With the General Assembly’s approval of a $12.7 billion state budget for the current fiscal year, local leaders are keeping a close eye on the levels of aid their towns can expect to receive.
The House of Representatives voted 59-6 Dec. 16 to approve a pared down state budget for the 2021 fiscal year that restores funding to cities and towns, uses federal coronavirus relief funds to aid struggling Rhode Islanders and does not raise taxes or fees. The Senate approved it 31-5 Friday and Gov. Gina Raimondo signed it Monday.
Importantly for local leaders, the bill fully funds state aid to education according to the state education formula.
That means that in addition to maintaining current local aid commitments, an additional $25 million in relief will be heading to cities and towns, and an additional $40 million to school districts.
South Kingstown officials met Dec. 16 to start local budget talks. Roughly $4 million to $5 million of the town’s $60 million education budget is money from the state.
“This is a big chunk of assistance,” Town Manager Rob Zarnetske said. “Actually in South Kingstown it’s not as large as it is in most Rhode Island municipalities, but it is still a significant sum of money we receive from the state to support our school program.”
State education aid has been on the decline for years in South Kingstown. The town is projected to receive $4.4 million this year, roughly level funded from the previous year.
That’s good because the town doesn’t have to make up for a loss, Zarnetske said. Historically, South Kingstown has lost about $565,000 annually according to schools Chief Financial Officer Raquel Pellerin.
Based on enrollment figures from March, the schools could see a modest $97,000 bump in state aid in 2021-22, she said. And because of how the state allocates funds, the town could see state its aid reductions level off and even rise as the community starts building projects in the future.
“We aren’t in the position we’ve been in for so long, having to dig out of a big hole because of the funding formula,” Town Council President Abel Collins said.
On the municipal side, South Kingstown is estimating about $3 million in state aid.
“We kept state aid flat from the adopted budget, because it’s still being discussed,” Finance Director Zachary Saul said.
In North Kingstown, municipal and school officials met Dec. 14 to have similar talks about the coming year and how the town’s finances will fare.
“Fiscal Year 2022 will without question be one of our most challenging budget years yet,” Town Manager A. Ralph Mollis said.
Fortunately, he said, the town stands to receive 100% of its $11.8 million in state education aid in Raimondo’s 2020-21 budget proposal.
“This is welcome news,” he said. “I had encouraged that we include that in the budget, because it was promised. We knew it was a gamble, but that’s some welcome news over these last 72 hours.”
Mollis also said taxpayers would continue to benefit from the phase-out of the motor vehicle tax.
“We sent out motor vehicle tax bills here in North Kingstown with the assumption that this phase-out would continue,” he said.
Mollis called the experience of receiving COVID-19 federal reimbursements frustrating and “nowhere near the level that was promised,” but thanked the House for including COVID relief funds in the state budget.
“This is all promising news from fiscal year 2020, but we have some obvious challenges as we face revenue and expenditure effects of COVID for fiscal year 2021 and significant challenges as we prepare the budget for 2022,” Mollis said.
Among them: revenue reductions in meal and beverage taxes and property taxes, plummeting commercial property values and the increased cost of business because of COVID.
Narragansett Supt. Of Schools Peter Cummings said the state aid picture is still up in the air as officials start to design a budget.
“We’ve heard our state aid may be flat or cut a little bit. That is a moving target,” Cummings said.
The town also has delayed the mailing of motor vehicle excise bills, while waiting for the state to pass the budget.
Although the town’s actual due date for motor vehicle taxes remains legally as July 31, 2020, installment payments will be deferred to January 31, 2021 and April 30, 2021 to coincide with the statutory quarterly due dates for all other taxes.
While it does include $400 million in bonds in seven ballot questions that will be put before voters in a special election March 2, the state budget does not initiate any new programs. It is intended only to formally establish state spending for the fiscal year that began July 1, authorize the planned use of $1.25 billion in federal coronavirus relief funds which are coming up on a Dec. 30 deadline for use, stay current on obligations and prevent current programs from expiring.