Budget Commission Works to Stop 'Fiscal Death Spiral'

East Providence will be broke by the end of January if financial operations stay the current course.

To ensure East Providence remains financially afloat, members of the state appointed  brainstormed ways to reduce future debt during a Thursday morning meeting.

The task grows increasingly daunting. According to Finance Director Ellen Eggeman, the city will run out of cash by the last week in January. City Manager Peter Graczykowski said the  only allowed the city to secure $10 million TANs (Tax Anticipation Notes), leaving the budget with an anticipated shortfall. According to Eggeman, the city has routinely borrowed TANs for over 25 years as the fiscal year is not aligned with most state municipalities. She said about $12.5 million would be needed until March tax bills are collected.

Chairman Michael O'Keefe, former state budget advisor and and retired House of Representatives fiscal advisor, said he was most concerned with the city's cash flow problems.

"I'm worried about three weeks [from now]," O'Keefe said.

"Believe me, we all are at this table," replied Graczykowski.

Members of the commission, including Rosemary Booth Gallogly, director of the Rhode Island Department of Revenue, recommended that an incentive could be made to encourage property owners to pay their taxes early, and thus give the city an influx of cash. Voters would have to approve the charter change. About 64 percent of taxpayers are able to fund their taxes in full.

Mayor Bruce Rogers said that most East Providence residents have already been stretched to their financial breaking point.

"People won't be able to feed themselves," he said.

Members also proposed that separate institutions could perhaps lend the city money. Gallogly said vendors were more likely to lend when "action is being taken." She refrained from mentioning which institutions she had been speaking with.

O'Keefe maintained that cash flow issues must be ironed out and said the city needed to "get on track" to avoid a "fiscal death spiral."

School committee member Chrissy Rossi attended the meeting and urged members to keep Mary King, the school department's finance director, informed. O'Keefe said better communication must be made between the school department and city administration.

At Wednesday's inaugural meeting, Mayor Rogers said he and the taxpayers did not approve of the budget commission taking over the city's finances. The commission must approve all expenses exceeding $25,000 unless an emergency situation arises.

A budget commission meeting has been scheduled for next Tuesday, Jan. 3, at 10 a.m. in East Providence City Hall. B&E Consulting members have been asked to make a presentation regarding their .