Commercial Property Assessments by Rhode Island Municipality, as a Measure of the Impacts of Tax-Exempts on Providence

To what degree is governing the City of Providence hampered by the existence of tax-exempt property within its boundaries? One way to begin answering this question is to start with readily available fiscal-data. Each year, all Rhode Island municipalities report tax assessment and levy information to the Division of Municipal Finance in the state’s Department of Revenue, with results separated into residential and commercial/industrial categories.

In the past, I've used the data collected and provided by the Municipal Finance Division to calculate the commercial/industrial tax-levy per resident in each RI city and town. However, with respect to the question of "tax opportunities" missed in Providence, this introduces at least one confounding factor. Because commercial tax-rates vary from community to community, the commercial tax levy measures both opportunities and what is made of those opportunities (for better or for worse). Since we are asking (at least for now) whether Providence is handicapped right from the beginning, before any incomes are earned or tax rates are set, we will go back one step further, to examine at how much commercial/industrial taxable property value is within each Rhode Island municipality, on a per-resident basis.

One technical note: In Rhode Island, taxes on apartments with more than five units and mixed residential/commercial properties are often classified as commercial. Since most, if not all, of the taxation levied on these properties will be passed along to residents, they will be considered residential and not commercial for this analysis. The Municipal Affairs Office collects assessment information that is detailed enough, in most cases, to allow the part of the official commercial levy due to class 3 (“apartment”) and class 4 (“combination”) properties to be determined and subtracted.

In the table below, the second column is a city or town's reported commercial/industrial tax levy for tax roll year 2011 with any portion due to class 3 or class 4 properties subtracted out. The third column is population from the 2010 census, and the fourth column is the amount of commercial/industrial property value per resident:

Quick conclusions, not exclusive to Providence:

1. Much to the dismay of folks who don't like suburbs for various reasons (whom Joel Kotkin would call "urban chauvinists"), a good way to generate commercial tax revenue seems to be through strip-mall/big box commercial development, e.g. as in Warwick and Middletown.
2. West Greenwich and Smithfield seem to be doing well in collecting revenue for their residents to use from large employers, though the conditions that make this possible are no more generalizable to every community in Rhode Island than are conditions in New Shoreham and Newport.
3. Compared to its neighbors like Johnston and East Providence, there is plausible evidence of a bit of a dent in Providence's available commercial revenue per resident (although Johnston is a beneficiary of the strip-mall dynamic). And East Providence is doing well, even though most of its big-box potential has been grabbed by Seekonk, MA.
4. On the other hand, Providence, in 13th place on the list, does have considerably more commercial property to tax than do the neighboring communities of Cranston, North Providence and Pawtucket.

Moving from the table of numbers to the taxation and subsidy policy questions that are the reason for their creation suggests a question central to this issue despite being rarely a subject for explicit discussion. Is it a sign of a problem, when the largest city in a region doesn't have the most commercial revenue per unit, i.e. does it automatically mean that something is out of balance, because Providence doesn't have as much commercial revenue per resident to work with than does Middletown or Warwick?