By David Eichenthal

David Eichenthal: Put Providence on Path to Prosperity

seal of providence riWhen Mayor Jorge Elorza asked the National Resource Network to assist Providence, he said the city’s economic future required a plan to put its fiscal house in order and address several critical challenges head-on. He was right.

Those challenges are significant, and threats to progress include: limited options to raise revenues, a high local tax burden, substantial unfunded liabilities, and operational inefficiencies. At the same time, Providence faces challenges related to poverty — more than one in four residents live in poverty — and aging infrastructure.

If Providence did nothing about its fiscal challenges today, it would face a $37 million budget gap by 2026, and expenditures would outpace revenues by $176 million over the next 10 years. While the city does not face the prospect of bankruptcy any time soon, failure to act now would be a prescription for insolvency.

It did not take one year for these challenges to develop in Providence, and it will not take just one year for them to be addressed. That is why the National Resource Network proposed a 10-year plan for Providence.

Annual budgets discourage long-term thinking. Short-term budget fixes often win out over long-term investments, and everyone has an incentive to kick the can down the road when it comes to the toughest challenges. Moreover, with the need to limit spending, it always seems that priority issues do not get addressed. Local governments often are like Red Sox fans during much of the last century — always “waiting till next year.” Well, those fans know that things can turn around in a big way, and the same is true in Providence.

To be clear, balancing the budget is only one component of this plan. To be truly competitive, Providence needs to right its fiscal ship in a way that creates opportunity and prosperity for the people who live here today — and the people the city wants to attract to live and work here as it grows and prospers.

The report’s recommendations present city leaders with options to balance the budget and make the city more competitive by investing up to $200 million in tax reform, programs for young people so that they can succeed in the future, and infrastructure essential to residents, businesses and neighborhoods.

Meeting these goals will require hard work and a shared commitment. It will require collaboration with partners in state government to ensure that the city has the flexibility it needs to ensure a fairer, more equitable, and more competitive tax system. It will require working with the city’s workers and its retirees to make sure that pensions and benefits are affordable and sustainable. It will require that the city build on its important and strong relationships with anchor institutions and the nonprofit sector. It will require that the city do different things and do certain things differently.

The result will be a balanced budget and fiscal stability, new investments in children and public education, and repairs to decaying infrastructure. Simply put, the result is a better, more sustainable future for Providence.

The National Resource Network, a part of the White House Strong Cities Strong Communities initiative, works with cities across the country that face similar issues. While every city’s needs are different, there is something that Providence has in common with the cities we work with: leadership that is ready to take on tough problems, a group of local leaders who are willing to be active participants in the process, and people who are willing to put the good of the community — and the economic prosperity of the region and state — ahead of their own individual interests.

The plan we presented to the city offers a series of options, and Mayor Elorza presented his ideas for implementation during his budget address earlier this week. We are confident — given the open dialogue and the willingness of the mayor and Providence’s community leaders, stakeholders and others to address these issues head-on — that the city is on the path to prosperity.