Councilman John J. Igliozzi, Finance Committee chairman, right, huddles with acting Deputy Finance Director Matthew Clarkin, center, and Councilman Michael A. Solomon.

The Providence Journal / Connie Grosch Connie Grosch

PROVIDENCE — The city plans to address its $27.8-million budget deficit by raising taxes by the maximum allowed, cutting heavily from the School Department, selling off city buildings, raising fees and making millions in small cuts across the city, according to the revised budget delivered to the City Council last night.

The revamped $616.7-million budget submission jointly crafted by Mayor David N. Cicilline and the City Council leadership includes a tax increase that will mean roughly a 4.25-percent increase to the average resident’s tax bill for the fiscal year that began Sunday.

That should net the city about $10 million toward eliminating its deficit. The remainder of the budget deficit is achieved through $6.7 million in new and one-time revenue, and $11 million in cuts to the $625.9-million budget Cicilline proposed earlier this year.

The city plans to require $6.25 million in cuts from the schools, $800,000 from the Fire Department and $700,000 from the Police Department. On top of that, 16 vacant city positions will not be filled, for a savings of $825,000, according to Cicilline’s chief of administration, John Simmons.

Providence will then sell off $4.6 million in unused property, scattered in 20 lots throughout the city.

The city also plans to introduce fees for connecting alarm boxes to the city system — a program that, earlier in the year, was believed to require approval from the General Assembly. The city tried to get that approval and failed, and is now going forward with the fees anyway, with Simmons contending that the city went to the state only “out of an abundance of caution,” and that no state approval was really necessary.

Providence will also make changes to the pension system that should save $1 million, move $500,000 in from some of the many small city funds not included in the main budget, and hire a firm to try to recoup money from situations where the city contributed significant services, such as the fire at the Motiva terminal in the Port of Providence last summer. Providence hopes to achieve $500,000 in returns from that company, but receives a payout only if it is successful, Simmons said.

The revised budget also lists a $1 million savings for the city under a line-item identified as Third Party Administration, making it possible that the city plans to switch to UnitedHealthcare of New England instead of its current health care provider, Blue Cross & Blue Shield of Rhode Island. Figures presented this year showed that the city and the School Department could each be expected to save $1 million annually by a switch to United, and Simmons acknowledged last night that the city was moving in that direction.

“That’s one of the possibilities,” he said.

There are also hundreds of thousands in slight revenue increases and smaller cuts, among them reductions of $36,000 to the Providence External Review Authority, which investigates residents’ claims against police officers, $40,000 to the Providence Center, and no money for the Capital Center Commission.

Those social-service agencies, in particular, should not be touched, Councilman Miguel Luna said.

“We are trying to balance the budget on the backs of the small agencies and services, the people who are doing good work in this city,” Luna said. “These are organizations that are doing a lot with a little — they shouldn’t be getting touched.”

The city also added $1 million to the budget to create a fund for capital projects throughout the year, primarily for road paving. The budget also strips a group of part-time employees — including Housing Court judges, members of the Licensing Board and members of the Board of Canvassers — from accruing any additional salary through longevity, or additional vacation days or sick days.

“We have people here who have thousands and thousands [of hours] in accrued time,” said Finance Committee Chairman John J. Igliozzi, calling the situation “unconscionable.”

The $27-million budget deficit is the result of a number of factors: a combination of Cicilline’s legislative efforts failing, unanticipated cutbacks in state aid, internal miscues and a reliance on long-term planning documents when calculating how much state aid the city would receive.

When he drew up his budget in late April, Cicilline gambled that the legislature would pass a package of bills that would let Providence and other municipalities introduce targeted fees in lieu of raising property taxes. The legislature denied all his proposals.

Cicilline also built his budget around the assumption that the state would allocate an additional $7 million in direct aid to the city, a figure he said came from the state’s five-year planning figures. The legislature did not do so.

Then, in an unexpected move, the Assembly kept the amount of state education financing to cities and towns flat; Providence had been counting on at least a 3-percent increase. That meant an additional $6 million the city had to make up.

Then, it became clear during city budget deliberations that the School Department had accidentally factored in $2.7 million more in their projections of the city’s education contribution than the city was planning to give — $118 million vs. $115.3 million.

Cicilline has long said that he wanted to raise taxes only as a last resort, but in the end, he was forced to resort to the maximum possible tax increase.

The maximum that the city can raise the tax levy — the total amount of money the city receives in property tax — is 5.25 percent annually.

But because this is a revaluation year, the city has already seen its tax levy increase by a little over 1 percent, just from growth in the value of Providence real estate. The city can raise taxes only enough to cover the remainder, about 4.25 percent.

In real-money terms, the tax increase should mean that the levy will increase to $275 million, from $259 million.

The revised $616.7-million budget does not include any money for increases in salaries or benefits for the city’s unionized workers. Union employees make up the vast majority of all city employees, and the contracts for all four major city employee groups — police, fire, schools and municipal employees — expired Sunday.

The city has scheduled a public hearing on the budget for Wednesday, July 18, and the City Council will probably consider the budget the following week.

dbarbari@projo.com