Providence Mayor Brett Smiley has been crystal clear: If you own a home in Providence, it’s not a question of if you’re getting a tax increase; it’s how much.

The mayor won’t propose his budget for the fiscal year that begins July 1 until next month, but the numbers are beginning to come into focus. 

The administration is projecting a $22 million increase in fixed costs for next year, including $11.4 million extra for the school department, an additional $4.7 million to the pension fund, $3.7 million in contractually obligated raises for city workers, and roughly $2 million more health benefits.

None of those payments are optional. They are guaranteed by courts and contracts.

Solving the problem is quickly becoming the biggest challenge Smiley has faced in his generally smooth first term as mayor, and it’s coming just as he begins to gear up to run for a second term next year.

The bigger picture: The Democratic mayor has no good options. 

No one wants to pay more in taxes, and most residents will hate the budget cuts that would produce meaningful savings. We’re talking moving trash pickup to every other week, slashing grants to libraries, community centers, and nonprofits, or a 10 percent reduction in city employees.

The good news for Smiley is that property values in every neighborhood are skyrocketing in Providence. The average single-family home value jumped 32 percent last year, and triple deckers are up 52 percent.

The bad news for Smiley is that state law caps increases in the tax levy – that’s the total amount the city brings in in taxes from all properties – at 4 percent each year. That maximum tax increase would generate $15.8 million if the city collects every single penny owed – which it never does. That leaves a $6 million gap.

Smiley is now seeking General Assembly approval to raise taxes above the 4 percent cap – which is not uncommon for municipalities to request – but he hasn’t said how far he wants to go over the cap. If every 1 percent increase generates around $4 million, then somewhere between 6 percent and 7 percent would probably close the $22 million gap.

Reality check: For every 1 percent increase in the tax levy, the average homeowner’s tax bill goes up about $42. If Smiley reaches for a 7 percent levy increase, the average property tax bill would increase by almost $300.

That’s real money.

City Council leadership has said it wants to see more guardrails on the tax levy proposal – perhaps a cap on how much the city can exceed the cap – but none of the 15 members on the council want to field calls from constituents about more rats in the streets, lackluster snow removal, or their kids having nowhere to play because the local rec center is closed one day a week.

Smiley and most members of the City Council are up for reelection next year – Councilors Jo-Ann Ryan and Mary Kay Harris are term-limited – so it’s smarter politically to rip the Band-Aid this year and try to avoid raising taxes or making painful cuts when they’re asking for votes next year.

What’s next: The City Council Finance Committee is meeting tonight at 5:30 to discuss the resolution asking the General Assembly to exceed the tax cap.

Most residents have already received their property tax assessments, but they won’t get a sense of just how much their taxes are increasing until Smiley releases his budget proposal next month. 

The council will spend two months vetting the budget, and potentially tinkering with the proposal.

First quarter tax bills are typically due by the end of July.

Separately, city leaders are exploring other options for pad revenue. One idea is to implement a parking tax for those who attend events at the AMP or PPAC. Another is to increase the cost of parking tickets.