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A Hummel Report Investigation

Disclosure

Taxpayers in East Providence last year repeatedly heard from their city council that taxes would increase at the city's capped rate of 3.5 percent in 2011. But the Hummel Report has learned the total amount the city had to raise from its taxpayers was actually 8.7 percent higher, in large part because of losses in state aid, a figure that was not publicized. Jim Hummel sits down with the former head of the council - and the man who defeated him - to try explain the numbers.

To see the letter East Providence Rep. John Savage sent to the state,click here.

For the response from the Department of Revenue,click here.

SCRIPT

Hummel: ``Last year taxpayers here in East Providence found themselves digging deeper to pay their tax bills. But how much deeper? This week one new  councilman says the previous council hid the true amount of the tax increase from its residents, secretly going to the state for permission to do it.''

As it put the 2011 budget together a year ago, the East Providence City Council faced the same dilemma many communities confronted: how to make up for a huge loss in state aid and car tax reimbursement eliminated by the General Assembly.

Larisa: ``We were cut millions and millions of dollars over the last two years and we refused to raise taxes above the 3 and half percent tax cap.''

That was the mantra of Joseph Larisa, who headed the city council at the time:  even with serious funding cuts from the state Larissa said the council was not going to exceed the tax  rate  cap the city had of 3.5 percent.

Larisa: ``Three and a half percent. That's it.''

And that was true for residential property taxes - from Riverside, to Rumford, to Kent Heights. But that's not the only tax burden for those in East Providence. The city also collects tangible property taxes from businesses and taxes on all  vehicles registered in the city. Those three sources make up what's called the tax levy - the total amount the city collects in taxes every year.

A huge loss in state aid and car tax reimbursement meant for 2011 the city had to come up with $95.5 million from its taxpayers, who the previous year had kicked in $87.8 million.

That translated to an 8.7 percent increase, nearly double the tax levy cap allowed by state law.

Conley:  ``We're asking you to pay us 8.7 percent more in taxes, but we're telling you it's only a 3.5 percent increase.''

William Conley defeated Larissa in last year's election. He said Larissa and the former council, all of whom lost or didn't run again, were not being honest with the taxpayers about the increase in the city's tax levy - keeping the focus on the 3.5 percent increase in the tax rate.

Conley: ``The bottom line is people were told repeatedly at public hearings at campaign forums they were told repeatedly their taxes were going up 3 1/2 percent. When the truth was they were up over 8 percent and when the tax bills came out they saw it. I don't think it makes a lot of difference to a taxpayers which category they're paying taxes on. They're paying more in taxes.''

Hummel:  ``I heard you talk a lot about the cap.''

Larisa: ``Yes.''

Hummel:  ``But it's the levy that went up 8.7 percent. The amount of taxes East Providence raised from one year to the next was more than 8 percent.''

Larisa:  ``Let's talk about that, the levy is the total amount of money raised. The half-truths you hear spouted from my adversary is that we therefore raised taxes and took all this money and are spending and we didn't do all we could to cut. Well wait a second, when you used how much money we got the big chunk of that was not a tax increase, it was the General Assembly taking away all of our car tax aid.''

Hummel: ``There's no disagreement on that; the issue is disclosure and being transparent with the people at the meetings because what I heard from you at the meetings - what I  listened to was  three and a half, three and a half,  three and a half. In fact, the city was raising its tax levy more than 8 percent and you have to go to the Department of Revenue to ask permission for that don't you?:

Larisa: To do an increase in the levy, yes, and it was very open at the time and in fact I talked ad nauseum,  extensively, about what's going on with the car tax.''

The Hummel Report reviewed the tapes of the council meetings where Larisa addressed the budget and found no mention of the 8.7 percent levy increase - or having to go to the state for permission to exceed the  cap - which it did in September of 2010.

Conley: ``When I was elected and initially made inquiries about this because I wanted to clarify it,  essentially the response  I got was there's no paperwork at East Providence City Hall to show that a request was ever made. In fact, to this day, as I talk to you Jim, there is no paperwork anywhere at East Providence City Hall. Ultimately everything came from the state.''

Hummel: ``Do you think that was intentional?''

Conley : ``Yes I do."

Larisa: ``I'm  not sure about the Department of Revenue to get a waiver because that wasn't relevant,  but  the car tax..''

Hummel: ``It is relevant. State law says  in order to raise your levy more than the cap allowed by state law, and  it's been decreasing, you need to get a waiver from somebody at the Department of Revenue.''

Larisa. ``And we did. The city manager did.''

City Manager Richard Brown - who applied for the state waiver - is no longer employed by the city and the Finance Director at the time is also gone.

The Hummel Report has obtained a report from the state Department of Revenue that shows East Providence was one of 14 communities that received permission to exceed the tax levy cap;  23 communities, despite the loss in state aid, stayed below it.

But Conley says there is no record of that in the Finance Department at City Hall - and current leaders had to go to the state for the information.

Larisa: ``Why would we  hide anything?  We've hid nothing at all.''

Hummel:  ``Well maybe because you had a re-election campaign coming up. What do you mean, why would you hide anything?''

Larisa: ``Because all we did was talk about it at every meeting. We weren't running from taxes...''

Hummel: ``What you talked about was 3.5, 3.5, 3.5...''

Larisa:  ``AND...the car tax at $200 more per person,  which is awful and we're going to fix it.''   

Hummel: ``Do you think it would have scared the voters if they heard: you know what, the city needs more than 8 percent - and explain it -  but we need more than 8 percent in taxes than what we raised last year. And you know what folks, it's got to come out of your pockets, one way or another.''

Larisa: ``We said that. We may not have used the words 8 percent but I said very clearly that the General Assembly is taking away $2.1 million of car tax aid and in this budget - there is only one place we can get it from and that's from the people that own the cars.''

Hummel: ``But do you think Joe Rumford knows that?''

Larisa: `The people who have called me? They don't care about 8 percent or 7 percent, or whatever...''

Hummel:`` You don't think about they understand 8 percent more than they understand the cobbling together of...''

Larisa: ``Oh no, here's what they understand, I got my car bill ,Joe, it's $202 higher. That's exactly the figure. Everybody's car bill is $202 higher.''

Conley: ``When I continued to talk to the fact the budget just didn't substantiate that number and that the tax revenue being generated by that budget was well over 8 percent, as we see now, 8.7 percent...''

Hummel:  ``What was the response?''

Conley: ``The response was: Conley's wrong, he doesn't know what he's talking about, he's misleading you, your tax  increase is 3.5 .''

Hummel: ``Were you the skunk at the lawn party?''

Conley: ``Every time. Because despite the fact that you're saying this, you have the city leaders, the council, the council, the mayor, the city manager all saying - well no his figures are wrong, his calculations are wrong.  The misrepresentation and lack of disclosure to the taxpayers is the real insidious thing here.''

Hummel: ``Is the real frustrating thing for you, nothing can be done about this?''

Conley:  ``No, it's done.''

Hummel: ``No rewinding the clock.''

Conley: ``It's done.

Hummel: ``But you believe everybody should know who's watching this,  this is why your tax bill is what it is.''

Conley: ``Exactly.''

So unless gets an infusion of state aid, an unlikely possibility, the 8.7 percent increase is now built into everyone's tax bill going forward.

Add to that the tax increase the current city council will vote on when next year's budget comes up for its approval later this month.

In East Providence, Jim Hummel, for the Hummel Report.

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