2017-05-04 / Front Page

Tough Fiscal Road Ahead for Newport

Winthrop says discussions on regionalized high school will begin again
By Olga Enger

Newport taxpayers should prepare for two consecutive years of tax hikes and long-term fiscal challenges with school and water infrastructure, officials claim.

Residents are facing a proposed 3.11 and 3.64 percent increase to their tax bill, for fiscal years 2018- 19, respectively. The city may not increase taxes higher than 4 percent in a year, under state law.

"This is a two-year budget," said City Finance Director Laura Sitrin. "We only adopt the budget for one year. We will not prepare this large of a document next year." Newport City Council got a first look at the $138 million budget for fiscal 2018 at a lightly attended budget workshop held May 2 at Newport City Hall. Councilors John Florez and Kathryn Leonard were absent.

If approved as proposed, the impact for a home valued at $350,000 would be an additional $119 per year.

The main driver of the budget is an increase in expenses, the majority tied to contractual obligations such as salaries, police and fire pension contributions, and health and dental rate increases. On the revenue side, the city anticipates a $750,000 increase in the meals and beverage and hotel taxes, based on a current upward trend and events such as the Volvo Ocean Race. There is a $450,000 loss of Newport Grand revenues built into the fiscal 2019 budget.

"Most of the revenue has remained flat," said Sitrin.

The proposed budget increases funding for the school department by 1.5 percent in both fiscal years. It continues to fund long-term liabilities at the actuarially determined funding rate. In addition to the tax rate hikes, residents should expect increases to their water bills. The rate is going up from $17 to $18.36 in fiscal 2018, and $18.36 to $19.96 in fiscal 2019.

Looking into the future, the city is facing two major financial challenges.

"Our fiscal hot spots are water pollution control and we believe school infrastructure," said City Manager Joseph Nicholson.

Newport's three schools require around $80 million of capital improvements, according to a recent study conducted by the Rhode Island Department of Education (RIDE). Nicholson said the report will have to be scrubbed further, possibly by consultants hired by the city. However, although the city may challenge the extent of the improvements, there is no question repairs are needed, he said. Rogers High School was identified as in the worst condition, yet repairs are also needed at Pell Elementary School and Thomson Middle School, according the RIDE report.

Newport Mayor Harry Winthrop said that as Middletown's schools are facing similar issues, it was time to restart discussions about a regional high school. A non-binding question to residents, asking if they supported the concept of a unified high school, appeared on the 2014 ballots in Newport and Middletown. Although Newport voters supported the idea, it was overwhelmingly rejected by Middletown residents.

"It would be a huge cultural shift," said Winthrop after the workshop. "But looking long term, we won't have an option. Middletown schools are facing the same challenges we are, with declining enrollment and aging school buildings."

"Policy discussions at [the council] level will happen sooner rather than later, and that's what has to happen," agreed Nicholson.

The second fiscal hotspot identified by the city manager was the Water Pollution Control fund. The city will be required to make $55 million worth of water infrastructure improvements over the next several years, in addition to the $30 million worth of improvements that were recently completed. In 2011, the city entered into a consent decree with the U.S. Environmental Protection Agency (EPA) and the Rhode Island Department of Environmental Management (RIDEM) after four residents filed an action under the citizen suit provisions of the Clean Water Act (CWA), alleging the city was in violation with control of Combined Sewer Overflows (CSOs). The upgrades are mandated under that decree.

Additionally, the budget allocates about $2 million annually towards repairs of the aging sanitary and stormwater piping infrastructure. Newport sewer rates are among the highest in the state, and the needs outweigh the city and ratepayer's ability to pay, said Nicholson. Last year, council approved bringing the maintenance of underground sewer and stormwater in-house, which is expected to save the city $600,000 each year. Equipment and personnel are included in the fiscal 2018 budget.

Sitrin showed councilors a slide, demonstrating that even if the city increased taxes and water rates exceed the maximum allowed under state law across many years, the city would still be unable to fund the school and water improvements.

"These are demonstrative of issues that we have going forward. You can see why we are always after additional revenues," said Nicholson. "...The school infrastructure is causing us some angst."

The next budget workshop is scheduled for May 8 at 5:30 p.m. at Newport City Hall. Public workshops, where the residents are invited to ask questions and make comments, are scheduled for May 10 and May 24, at the regular City Council meetings. Council will adopt the budget on June 14.

Return to top