Mayor Jorge Elorza is continuing to press for the leasing of the Providence Water Supply Board to fund the city’s $1 billion long-term pension liabilities.
Elorza reiterated his commitment to lease the Water Supply Board following his announcement that he is running for re-election in an interview with the Providence Journal Jan. 18.
The mayor’s team expressed satisfaction with their management of the city’s budget throughout his time in office. “I can confirm that the city realized a $2.2 million rainy-day fund,” wrote Victor Morente, press secretary for the office of the mayor. This surplus in the general reserve eliminated a cumulative deficit of $3.16 million, according to the City of Providence Financial Report for fiscal year 2017.
A surplus was projected for $10.2 million, but Elorza told the Providence Journal that when a $7.2 million surplus was achieved, $4.9 million was paid to a settlement with city firefighters.
The recent surplus is attributable to “realistic budgeting, continued strategic cash management, more efficient and robust tax collections, better departmental revenues and attrition savings in salary expenditures,” Morente wrote.
Despite the general fund surplus, Providence’s budget has long-standing challenges — most notably, pension liabilities. In 2016, the National Resource Network, a federal program which advises cities on how to strengthen their economies, recommended that the city of Providence sell or lease a valuable asset to fund this shortfall. The Water Supply Board, which provides water to 600,000 people across Rhode Island, was valued at $404.2 million in 2017.
While Elorza is in favor of leasing the Water Supply Board, he has been consistently opposed to privatization. In order for Providence to lease it, legislation must first be passed by the Rhode Island General Assembly because a state statute currently prohibits the city from profiting off its water supply.
Legislation to create a regional water board with the authority to lease and sell property was introduced in April 2017 to the Assembly by Rep. Scott Slater D-Providence, but was opposed by House Speaker Nicholas Mattiello D-Cranston, on the grounds that the regionalization would not be beneficial to ratepayers. The Rhode Island Republican Party critiqued the bill as being designed to bail out Providence with state residents’ water bills.
As Elorza looks toward re-election and the possibility of a second term, he continues to advocate for monetizing the city’s water supply as the most viable solution to the city’s pension debt. “While the City continues to pursue all options to put Providence on a strong fiscal path moving forward and resolve the long-term pension liabilities for future generations, at this time we believe that monetization of our water system is a viable and sustainable solution,” Morente wrote.
“Providence Water is committed to providing high quality, safe and affordable water to two-thirds of Rhode Island. We will provide support to city and state officials as they analyze the issue of monetizing Providence Water,” wrote Dyana Koelsch, spokesperson for the Water Supply Board, in an email to The Herald.
“This year, we will again be pursuing this at the State House and be submitting legislation that outlines a path forward. We are confident that any transaction will ensure continued access to high quality water at affordable rates,” Morente wrote.
