PROVIDENCE, R.I. (WPRI) — Mayor Brett Smiley in his first tax-and-spending plan of his term is proposing an increase in property taxes for residential homeowners, while also seeking to cut the commercial tax rate charged to businesses and large apartment buildings.

The tax hike is part of a larger budget plan unveiled Tuesday that includes money to hire more police officers, repair sidewalks and help homeless individuals.

Smiley put the blame for the tax increase squarely on his predecessor Jorge Elorza’s administration, referring in prepared remarks to “irresponsibly low tax rates” he inherited, along with the previous administration’s use of one-time federal relief money to close budget gaps. He also cited the potential for an economic recession as a reason for the tax increase.

“We have no choice but to raise taxes this year,” Smiley told reporters. “I’m not enthusiastic about proposing to raise residential taxes. But it’s the responsible thing to do.”

The average owner-occupied homeowner’s tax bill would go up by $400 under the proposal, according to chief financial officer Larry Mancini, while landlords who don’t live in their properties would see an average increase of $254.

Last year during the Elorza administration, the city increased the commercial tax rate while cutting the residential rate.

Despite that lower residential rate, many Providence property owners still saw a tax hike last year due to a property revaluation. Homes in South Providence and the West End neighborhoods saw big increases in value, for example, increasing tax bills despite the lower rate. Meanwhile, East Side neighborhood home values remained fairly steady, resulting in lower tax bills for some of those homeowners.

Smiley’s proposed residential tax rate is $18.70 per $1,000 of assessed value, up from $17.80 currently. He’s also proposed to decrease the homestead exemption from 45% to 40%, which is the amount of home value that owner-occupied owners can exempt from their taxes.

The proposed commercial tax rate is $34.10 per $1,000, down from $35.40 currently, and the tangible tax rate on businesses is proposed to stay the same at $53.40 per $1,000, with an exemption for the first $10,000 of property.

The city is raising overall taxes by roughly $14 million, the full 4% cap allowed by law.

Smiley submitted his budget proposal to the City Council on Tuesday night after making an address in the council chambers. The council will vet the $586 million budget over the next two months and make changes before passage. The new budget year starts July 1.

Watch: Smiley’s full budget address (story continues below)

Smiley said he expects commercial properties to pass on the savings from their tax cut to renters, who have been dealing with significant rent increases in recent years.

“We know too many of our neighbors are burdened by high rent,” Smiley said. “These properties will see a $1,900 decrease in their taxes annually, which should be passed on to their renters.”

Buildings with six or more apartments are considered commercial properties and would receive a tax cut under Smiley’s plan, while smaller multifamily homes with five or fewer rental units would get a tax increase as residential properties. No state or city law limits how much a landlord can raise rent annually.

Many commercial apartment buildings in the city have tax stabilization agreements, and therefore would not be affected by the tax cut.

Council President Rachel Miller declined to immediately weigh in on the tax proposal, telling reporters she needs to see a full analysis of how the changes would affect homeowners.

But City Councilman Pedro Espinal slammed the proposal, saying he was “deeply concerned” and would likely vote against the budget if Smiley’s tax increase is included.

“Less than a year ago, through the revaluation, taxes in my community went up,” Espinal said. “Coming off the pandemic, it’s going to hit them really hard.”

He also doubted that lowering the commercial tax rate would result in rent relief.

Miller said she continues to be interested in rent stabilization or rent control, which could potentially limit rent increases.

Smiley — who has previously said he is opposed to rent control — said Tuesday he would be happy to discuss it as a policy issue, but he believes rapidly increasing the supply of housing is a better way to decrease rent prices.

On the housing front, Smiley pledged to “build new units across all price points,” while also proposing to fund a position for a new housing support coordinator to help people who are homeless.

The mayor’s proposal increases the city’s payment into the pension fund to $105 million, up from $100 million, a rising cost that continues to squeeze the budget. (Voters approved a pension obligation bond last year to bolster the unfunded pension liability, but the money cannot be borrowed due to high interest rates.)

The budget also includes a $130 million appropriation — unchanged from last year — to the Providence Public School Department, which is currently controlled by the state. (The city and state have been in disagreement for years about how much money the city should be giving to the state-run schools.)

Smiley said in his speech the city is preparing for a “responsible and successful transition back to local control of our schools.”

Big boost to police department

Smiley is proposing to increase the ranks of the Providence Police Department by up to 80 officers, including the 30 set to graduate from the police academy in August.

The mayor’s plan would then almost immediately start a new police academy in October to hire and train another 50 officers.

The police department has been struggling to recruit new officers, and was unable to get to 50 qualified recruits for the current academy.

The overall police budget would rise from $100 million to nearly $108 million.

The mayor is funding the position of public safety commissioner in his budget, though he hasn’t decided yet if he will fill the position, which oversees both the police and fire departments. Smiley is currently filling the role as mayor.

Story continues below.

On the fire department side, the mayor is proposing to fund a mini training academy for 40 lateral transfers this year, which are firefighters coming from other departments who don’t need to go through a full academy.

A previous plan by the Elorza administration to hold a full entry-level fire academy this year was scrapped, but Smiley has placeholder funds in the budget for a potential second academy that has not yet been scheduled. (The money would either fund a second lateral academy, or the recruitment phase of a future full entry-level academy.)

The mayor has also proposed $100,000 for noise enforcement, which would pay for new handheld sound meters and inspectors to respond to noise complaints in the city.

While there’s no dedicated funding for ATV enforcement in the budget, Smiley focused on his newly-announced enforcement program in his speech.

“When ATVs and illegal dirt bikes are out in the street, Providence Police will respond, stop them and hold them accountable for all the danger they present to our city,” Smiley said. “In just three weeks, our Community Response Team has seized 34 unregistered, illegal vehicles from our streets and we are just getting started.”

Back to basics

Smiley spent much of his campaign for mayor last year talking about improvements to basic city services, and his budget includes increased funding for sidewalk repairs, trash pickup and graffiti cleanup.

The spending plan includes two new public works employees for trash and litter removal, five new workers for graffiti removal and four more for sidewalk maintenance.

He is also proposing $100,000 to get a new software vendor for the 311 system, where residents submit complaints, to make it more “efficient for staff and user-friendly for you,” Smiley said.

Miller praised the improvements to neighborhood services, and pledged to vet the budget department-by-department.

What’s not in the budget?

Smiley has been doing an analysis of the previously-approved plans for the city’s American Rescue Plan Act money, and at some point is expected to submit an updated proposal for the unspent COVID cash, currently totaling $128 million.

But that proposal is not part of Tuesday’s budget submission to the City Council. (A Smiley spokesperson had previously said a new ARPA proposal would come at the same time as the budget.)

The mayor’s budget plan does include $11 million from the ARPA money for “revenue recovery.” There’s no immediate timeline for when he’ll submit a new plan for the rest of the money.

There’s also no specific funding for more speed bumps or bike lanes, both of which are programs from the former Elorza administration that are on pause while the mayor evaluates whether to continue.

Smiley is also evaluating whether to continue Elorza’s municipal reparations program, which is currently slated to be funded with ARPA dollars.

The city is in the middle of negotiating new payment-in-lieu-of-tax agreements with the large nonprofit universities and hospitals, which are tax-exempt but give voluntary payments to the city. Those agreements aren’t in place yet, so it’s not yet clear how much the nonprofits will pay this year.

How to weigh in

The public will get a chance to testify both in writing and in person as the City Council vets the budget in the Finance Committee.

For the first time, Finance Chair Helen Anthony says there will be two public hearings: one on Smiley’s proposal, and then a second hearing after the council comes out with an amended version of the tax-and-spending plan.

Anthony released a tentative schedule of meetings and hearings on the budget plan here.