On March 20, the Providence City Council unanimously approved a resolution supporting a State House bill that would allow the city to increase its tax revenue for fiscal year 2026. If passed, Providence could increase its city taxes by more than it has in previous years, which could help the city balance its budget, according to City Council Communications Director Marc Boyd.
The resolution was a required step in the potential passage of the bill.
Rhode Island state law prohibits municipalities from increasing taxes by more than four percent each year. The resolution approved by the City Council supports an act that would allow Providence specifically to exceed this levy cap in FY 2026.
According to the resolution, Providence is seeking “a maximum total levy increase of 8%.”
Providence has faced increased costs due to pension payments, contractual raises for city employees and health benefits, as well as a November 2024 settlement with the Rhode Island Department of Education, according to Councilwoman and Finance Committee Chair Helen Anthony (Ward 2).
Providence is required by law to pass a balanced budget, so city officials must find a way to make up the increased costs.
Anthony said she expects opposition to the bill in the General Assembly, but she hopes that a majority of the Providence delegation supports the cap increase.
“I hope that (other legislators) will respect the fact … that our financial burdens are difficult, and that we need some flexibility to work them out,” Anthony said.
But Anthony noted that some Providence legislators may be wary of raising taxes on their constituents.
“The fact that the council passed a resolution in support is very important,” Rep. Edith Ajello (D-Providence) wrote in an email to The Herald. “Given that there is a council resolution I think it is likely that the General Assembly will approve.”
Anthony said it is “pretty urgent” for the General Assembly to vote on the act before Providence Mayor Brett Smiley releases his budget proposal, which will be impacted by whether the city can count on additional tax revenue. The budget proposal is typically released in mid-April.
Providence will not necessarily use its increased tax allowance if the act is passed, as city officials are examining other avenues to eliminate the budget gap.
“The City has been examining all municipal fines and fees and has advocated for consumption-based taxes” such as Smiley’s commercial parking tax proposal, wrote City of Providence’s Deputy Press Secretary Samara Pinto in an email to The Herald.
“Additionally, the city has enacted a hiring freeze and a pause on non-essential spending,” Pinto wrote.
The City Council “views raising taxes … as a last resort to balance the budget,” Boyd wrote in an email to The Herald. The increased cap would be “just one more tool in the toolbox,” he added.
Lev Kotler-Berkowitz is a sophomore senior staff writer covering city and state politics. He is from the Boston area and is concentrating in Political Science and Economics. In his free time, Lev can be found playing baseball or running around with his dog.
