June 21, 2006

Taxation

Senate Passes Property Tax Reform Bill

Marc Comtois

With a vote of 36-0, the State Senate passed a bill that would slow down and then limit the amount that a community could raise property taxes in any given year.

The bill would lower the maximum annual increase to a community's tax levy from the current 5.5 percent to 4 percent gradually, starting in fiscal 2008 and reaching 4 percent in 2013.

Rather than imposing a 4-percent cap immediately, [Senate Majority Leader M. Teresa] Paiva Weed said she chose the gradual cap to give cities and towns time to adjust. When Massachusetts capped local tax increases at 2.5 percent, she said, "a dramatic decrease overnight did have a negative impact on municipal services."

There were quite a few changes made from the original proposal, including:
...a provision instructing judges to consider the caps in deciding whether to allow school committees to seek a higher appropriation than they receive from a city or town council.

The bill would apply the same percentage caps to school-spending increases as it would to tax levy increases....

Another amendment would excuse school committees from including state and federal aid in computing compliance with the cap....

The bill contains an exemption from the cap in four cases:

if a city or town experiences a loss in revenues other than property taxes, such as state aid or gambling revenues,

if a city's or town's health-insurance costs, retirement contributions or utility expenditures rise at a rate more than three times the cap specified for that year,

if a city or town experiences debt-service costs that exceed the prior year's costs by a percentage greater than the cap specified for that year,

if a city or town "experiences substantial growth in its tax base as the result of major new construction which necessitates either significant infrastructure or school housing expenditures . . . or a significant increase in the need for essential municipal services."

The original bill would have required a special election, paid for by the state, to override the cap in those circumstances. The bill, as passed, instead requires a supermajority vote -- four fifths of the full membership -- of the city or town council.

The Governor supports the measure, but it's still up in the air as to whether or not the House will take it up. I'm betting against that happening. Nonetheless, kudos to Sen. Paiva Weed and the Senate for making the attempt.

8:45 AM
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The teachers and other municipal employees unions are fighting this tooth and nail on the House side. Apparently, they hold the unrealistic belief that, if they can just block this bill, the rest of us will sit around like sheep while our property taxes are raised through the roof to pay for Rhode Island's huge unfunded liability for public employee pensions and post-retirement health care benefits (which far exceed those available to those of us who work in the private sector).

Call your Rep today and tell them to pass this bill.

Posted by: John at June 21, 2006 10:03 AM

This is an election year gimmick.

Dp you really believe that the Queen of All Welfare Queens Teresa Paiva Weed supports something that would inevitably divert state funds from The Poverty Institute and its beneficiaries?

Whether or not the bill passes, the limits will never be implemented.

Expecting the General Assembly to keep its word about property tax relief is as naive as expecting it to keep its 1973-4 word that Lottery proceeds would be used for property tax relief.

If it ain’t taking effect immediately, or ain’t written into the Constitution, it’s just more BS.

Posted by: Tom W at June 21, 2006 2:55 PM

"Whether or not the bill passes, the limits will never be implemented"

You've got that right. Until systemic changes such as 401k pensions, work until 62 and the end of phony diability claims are made all these "caps" will go the way of the "temporary DEPCO sales tax"

Posted by: Mike at June 29, 2006 7:16 PM