PROVIDENCE, R.I. (WPRI) – While the Taveras administration maintains that Providence will finish the 2012-13 fiscal year with a balanced budget, Internal Auditor Matt Clarkin on Thursday said the city could wind up with an $11.2 million deficit if steps aren't taken in the coming months.
In his mid-year report to the City Council Ways and Means Committee, Clarkin said he expects a combination of shortfalls in the annual required pension contribution, property tax collections, fines and forfeits and the city's overnight parking program to make up the bulk of the projected deficit.
Providence ended the 2011-12 fiscal year with a $15 million shortfall.
Clarkin said the numbers could change if the General Assembly supports Gov. Lincoln Chafee's proposal to increase state aid to cities and towns or if the city chooses to forgo its payment to the reserve fund or makes less than 100% of the annual required contribution to the pension system. But the council's fiscal advisor, Gary Sasse, warned that the credit rating agencies would not approve of the latter options.
"It's easier to solve the problem in February than it is in May," Sasse said.
Clarkin's projections came two days after Mayor Angel Taveras proclaimed that Providence is recovering from a fiscal crisis that nearly forced the city into bankruptcy last year.
"Through collaborative efforts and shared sacrifice, we have all but eliminated our City's $110 million structural deficit, and we expect to end this year with a balanced budget," Taveras said during his State of the City address Tuesday. "Working together, we have accomplished what few believed possible."
Taveras aides say they've cut Providence's structural deficit from $110 million to $4 million by making cuts, closing schools, renegotiating union contracts, reaching payment agreements with the city's tax-exempt institutions and reaching a settlement on pension reform.
But Ways and Means Committee Chairman David Salvatore said there is more work to do. He said he expects the administration to produce a corrective action plan in the coming weeks.
"While we're not at the starting line, we're not at the finish line either," Salvatore said.
The city's finance director is expected to deliver his budget projections to the Ways and Means Committee next week.
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