2013 Budget Hinges On Pension Reform [POLL]

Discussion of the 2013 budget started last night at the Town Council meeting and while much is not known until at least the vote on pension reform takes place later this week, it seems certain that East Greenwich taxpayers will be facing a tax increase.

The question becomes, how much of an increase?

According to Town Council President Michael Isaacs, there are three areas of the budget that will see “substantial increases”: pension costs, health care and debt service. Pension costs next year - fiscal year 2013, which begins July 1, 2012 - are $2 million higher than current year spending if pension reform doesn’t pass.

The proposal that went to the General Assembly earlier this month would cut that increase to $400,000. Amendments to that proposal have so far added what looks like another $50,000, for a total of $450,000. Isaacs is hopeful that the vote on pension reform - due to take place on Thursday - will pass, but as he said Monday night, “No increase would be better.”

The second area of increase next year is coming from health care costs, which could rise between $100,000 and $200,000. The final big increase is just the other shoe dropping after several years of hanging overhead - debt service payments for school building projects will start coming due in 2013 for a whopping $2.7 million increase. That payment, at least, the town had been anticipating ever since the $52 million school bond was passed in 2007.

The town budget for Fiscal Year 2012 (which runs through June 2012) is $47,448,275, an increase of 5.77 percent over the current year. Of that total, the schools’ share is $32,561,927.

As of Monday, even with a tax increase of 4 percent (the limit allowed), the town’s budget for 2013 would be nearly $900,000 in the red.

“The 800-pound gorilla in the room is the debt service,” Sequino said.

The budget session will begin in earnest in January. The Town Council meets next on Monday, Nov. 28.