East Greenwich council presses staff for tax-rate scenarios as budget deliberations continue

The East Greenwich Town Council at its May 27 meeting pressed town staff to model several residential tax-levy scenarios as it debated the manager'proposed fiscal 2026 budget and weighed steps to protect the town's fund balance and bond rating.

Councilors asked the town's finance director to return with the projected tax-rate and homeowner impacts for additional levy revenues of $200,000, $300,000, $600,000 and $900,000, and directed staff to hold the commercial tax rate steady while the models are prepared. The motion directing staff to prepare those scenarios carried 4-0.

The request came amid a broader discussion of the administration's proposed budget, which the finance director said requires municipal-finance approval to exceed Rhode Island's 4% levy cap. "We have a levy cap of 4%," the finance director said while walking the council through the state disclosure form. She described the town's approved reasons this year for exceeding the cap: higher debt service, loss of other revenue and reductions in non-tax appropriations.

Why it matters: Councilors said they want to strengthen the town's reserves after rating agencies signaled those reserves as an area of vulnerability. Municipal advisers recently completed calls with S&P Global and Moody's ahead of a planned bond issuance for the school construction project; the town retained its ratings but staff said the agencies emphasized the size of fund balances and long-term liabilities in their evaluations.

At the meeting the town manager and finance director described the town's current financial picture. The proposed tax levy produced an estimated residential tax rate that rose by one penny in follow-up assessments, from $15.46 to $15.47 per $1,000 of assessed value, which the finance director said equates to about $32,000 in extra tax dollars per penny on the residential rate and roughly $324,000 per 10 cents. The administration said small changes in the levy or in assessed value can move the rate and that continued commercial abatements and assessment appeals have reduced the commercial assessment base this year.

Council discussion focused on how to balance near-term service and capital needs against the rating agencies' advice to grow unassigned reserves. Council President (presiding) said the town had proposed a "sound" budget but that added contingencies might be appropriate this year given uncertainties in state and federal aid and the scale of near-term bond issuances. Councilor Karen Kornthal and others urged caution in spending reserves and asked that any contingency be treated as protection to be spent only in defined cases.

Finance staff described the mechanics: departmental budgets are built from salaries and operating lines, offset by departmental and state revenue, and the final plug is the tax levy. The town has submitted required state disclosure forms and obtained municipal finance approval to exceed the 4% cap for specified reasons. The finance director said assessment work remains ongoing and that the board of review has approved commercial abatements this season that reduced the net assessment roll and put modest upward pressure on the residential tax rate.

The council also asked about options for handling unexpected costs in the coming year. Staff said the budget includes a modest contingency line (proposed $50,000) and a separate small proposed contribution toward OPEB this year; they noted large one-time federal ARPA funds are being spent and will be largely exhausted by the end of fiscal 2026.

What's next: The council set a schedule to continue budget work with at least one additional meeting before the June 10 statutory deadline to adopt the final budget. Staff will return with the requested tax-levy scenarios and homeowner impact calculations for the levy increases the council specified, holding the commercial tax rate steady as directed.

Ending: Councilors framed the next step as giving staff parameters to test: model modest levy increases against the residential rate so the council can weigh whether to add contingency to protect reserves and the town's credit position before final adoption.