More city positions, a School Department deficit: 5 ways Newport plans to spend your money

NEWPORT – Tax rate decreases and school funding shortfalls are just a few of the topics of conversation currently underway at City Hall as city officials work toward finalizing its budget for Fiscal 2025.

Newport produces an annual budget each year to manage the money flowing in and expenses flowing out of city hall. It also produces a biennial budget every two years. The council is currently holding workshops to better understand the city administration’s budget proposal for FY25. They will then hold three separate public hearings on the budget, scheduled for May 8, May 22 and June 12. The last hearing will also include a vote on the adoption of the budget.

Here’s a rundown on five main points to take home from this year’s budget proposal:

1. Tax rates drop to account for staggering property value increases

The city has proposed an increase in General Fund revenues by 3.4%. This is a smaller increase than it proposed a year prior, which increased revenues by 6.11%. About 77% of the General Fund is funded by property taxes. The city establishes the property tax rates each budget cycle and applies them to the total assessed value of properties throughout the city to figure out what the tax levy, the total amount of property tax dollars the city will collect, will be.

This year, Newport homeowners received news of massive value increases in their property through the latest citywide property assessment. The average home increased in value by over 50% in just three years, causing many to panic over how this may affect their tax bills.

With the total assessed value of all residential properties in Newport jumping from $5.9 billion to $8.57 billion, the city could not maintain its current tax rate without raising the total tax levy more than 4%, which goes against state law. Instead, the city is proposing a lower tax rate: $6.98 per thousand for owner-occupied residential properties, $8.22 per thousand for non-owner-occupied residential properties and $10.46 per thousand for commercial properties.

Through these new rates, the total tax levy increases by $3.4 million, an increase just shy of 4%.

This is also the second fiscal year that uses the city’s new two-tier tax system, which discounts the rates for residential properties occupied by Newport residents. This year, owner-occupied properties have a tax rate that’s 24% less than non-owner-occupied properties. Last year, it was just 15%.

2. School department faces $2.6 million budget deficit

The City of Newport’s contribution to the School Department budget makes up about 60% of the total funds that go into the city’s public schools. This year, the city is proposing to increase the amount it gives to the school by 2% for a total of $28.38 million. This suggested appropriation is $276,737 less than the School Department proposed in its own draft budget.

The School Department had hoped the city would increase its contribution by at least 3%, if not 4%, to help tackle the impending $2.6 million budget deficit it has predicted for Fiscal 2024. Part of the reason the department faces this deficit is a $250,000 reduction in the amount it will receive from the State of Rhode Island as a result of declining enrollment. Additionally, the district expects to pay $2 million more in salaries and benefits through its union contracts and $834,694.72 in tuition and transportation costs for students attending schools outside the district.

3. City department restructuring includes new department, new titles

During discussions on the city’s Capital Improvement Plan, city administration proposed a plan to restructure its various departments into three umbrella departments: the Department of Public Safety, led by the police chief; the Department of Administration, led by the director of finance; and the Department of Resilience and Sustainability, led by a new director of resilience and sustainability.

The new Resilience and Sustainability department adds $529,096 to the budget through its new director position, a resilience assistant position and a grant writing position. The Planning and Economic Development, Zoning and Building Inspections, Public Services and Utilities Departments will all report directly to the Director of Resilience and Sustainability. The Public Safety Department will be in charge of the Police Department and Fire Department while the Administration Department will head the Finance, City Clerk and Canvassing offices.

The only departments not impacted by this restructuring are the City Manager’s office, the City Solicitor’s office, also referred to in the budget as the “law department,” Human Resources and the newly established Communications Department, although the latter is also referred to as a division within the City Manager’s office. While the city has had a communications manager for years, the FY25 budget adds the new "Director of Communications" title and a new communications assistant position.

In total, the city is proposing to add 8 new positions to its roster of executive, administrative and professional employees through this budget cycle. In addition to the new titles of Director of Communications, Director of Public Safety and Communications Assistant, the city has budgeted for an administrative assistant for the Fire Department, a city principal accountant, a Diversity, Equity and Inclusion Officer, a deputy city manager, a deputy police chief, a deputy public services director, an executive assistant for the utilities department, a grant writer, a resilience assistant, a school principal accountant and a special project assistant for the utilities department. The positions of Harbormaster and Laboratory Supervisor were also moved to this list from the list of N.E.A Supervisory Employees.

4. Few departments to receive major increases/cuts

Many city departments were allocated very minor increases or decreases to their budgets through the proposed FY25 budget. However, a few standout departments still remain. The City Council’s budget increased by 113.8% from FY2024, mostly due to an additional $104,000 in contract services and doubling of Sister City expenses. The City Manager’s Office’s budget increased by 26.57%, which includes the new communications division expenses and an additional $50,000 in contract services. Finally, the Police Department’s budget increased by 13.75%, as a result of a 14% increase in Police Administration and 15% increase in Uniform Patrol expenses.

5. The city is planning to spend more than it originally planned in 2023

The City of Newport has a biennial budget development process. Every two years, the city will put together a massive two-year budget that includes the proposed budget for the upcoming fiscal year, as well as expectations and assumptions for the next fiscal year. The Biennial Budget for Fiscal Years 2024 and 2025, for example, was developed and approved by the city in Spring 2023.

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There are several key differences between the new proposed budget for FY25 and the city’s proposed FY25 budget from last year. The city’s new FY25 budget for the general fund is $1.4 million than it was when initially proposed in 2023, and the city is planning to spend more than projected on expenditures in most departments. Here’s a breakdown of the main differences between the two FY25 proposed budgets.

Increased allocation between the original biennial budget and the current proposed budget:

• Total General Fund Expenditures, current proposal: $115,073,223

  • Initially proposed at $113,663,017

• City Council, current proposal: $332,839

  • Initially $173,086

• City Manager, current proposal: $2,219,109

  • Initially $1,692,394

• City Solicitor, current proposal: $661,085

  • Initially $573,809

• Finance, current proposal: $5,641,349

  • Initially $5,564,757

• Police, current proposal: $21,512,205

  • Initially $19,163,160

• Fire, current proposal: $22,741,351

  • Initially $22,389,445

• Planning and Development, current proposal: $1,364,613

  • Initially $932,527

Decreased

• Public School Operations, current proposal: $28,381,115

  • Initially $28,518,815

• Public Services, current proposal: $12,845,471

  • Initially $12,853,952

• Building and Inspections, current proposal: $653,819

  • Initially $757,000

This article originally appeared on Newport Daily News: Newport FY25 budget includes adding personal to city departments