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Mayor Lombardi: "With debt gone , town will likely cut $1.6 million in pension fund contribution".
Posted On: Jan 16, 2013

Mayor Lombardi: Landmark decision on Google cash helps whole town

New roads, car tax relief by spring? Leaders ready proposals for more spending

NORTH PROVIDENCE - It was certainly a "historic" and "monumental" day for the town, said Mayor Charles Lombardi, but there really are no words to adequately describe what the stunning decision by the U.S. Department of Justice last Friday really means for North Providence's future.

With debts erased and fresh money freed up in the budget, said the mayor, new roads and reduced car taxes could be on the near horizon.

"What happened to us the other day was just over the top," said the mayor. "We hit it out of the ballpark with that one."

A "huge burden" was lifted when U.S. Attorney General Eric Holder called state officials at around 1 p.m. Jan. 11 to inform them that North Providence would be allowed to use $20.6 million of $60 million won as part of a settlement with Google last year to fill its flailing police pension fund, said Lombardi.

With one phone call, said the mayor, the unfunded hole was gone and the problem fixed.

"The idea for this came out of our office, and nowhere else. We wanted to be responsible with the spending," he said. "My opponents said this was something that couldn't be done, but my mind wasn't thinking about doing any other things with the money until it was done."

With the federal approval in hand, and $40 million still remaining to be spent, said Lombardi, town officials can now focus on how to most "wisely" use the remainder of the Google money and what to do with nearly $1 million a year that is freed up from not having to make higher annual payments into the pension plan.

The two possible initiatives at the top of his list, said the mayor, will be:

* A street repaving program to address town roadways that are in tough shape;

* And a change to the town's car tax exemption of $500 to a higher number, possibly $5,000, a measure that would "restore some fairness" to a car tax system that caused many residents who never had to pay vehicle excise taxes in the past to start having to pay them three years ago when the state ditched its $6,000 exemption. Those with cars valued at more than $5,000 would potentially have an exemption on the first $5,000 of value, he said.

Lombardi will be meeting with Finance Director Thomas Massaro early this week to determine whether the town has enough money to start repaving roads and providing car tax relief this spring.

The mayor will also be huddling with Police Chief Paul Martellini in the coming days to decide the next steps for spending the remaining money from Google, though he assured taxpayers again that there will be "no foolish spending."

Lombardi gave The Breeze the "vision" he has for what to do with the money, but emphasized that "nothing is set in stone."

Possible uses he and other officials are discussing include:

* An annual fund set up to stock the Police Department with all of the cars, weapons, ammunition, and other equipment it needs for decades to come, relieving taxpayers of the annual costs for all of that.

"That would allow us to realize this revenue not short term but long term," said Lombardi.

* Implementing numerous educational safety measures, including the possible addition of two new resource officers to "interact with our children on a daily basis" in town schools. The town already added one officer to the daily shift, said Lombardi, and adding more will "let the students in our town know that, 'look, we've got you covered, so you don't have to worry about your safety.'"

* Starting up partnerships between the Police Department and various town recreational programs, especially at the newly expanded Notte Park.

* Assisting Sgt. Diana Perez with the successful implementation of "Project Neighborhood Watch," a fledgling collection of local neighborhood groups being organized to reduce crime.

* A "police athletic league," a league under the auspices of the Police Department that could allow more of the town's youths to get involved with sports at a lower cost.

* And a combined police and fire safety complex in the center of town. The mayor said he would be opposed to building just a police complex, as it wouldn't allow the town to consolidate fire stations and save money for taxpayers over the long haul. A combined station, like the pension fix, would require a special exception.

Lombardi is pledging to treat the $60 million from Google as he would if he "hit the lottery for $60 million." The goal is to be "wise in the spending" and to use the money "to protect yourself and your family for years to come," he said. "North Providence is my family."

Word of the decision from Washington spread quickly through the ranks at the North Providence Police Department, according to Chief Paul Martellini, who said that the "men and women of the department" will "sleep well tonight."

"Everyone feels really good about this," said the chief. "It's great news."

The decision of Holder last Friday to allow North Providence and East Providence officials to fill their pension shortfalls "was not happening" without the help of Sen. Jack Reed and Sen. Sheldon Whitehouse, said Lombardi during an afternoon news conference at North Providence Town Hall.

Lombardi said that Holder's decision is "huge" for North Providence, erasing a liability that would have weighed the town and its taxpayers down for years to come. With the debt gone, the town will likely cut in half its annual contribution of more than $1.6 million to the pension system, said Lombardi.

Holder also informed officials from East Providence that they would be allowed to use $49.2 million of that city's allotment toward its police and fire pension fund, which is about $105 million under-funded.

The two municipalities were awarded $60 million each last April after assisting the Department of Justice in a federal investigation into online ads distributed by Google for Canadian pharmacies that were illegally marketing prescription drugs to Americans.

After the funds were awarded, North Providence and East Providence requested flexibility to spend the money for purposes outside of Department of Justice guidelines for the program, which generally limit use of "equitable sharing" funds to expenses like police training, equipment, and the improvement of facilities, according to a news release. Led by Lombardi, local leaders requested that they be allowed to use the funds to help address shortfalls in their police pension systems.

Reed and Whitehouse strongly backed local officials' requests, calling and writing to Holder on their behalf.

"This is great news for taxpayers, the cities, and for the retirement security of our police officers. Attorney General Holder made the right call based on the merits of the case," said Reed in a statement. "I appreciate his careful and timely review of this matter, and I thank the attorney general. Using a portion of these funds to stabilize these police pension plans should ease budgetary difficulties, and I am pleased to have helped East Providence and North Providence make the best possible use of these funds for public safety."

According to Whitehouse, Holder made it clear his decision represented an "extraordinary exception," limited to the Google forfeiture in Rhode Island. He said Holder told them it "would not have happened without the compelling case" that Whitehouse and Reed made about the economic stresses facing Rhode Island and the two municipalities in question.

Rhode Island's efforts, led by Governor Lincoln Chafee and Director of Revenue Rosemary Booth Gallogly, included crafting a waiver request detailing the extent of the communities' needs and laying out compelling facts for why the funds should be put toward strengthening local pension systems.

"I am pleased that the federal government has recognized the need of these municipalities to strengthen their locally managed pension funds," said Chafee in a statement. "State, federal, and local officials worked together to achieve this outcome, and because of this collaboration East Providence and North Providence are on firmer financial footing today."

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