Commercial Property Taxes and the Idea of Non-Profits as a Revenue Problem

Here is the first of several charts I will present regarding local taxation in Rhode Island. The data on the charts is based on the statements of tax assessment and levies that were submitted to the Rhode Island Division of Municipal Affairs for taxes payable in the 2009-2010 fiscal year.

This chart considers at an oft-neglected distinction here in Rhode Island, the commercial/industrial property tax as separate from the residential property tax collected by each Rhode Island community. This information is needed to begin to answer the question of whether non-profit properties are creating a burden on the communities they reside in.

Before going on, I will make one technical note. Tax levy figures are not reported by the cities and towns to the Municipal Affairs department in a uniform fashion. Each municipality does use the same property classification structure, but the levy and assessment numbers indicate that there is some variation from community to community in what is counted as "residential" and what is counted as "commercial or "industrial", for the purposes of calculating the levy.

The charts below the fold show official "residential" and "commercial" property tax levy payable for 2009-2010 reported by each municipality, and then the set of estimates I made to try to group the same set of properties as "residential" or "commercial" in each city or town, including counting "mixed use" properties as residential, even though the state officials classifies them as commercial. Adjusted figures are used in this and the related posts. If anyone feels that their community is being slighted, send me an email, and I'll explain the adjustment.

Now, back to the substance...

Bristol, home of Roger Williams University, is relatively low in the amount of commercial property tax it has to use per-resident, but other private college towns (Providence, Newport, Smithfield) are near the top of the list in terms of commercial and industrial property tax revenue.

You can always make the argument that something not being taxed means that there is another source of money out there that more more more can be squeezed out of, but there doesn't appear to be a strong statewide case for non-profits overly depressing the amount commercial and industrial property tax dollars collected by the communities they reside in (unless maybe you want to use the progressive "logic" of if we're not #1 on a taxation list, it's evidence that taxes must be made higher).

In the end, if taxing non-profits is the best solution that a financially-strapped community is able to come up with to solve its fiscal problems, it is highly likely that the new revenue will quickly be absorbed by the same poor budgeting practices that created the problem, and that a new budget hole will soon reappear. No matter how many "new" sources of revenue are added, there is not enough revenue in the world to sustain faster-than-inflation growth forever.

Finally also shows, much to the chagrin of the pack-everyone-into-cities land-use planning advocates, that strip-mall/big box development (Warwick, Middletown) seems to be very lucrative in terms of commercial tax revenue.