Budget Battle Over Providence Schools Intensifies as Smiley Warns of Tax Hikes, Service Cuts

The city of Providence has halted all discretionary spending and imposed a hiring freeze to comply with a court mandate to fund the city's public schools — with the potential for cuts to municipal services and even a property tax hike, Mayor Brett Smiley told reporters gathered in his office Tuesday.

The warning about tough choices ahead comes three days after a Providence Superior Court judge ruled in favor of the Rhode Island Department of Education (RIDE), which is withholding millions in state aid to Providence until the city appropriates local dollars to fund its public schools, which have been under state control for the past five years.

"The decision the court handed down put the city's finances at risk," Smiley said. "And we're going to have to make very difficult decisions in the days ahead."

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That could include cuts to all grant programs for the community libraries, housing support, and parks programs. Smiley said his office would also consider rolling back police patrols at PVDFest and other holiday celebrations.

"That will all have to stop," he said.

Rhode Island Superior Court Judge Jeffrey A. Lanphear on Friday upheld a request from Education Commissioner Angélica Infante-Green to state Treasurer James Diossa to withhold $8.5 million in state car tax payments from the city, claiming Providence owed nearly $30 million to the district under the state statute that authorized RIDE's 2019 takeover of the Providence Public School Department.

A decision on how much the city must pay was originally scheduled for Wednesday morning but was postponed to Nov. 20. The City Council's Committee on Finance was scheduled to meet to reallocate $1.5 million in federal COVID relief funds to help cover school budget shortfalls at its Tuesday meeting, but postponed that part of its agenda to Monday, Nov. 18.

Michelle Moreno Silva, spokesperson for Diossa's office, declined to comment on the Superior Court's ruling.

"Our role here is very minimal," she said in a phone interview. "We just hold the money."

Smiley told reporters Tuesday that the city may have to conduct layoffs and furlough additional employees — which he said would save the city $200,000 per day. Also possible, he said, the city could impose a mid-year tax hike, something it can't do without General Assembly approval.

"If legislation is introduced, it will be thoroughly reviewed through the public committee hearing process," Senate spokesperson Greg Pare said in an email.

Last week's Superior Court ruling intensified the battle over funding obligations to the district. The feud went public in early October after Smiley called a press conference to reveal an "ultimatum" made by Providence Superintendent Javier Montañez asking for $10.9 million for the district.

Montañez warned Smiley that without the cash from the city, the district would have to cut winter and spring sports, along with revoking students' Rhode Island Public Transit Authority bus passes.

Smiley responded with a $1 million offer the following day, promising to use money from a payment-in-lieu-of-taxes agreement recently struck with Lifespan Corporation, plus a parking agreement with the Rhode Island School of Design. The City Council promised to repurpose $1.5 million from its share of federal pandemic relief money.

But Smiley said the combined offer was not accepted as of Tuesday.

"All of this is in the context of irresponsible spending from the school department," he said Tuesday. "We all know there was going to be a fiscal cliff when the federal COVID aid expired and they did nothing to plan for it other than to send us the bill and expect Providence taxpayers would foot that bill."

Smiley blamed Infante-Green's administration at RIDE for a lack of collaboration, adding the city would help to instill discipline and oversight on state spending.

"It is clear the commissioner views her ability to run our schools as one without checks and balances," he said. "Cooperation is a one-way street with her."

Smiley and City Council President Rachel Miller called on the state to put the district back on local control — something the Rhode Island Council on Elementary and Secondary Education declined to do in August , instead extending the takeover through 2027.

"Our city is not a bank for a state-controlled experiment," Miller said. "After four years, it has become abundantly clear the state takeover is not working to promote the collaboration and the transparent decision making that our students need."

RIDE spokesperson Victor Morente said it was a lack of city resources and underperformance that led the state to take over the school district in the first palace.

"City leaders have repeatedly stated they are ready to prove to the State that they are prepared to regain local control, but their budget priorities say otherwise," Morente said in a statement.

The budget feud led high school students to rally outside of City Hall on Tuesday.