Town prepares for budget season

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With last year’s budget of $134 million setting the stage, Johnston Mayor Joseph Polisena Jr. and the town’s departments are preparing financials that address school budget deficits and balance growth, rising costs and infrastructure challenges.

During the next few weeks, department heads will present their key goals for the next fiscal year in the form of their departments’ operating budgets. Those budgets are expected to consider economic development, infrastructure improvements, environmental issues and other initiatives.

Passed last June, Johnston’s current budget of $134,342,201 million represented a $5-million increase from the previous year’s budget of $129,081,852. Growth in the town during that period effectively prevented a tax increase, as there was an additional $2.3 million in tax revenue collected during that time.

A newly enacted senior tax discount – a flat tax exemption rather than an exemption based on property value – brought relief to about 2,700 residents. The town’s previous exemption model was based on a system where higher property values produced less of a discount.

In a recent interview with state Auditor General David Bergantino, he stated that – school deficit aside – the town is sound fiscally.

“The town is in a very good situation financially. There are no other town concerns from our standpoint. The town has a robust surplus,” he said.

His office noted several trends favoring the town. The financial health of the general fund shows that, during the last five-year trend there were operating surpluses in four of the five years presented, and the unrestricted fund balance exceeded the Government Finance Officers Association’s reserve recommendations.

The town has a AA municipal bond rating, which has remained consistent for five years. Five municipal pension plans administered by the Employees’ Retirement System of RI and 100% of the actuarially determined contributions (ADC) were made.

The town’s two largest locally administered pension plans, for police and firefighters hired before July 1, 2010 and July 1, 1999, respectively, were funded at the ADC for the five years.

The Auditor General’s office did note some negative trends as well. Audited financial statements were consistently being issued between 8 and 12 months after year end. The towns other post-employee benefits plan is managed in trust; however, annual contributions were significantly less than required. The office also noted the town’s school budget deficit.

Last year, the school department’s budget increased $3.7 million to a total of $63,496,920, with $2.7 million coming from the state and $1 million from local appropriations. That led to an overall increase of 5.82% in their budget. Comparatively, on the town side of the equation, the budget increased 3.57%.

During last year’s approval process, Councilman Robert Civetti calculated that the school department saw an increase of about 5.5%.

“We’re definitely going to have to meet with them and look at their budget a little bit further,” Civetti said at the time.

The School Department is facing a mounting budget deficit, now approaching $2 million. The School Department’s deficit began in 2019 when the district’s operating expenses outpaced revenues. By 2020, the department faced a cumulative deficit that has grown steadily each year, reaching nearly $1.6 million by the end of 2023. Projections for 2024 suggest an additional deficit of $400,000 to $500,000.

According to Polisena, a budget should be presented during the next few weeks. While there is no indication yet of how much the budget will increase or whether there will be a corresponding tax increase, Polisena noted potential economic headwinds.

“Budgets always seem to grow because everything goes up in cost, right? You never pay somebody less—you’ll only pay them more,” Polisena explained, highlighting rising costs in both public and private sectors.

Acknowledging the reality of annual pay increases for rank-and-file workers and their effect on the town’s finances, especially those in unions, the mayor noted, “They always get raises every year, whether that’s 1%, 3%, 2.5% or whatever it may be. I think we need to always balance that with growth because we get growth every year. The growth is, you know, dependent on what gets built and what our costs are.”

Addressing the town’s infrastructure challenges, Polisena pointed to outdated systems in need of urgent attention.

“We’ve got pipes that are 80 years old that should have been replaced probably 40 years ago,” he said. Public buildings, he added, are also deteriorating and require investment.

While commending efforts by past administrations and town councils to keep taxes low during the last two decades, Polisena spoke about a measured approach to taxation. He called it a “balancing act” of making necessary improvements while keeping taxes in line. He cautioned against avoiding tax increases entirely, citing potential long-term budget issues.

“You need to not just avoid raising taxes for four or five years in a row. I think that can cause budget problems,” he said. “But you have to hold the line on taxes, whether that means you don’t raise them, or you only raise them by a nickel, a dime, fifteen cents – whatever it may be.”

Using an analogy, the mayor compared his approach to fiscal management to chopping up credit cards and eating ramen noodles every day, a strategy that may work but have negative outcomes.

“What I think does take skill is ... in that example, to eat healthy without spending a lot. Cutting coupons, buying things that are on sale – that’s what I would equate to the town.”

Polisena said he believes in emphasizing cautious investment.

“I would like to invest in the community, but invest wisely, and only invest what I have to,” he said.

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