Smiley says it’s time for Lifespan to pay its share; proposes no new taxes

Providence Mayor Brett Smiley scored a victory in his first year on the job when he struck an agreement securing voluntary payments from the city’s tax-exempt universities over the next 20 years. 

In his second budget address on Wednesday night at City Hall, Smiley challenged the state’s largest hospital system to do the same. 

“To the Lifespan leadership team — it’s time to come to the table with a meaningful contribution,” the mayor said, referring to the not-for-profit owner of Rhode Island Hospital and The Miriam Hospital.

“I am confident that we can also reach a fair, equitable, and mutually beneficial agreement that ensures we grow together in the decades to come. Hospitals throughout the region have made meaningful long-term commitments to their host communities, you can too.”

Smiley’s team said in a budget briefing Wednesday afternoon there were no recent indications that Lifespan would strike a deal similar to the one made with local colleges. The city wants to strike a Payment in Lieu of Taxes agreement, or PILOT, which generates revenue from untaxed, landowning institutions to help offset the burden of providing them municipal services such as police and fire protection on property taxpayers.

Smiley’s proposed fiscal 2025 budget is $598.6 million, a 3% increase over this fiscal year. About $15.8 million of revenue would come from local PILOT payments from four higher education institutions: Brown University, Providence College, Johnson and Wales University and the Rhode Island School of Design. Another $37.3 million would come from state PILOT funds. 

Did that extra spending money have anything to do with the absence of tax hikes in the proposed budget? Smiley’s team was unspecific about the impact, but did say it was helpful. Lifespan, meanwhile, has not contributed to any PILOT revenue to the city in approximately two years. 

Lifespan declined to comment, said Jessica A. Wharton, a company spokesperson, via email Thursday morning.

But Care New England, the city’s other sizable health care network which owns Women and Infants and Butler hospitals, has been more willing to pay up. Care New England was not singled out in Smiley’s speech.

“Care New England enjoys its partnership with the city of Providence, and we are currently making payments to the city as part of our current agreement,” said Todd Conklin, CFO of Care New England, in an email Wednesday. 

How much are those payments, exactly?

“Our payments are made annually. That’s all the information we will be providing,” said Doreen Scanlon Gavigan, a Care New England spokesperson, in an email Wednesday.  

In 2023, Care New England paid around $350,000 to $400,000, with that annual payment set to expire in fiscal 2025, Rhode Island Current previously reported. 

A recent study commissioned by the Rhode Island Foundation documented the dire financial positions of Rhode Island’s acute care hospitals, which received lower reimbursements from Medicaid and private, employer-sponsored health plans for inpatient and outpatient services compared with Massachusetts and Connecticut in fiscal year 2022. From 2018 to 2022, average operating costs in Rhode Island increased by 17%, while the average net revenue from patient discharges grew 9%, the study found.

More money for schools, flood response

Even without Lifespan’s help, Smiley’s plan would see no increase in taxes for homeowners, though it would change how the residential rate is displayed. The Homestead Exemption would be eliminated so that it would be easier for aspiring Providence residents to compare tax rates with other municipalities. The new classifications would be owner-occupied, at $10.46 per $1,000 of assessed value, and $18.35 per $1,000 for non-owner occupied properties. 

Commercial tax and tangible tax remain the same as fiscal 2024, at $35.10 and $53.40 per $1,000 of valuation, respectively. Smiley’s team noted some concerns, however, about the state government’s upcoming reimbursements for tangible tax exemptions. The city’s spending plan has allocated over $5 million to accommodate the reimbursements, but answers as to how exactly municipalities will receive the reimbursements is still unclear.

Fiscal 2025 will also be the first year the city isn’t using American Rescue Plan Act (ARPA) funds to fill budget gaps. There are no significant cuts to programs or services this year, Smileys’ team said.  

Some programs are actually being expanded: While one of Smiley’s campaign talking points involved snow removal, recent flooding — in a city littered with flood plains — has made rain Smiley’s nemesis. The mayor is proposing $135,941 for a new sewer team that would respond quickly to flood-prone areas, largely by clearing clogged storm drains.  

Providence Public School District will see an extra $3 million, a 2.3% increase, for a total of $133 million in city funding. Summer learning opportunities will receive the same as in fiscal year 2024 ($580,000) as will after school supports ($385,000). 

Smiley’s recent proposal to remove the bike lane on South Water Street was not included in the budget summary. Like other infrastructure changes, including any motivated by the closure of the Washington Bridge, the removal would most likely be paid for with Capital Improvement Plan Funds.  

There were a number of quality-of-life improvements Smiley proposed, including one already underway with a previous allotment of ARPA funds: The city’s parking meters are getting an update. That change may be welcome in a place notorious statewide for lack of parking. Smiley’s team estimated that more than half of the city’s meters are broken, and they don’t accept many forms of payment either.

The new meters will accept a wide variety of payment options compared to the old models and installation will start Thursday. The overhaul to the city’s meter system will include both individual and kiosk units and will take about three weeks. That would help the city hold onto its meter revenue: It made $2.6 million last year, a number that’s projected to stay roughly the same.

In the fiscal 2025 proposal, PVDFest has also been retooled after a less-than-smooth rollout in 2023 that frustrated both residents and businesses. The latter were especially affected by a rained-out final day of the annual event, which had been moved from June to September. This year, the budget accommodates a rain date — meaning the festival will only be one day, unlike three days as it has been in past years. A one-day festival with rain dates budgeted in costs roughly as much as three days without. But the city does not fund the entirety of PVDFest, and the budget line this year is not substantially less than fiscal 2024.       

Providence’s public libraries — which have expressed dissatisfaction with Gov. Dan McKee’s proposed fiscal 2025 budget — would see a little love from Smiley’s office. The mayor is proposing $4.25 million, a 6.3% increase from last year, for Community Libraries of Providence, and $329,500 for Providence Public Library, a 17.8% increase. 

Another $200,000 for citywide digitization efforts would bring certain city records online and publicly accessible. Another budget line would see the creation of a case management system for the city’s municipal courts.

The budget is now online for public viewing. City Council committee meetings on the budget will take place periodically from April 23 through May 30. Public hearings for the budget are scheduled for May 7 and June 4, and the tentative adoption date for the budget is June 20.

This story was updated to include a comment received from Lifespan.