Elorza: study of City finances is a resounding call to action

Elorza: Study of City Finances is a Resounding Call to Action

Mayor Elorza Working with City Stakeholders, Experts to Develop Long-Term Budgeting Options

PROVIDENCE, RI – Mayor Jorge Elorza Monday released a summary of key findings from a study into the current state of the capital city’s finances showing that, if the city fails to act, its annual deficits will continue to widen until the city’s financial burdens become insurmountable.

“The way the city currently budgets rewards short-term thinking and forces us to scramble for one time fixes instead of focusing on the investments we need to succeed,” said Mayor Elorza.  “These challenges did not develop overnight but, rather, are the result of decades in a system that looks to one-time fixes and makes it difficult if not impossible to budget for two, five or even ten years ahead.”

The benchmark findings include a comparative analysis of a number of comparable cities in the region as well as a projection of the city’s growing budget shortfall. The projection shows that, if the city fails to act, annual deficits would continue to widen until the city’s financial burdens become insurmountable.  Specifically, the study projects a widening gap between the city’s revenues and expenditures which, unless addressed, will balloon to $176 million by 2026.

The report highlights four key factors which are driving the city’s current financial imbalance:

1.       The City’s underfunded pension system and ongoing benefits;
2.       Growing healthcare and benefit costs;
3.       Significant cuts to state aid since the Great Recession;
4.       Growing costs of deferred maintenance to the city’s roads, bridges and schools.

The study is the first part of a project launched when Providence secured a grant from the White House to explore long-term budgeting options in the city. For more than a year the city has engaged stakeholders from throughout the city and experts from groups such as the National Resource Network (NRN) to identify and develop opportunities for long-term financial solutions that will address the city’s structural fiscal gap.

“Overcoming these challenges once and for all will take cooperation, vision and fiscal responsibility. Important changes are seldom easy, but Providence is up to the task. We will play to our strengths and engage the wealth of stakeholders who are invested in seeing Providence succeed,” continued Mayor Elorza. “Working together, there is nothing we cannot overcome.”

The full National Resource Network report, which will include the options and recommendations of the working groups and NRN experts, is expected to be released in the coming weeks.

(release from City of Providence)

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