how that money is spent. In other words, it may have been the Town Council’s intent to avoid school department layoffs, but that doesn’t mean they won’t happen.

“The school department has the authority to determine how those funds are used but a priority would always be to provide educational programming with the required staff,” said Supt. Alexis Meyer during the meeting Monday. 

On Tuesday, School Committeewoman Carolyn Mark said the panel will decide what to add back to the budget “typically based in large part on the superintendent’s recommendation.” 

“We had cuts on the table of over a million,” said Mark. “It could be those positions, but it could be other things too, or some combination…. We still have the huge unknown re: state aid. And, we won’t know that number until July. It’s hard to imagine a scenario where there won’t be cuts from our original budget.”

She added, “These decisions all have to be made within the context of a great deal of uncertainty regarding what school looks like in the fall. It’s a challenge!”

*In case you were wondering how last year the Town Council approved a $62.6 million budget and this year they approved a $72.8 million budget, no – the town’s spending did not increase by $10.2 million. Rather, Town Manager Andrew Nota and Finance Director Trish Sunderland have changed how the town’s budget is presented. This year’s budget includes the full EGSD budget amount, not just what the town gives the schools (which adds $4.7 million to the budget). It also includes the wastewater (sewer) fund (an additional $4.07 million) for a total of $8,789,902. That number subtracted from the FY 2021 $72.8 million budget equals $64.09 million, an increase of $1.4 million over FY 2020.

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