Finance committee reviews $624 million proposed FY2026 budget, details levy increase and new property tax classifications

Director of Finance Sarah Silberia presented the City of Providence's proposed fiscal year 2026 operating budget to the Finance Committee on April 22, outlining a $624,000,000 spending plan and a proposed $425,000,000 property tax levy that represents a roughly 7.5% increase in levy revenue year over year.

Silberia described the budget as balanced and said it includes a $100,000 appropriation to the rainy day fund. She told the committee the total operating budget is about a 1% increase over the prior year and that the levy increase is within the council's guideline (an 8% total levy cap established previously). She said staff found nearly $5,000,000 in additional non-tax revenue and reduced department line items and positions where feasible.

Tax rates and property classifications

Silberia walked the committee through a reclassification of property types and the proposed tax-rate changes that staff used to generate the levy. Highlights presented by Silberia and discussed by councilors include:

- Proposed levy: $425,000,000 (proposed for FY2026) versus the adopted FY2025 levy of about $396,000,000 (a change of roughly $30,000,000). - Total budget: $624,000,000. - Proposed levy increase is supported by an adjusted tax rate and by new/non-tax revenue; staff said most of the balancing increase comes from property tax revenue. - Owner-occupied residential tax rate would move from about $10.46 per $1,000 of assessed value to $8.25 per $1,000 (a reduction in the rate, even as assessed values rose). - Non-owner-occupied residential rate would move from about $18.35 to $14.40 per $1,000. - Properties with 6 to 10 residential units were reclassified into a residential category and shown at $24.50 per $1,000 (previously taxed using a commercial rate); 11-plus unit residential properties were shown at $27.75 per $1,000 (previously taxed at the commercial rate of 35.10). - Commercial rate shown in presentation as changing from $35.10 to $28.80 per $1,000. Tangible tax rate was presented as unchanged.

Silberia and councilors emphasized that the overall bill for a property is a function of assessed value and tax rate; increases in assessed values drive much of the projected increases in average bills. For example, Silberia said average owner-occupied home assessed values increased from about $419,000 to $551,000 and that these value changes, combined with the proposed rates, yield the average bill impacts presented by staff.

Exemptions and targeted relief

The presentation included increases to several property tax exemptions: - The elderly exemption was proposed to rise 25% to $750. - Veteran and surviving-veteran exemptions were proposed to increase (veteran exemption numbers cited in presentation), and the disabled veteran exemption was presented at $614 in the proposed budget.

Staff clarified application rules: residents must apply to receive exemptions, some exemptions are mutually exclusive (for example, certain Social Security age exemptions and the 65+ elderly exemption cannot be combined), while disability- or service-based exemptions may be combined with some age-based exemptions. Silberia said the assessor determines eligibility and applies the exemption to the property tax bill.

Revenue assumptions, risks and pending legislation

Silberia said the budget incorporates roughly $23,700,000 in new levy revenue (part of the $29,000,000 year-over-year levy change) and stressed that some new revenues depend on external approvals or timing. Staff lowered the assumed collection rate from 94.25% to 93% to provide a margin for likely appeals and to buffer risk tied to a substantial tax stabilization payment that may not be collectible if a large health-care entity converts to nonprofit status (presentation referenced the conversion of "Bridal Games Medical Center" as a risk in the tax stabilization portfolio). Silberia said the 93% collection assumption leaves about $5.3 million to offset a potential $5.9 million tax-stabilization revenue loss.

Silberia outlined additional potential revenue if state legislation passes but noted timing and approval uncertainty. Examples discussed: - A commercial parking tax estimated in presentation at about $1,700,000 annually (would require state enabling legislation). - Short-term rental tax changes and bus-camera revenue changes, both dependent on state action or contract changes; Silberia said the bus-camera revenue split among vendor, state and city affects how much the city could realize. - A proposed ticket surcharge for large venues ($2 per ticket for venues above a set capacity) that Council leadership supports; staff estimated about $2,630,000 annual revenue if enabled in state law and adopted locally.

Pension and fixed costs

Committee members and Silberia discussed the city's fixed costs. Silberia said the city's pension payment for FY2026 is budgeted at $96,479,551 (roughly a quarter of the tax levy). She also said combined pension contributions across city agencies (including school and water boards) approach cited totals in the presentation. Medical insurance and pension increases were listed as major drivers of the budget change; Silberia said medical insurance contribution was budgeted to increase by about 6.93% and pension contributions by roughly 4.89%.

Silberia and councilors discussed options for pension risk management and the timing of potential debt-refinancing; staff said market conditions and the city's funding improvement plan constrain immediate action and that any refunding would be considered cautiously.

Council questions, next steps and transparency

Councilors pressed staff for more granular breakout data by property subtype (for instance, 2-family, 3-family, etc.) and for individual-property examples; Silberia said the assessor's coding and the tax roll structure drove some of the current groupings and that finance staff would provide more detailed breakouts and a calculator showing case-by-case impacts. Councilors also raised concerns about renters and potential passthroughs from landlords following public reporting; Silberia and others said assessment-driven bill increases do not themselves mandate rent increases but acknowledged landlords may respond independently.

Silberia credited budget analyst Melanie Duran and other finance staff for assembling the materials and said the committee will receive updated charts and detailed breakdowns (including assessor data and updated slides) before subsequent budget hearings. The committee scheduled follow-up sessions on the budget and asked for additional information on valuation changes, tangible account trends, and the timing of potential state revenue measures.

No final budget adoption vote occurred at the April 22 committee meeting; the presentation served as a detailed staff review and an opportunity for councilors to request additional analysis before formal votes later in the budget process.