2006 -- S 3050 | |
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LC03048 | |
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STATE OF RHODE ISLAND | |
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IN GENERAL ASSEMBLY | |
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JANUARY SESSION, A.D. 2006 | |
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A N A C T | |
RELATING TO TAXATION -- PROPERTY TAXES | |
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     Introduced By: Senators Paiva-Weed, J Montalbano, Alves, Lenihan, and Felag | |
     Date Introduced: April 27, 2006 | |
     Referred To: Senate Finance | |
It is enacted by the General Assembly as follows: | |
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     SECTION 1. Section 44-5-2 of the General Laws in Chapter 44-5 entitled "Levy and |
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Assessment of Local Taxes" is hereby amended to read as follows: |
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     44-5-2. Maximum levy. -- (a) |
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town may levy a tax in an amount not more than five and one-half percent (5.5%) in excess of the |
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amount levied and certified by that city or town for the prior year. |
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fiscal year 2008, a city or town may levy a tax in an amount not more than five and one-quarter |
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percent (5.25%) in excess of the total amount levied and certified by that city or town for its fiscal |
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year 2007. In its fiscal year 2009, a city or town may levy a tax in an amount not more than five |
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percent (5%) in excess of the total amount levied and certified by that city or town for its fiscal |
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year 2008. In its fiscal year 2010, a city or town may levy a tax in an amount not more than four |
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and three-quarters percent (4.75%) in excess of the total amount levied and certified by that city |
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or town in its fiscal year 2009. In its fiscal year 2011, a city or town may levy a tax in an amount |
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not more than four and one-half percent (4.5%) in excess of the total amount levied and certified |
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by that city or town in its fiscal year 2010. In its fiscal year 2012, a city or town may levy a tax in |
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an amount not more than four and one-quarter percent (4.25%) in excess of the total amount |
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levied and certified by that city or town in its fiscal year 2011. In its fiscal year 2013 and in each |
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fiscal year thereafter, a city or town may levy a tax in an amount not more than four percent (4%) |
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in excess of the total amount levied and certified by that city or town for its previous fiscal year. |
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      (b) The office of municipal affairs in the department of administration shall monitor city |
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and town compliance with this levy cap, issue periodic reports to the general assembly on |
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compliance, and make recommendations on the continuation or modification of the levy cap on or |
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before December 31, 1987, December 31, 1990, and December 31, every third year thereafter. |
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The chief elected official in each city and town shall provide to the office of municipal affairs |
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within thirty (30) days of final action, in the form required, the adopted tax levy and rate and |
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other pertinent information. |
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      (c) The amount levied by a city or town may exceed the |
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percentage increase as specified in subsection (a) of this section if the city or town qualifies under |
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one or more of the following provisions: |
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      (1) The city or town forecasts or experiences a loss in total non-property tax revenues |
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and the loss is certified by the department of administration. |
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      (2) The city or town experiences or anticipates an emergency situation, which causes or |
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will cause the levy to exceed |
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specified in subsection (a) of this section. In the event of an emergency or an anticipated |
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emergency, the city or town shall notify the auditor general who shall certify the existence or |
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anticipated existence of the emergency. Without limiting the generality of the foregoing, an |
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emergency shall be deemed to exist when the city or town experiences or anticipates health |
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insurance costs, retirement contributions or utility expenditures which exceed the prior fiscal |
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year's health insurance costs, retirement contributions or utility expenditures by a percentage |
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greater than two (2) times the percentage increase as specified in subsection (a) of this section. |
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      (3) A city or town forecasts or experiences debt services expenditures which |
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expenditures by an amount greater than the percentage increase as specified in subsection (a) of |
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this section and which are the result of bonded debt issued in a manner consistent with general |
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law or a special act. In the event of the debt service increase, the city or town shall notify the |
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department of administration which shall certify the debt service increase above |
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section the prior year's debt service. No action approving or disapproving exceeding a levy cap |
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under the provisions of this section affects the requirement to pay obligations as described in |
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subsection (d) of this section. |
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      (4) Any levy pursuant to subsection (c) of this section in excess of the |
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a majority vote of the governing body of the city or town or in the case of a city or town having a |
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financial town meeting, the majority of the electors present and voting at the town financial |
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meeting shall approve the excess levy. |
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     (5) In addition to the approval required by subdivision (c)(4) of this subsection, any levy |
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pursuant to subsection (c) of this section in any city or town's fiscal year subsequent to fiscal year |
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2007 in excess of the percentage increase specified in subsection (a) of this section shall also be |
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subject to approval by the electors of that city or town at a municipal budget referendum election |
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conducted in accordance with the provisions of section 45-3-25 of the general laws. Any such |
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municipal budget referendum election shall be conducted not less than fifteen (15) days nor more |
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than thirty (30) days after certification of the approval required by subdivision (c)(4) of this |
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subsection. |
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      (d) Nothing contained in this section constrains the payment of present or future |
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obligations as prescribed by section 45-12-1, and all taxable property in each city or town is |
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subject to taxation without limitation as to rate or amount to pay general obligation bonds or notes |
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of the city or town except as otherwise specifically provided by law or charter. |
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     SECTION 2. Sections 44-35-3 and 44-35-6 of the General Laws in Chapter 44-35 |
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entitled "Property Tax and Fiscal Disclosure - Municipal Budgets" are hereby amended to read as |
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follows: |
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     44-35-3. Definitions. -- (a) "Adjusted current property tax rate" means the estimated |
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property tax rate that would be necessary in the next fiscal year to raise |
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general laws. |
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      (b) "Chief elected official" means the highest locally elected official in each town or city. |
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      (c) "Proposed property tax rate" means the estimated property tax rate that is proposed |
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by a town or city to support its operating budget for the town's or city's next fiscal year. |
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     44-35-6. Publication of property tax rates. -- At least ten (10) calendar days prior to the |
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hearing for the purpose of adopting the town or city budget, the chief elected official in each town |
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or city shall cause to be published a notice indicating the town's or city's intent to consider |
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adopting a property tax levy. This notice shall be published in a newspaper of general circulation |
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in the town or city. However, this notice may not be placed in that portion of the newspaper |
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where legal notices and classified advertisements appear. This notice shall constitute notice of |
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public hearing which may coincide with the hearing on the proposed budget and shall be by and |
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in the following form: |
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      (CITY, TOWN) of (NAME) |
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      NOTICE OF PROPOSED PROPERTY TAX |
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      RATE CHANGE |
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      The (City, Town) proposes to increase (decrease) its property tax levy to ________ in |
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the ________ budget year; the property tax levy this year is __________, THIS IS A |
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PROPOSED INCREASE (DECREASE) OF ______%. |
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      It has been estimated that the proposed increase (decrease) in property tax revenues will |
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result in a property tax rate of $________ (proposed property tax rate) per $1,000 assessed |
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valuation, as compared to the current property tax rate of $________ per $1,000 assessed |
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valuation. |
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      A property tax rate of $________ (adjusted current property tax rate) would be needed in |
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the coming budget year to raise |
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maximum levy authorized by section 44-5-2 of the general laws. |
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      The (City, Town) budget __________ will be considered at (date, time, place). |
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      The above property tax estimates have been computed in a manner approved by the |
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Rhode Island Department of Administration. |
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     Chief Elected Official |
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     SECTION 3. Section 44-45-2 of the General Laws in Chapter 44-45 entitled "Omnibus |
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Property Tax Relief and Replacement Act" is hereby amended to read as follows: |
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     44-45-2. Legislative findings. -- The general assembly finds and declares that the |
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following conditions confront Rhode Island at this time: |
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      (1) In 1982, the governor's advisory commission to study the financial operations of state |
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and local governments found that "when the state and local tax system is viewed in its totality, it |
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becomes clear that property tax relief and replacement is needed". |
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      (2) Rhode Island has a serious over reliance on the property tax, as evidenced by the |
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facts that: |
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      (i) Rhode Islanders paid forty-nine dollars and ninety-two cents ($49.92) per capita in |
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property tax collections in fiscal year 1983, compared to a U.S. average of thirty-four dollars and |
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seventy-one cents ($34.71), ranking this state sixth highest in the nation; |
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      (ii) Per one thousand dollars ($1,000) of personal income, property tax collections in |
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Rhode Island equaled five hundred and thirty-seven dollars ($537) that year, compared to a three |
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hundred and eighty-one dollar ($381) U.S. average, placing the state ninth highest nationally; and |
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      (iii) Rhode Island's cities and towns derived fifty-eight and nine-tenths percent (58.9%) |
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of their own-source local general revenue from the property tax in fiscal year 1983, compared to |
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an average of only twenty-eight and eight-tenths percent (28.8%) for all the states. |
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      (3) In 1983-84, Rhode Island ranked only forty-third nationally in terms of state support |
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for public elementary and secondary school, providing only thirty-six percent (36%) of these |
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revenues. |
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      (4) The state educational operations aid formula should be gradually increased until the |
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state and municipalities equally share the cost of providing local education. |
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      (5) The state should also share a greater portion of its economically sensitive growth |
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taxes with its cities and towns in order to further shift the burden of funding essential municipal |
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services from the property tax. |
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      (6) The growth in property tax levies should be capped |
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      (7) Cities and towns should be assisted in their efforts to control school and municipal |
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expenditures by appropriately amending state arbitration and school budgeting laws. |
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     SECTION 4. Chapter 45-2 of the General Laws entitled "General Powers" is hereby |
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amended by adding thereto the following section: |
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     45-2-3.2. Availability of funds upon failure of city or town to approve annual |
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appropriation. – Unless otherwise provided by a city or town charter, in an emergency caused |
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by a failure of a city or town to approve an annual appropriation measure, the same amounts |
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appropriated in the previous fiscal year shall be available for each department and division |
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thereof, subject to monthly or quarterly allotments, in accordance with seasonal requirements, as |
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determined by the city or town's chief financial officer: provided, that expenditures for payment |
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of bonded indebtedness of the city or town and interest thereon shall be in such amounts as may |
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be required, regardless of whether or not an annual appropriation ordinance is enacted by the city |
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or town council. |
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     SECTION 5. Sections 35-3-7 and 35-3-20.1 of the General Laws in Chapter 35-3 entitled |
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"State Budget" are hereby amended to read as follows: |
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     35-3-7. Submission of budget to general assembly -- Contents. -- (a) On or before the |
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third Thursday in January in each year of each January session of the general assembly, the |
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governor shall submit to the general assembly a budget containing a complete plan of estimated |
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revenues and proposed expenditures, with a personnel supplement detailing the number and titles |
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of positions of each agency and the estimates of personnel costs for the next fiscal year. Provided, |
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however, in those years that a new governor is inaugurated, the new governor shall submit the |
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budget on or before the first Thursday in February. In the budget the governor may set forth in |
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summary and detail: |
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      (1) Estimates of the receipts of the state during the ensuing fiscal year under laws |
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existing at the time the budget is transmitted and also under the revenue proposals, if any, |
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contained in the budget, and comparisons with the estimated receipts of the state during the |
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current fiscal year, as well as actual receipts of the state for the last two (2) completed fiscal |
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years. |
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      (2) Estimates of the expenditures and appropriations necessary in the governor's |
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judgment for the support of the state government for the ensuing fiscal year, and comparisons |
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with appropriations for expenditures during the current fiscal year, as well as actual expenditures |
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of the state for the last two (2) complete fiscal years. |
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      (3) Financial statements of the |
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      (i) Condition of the treasury at the end of the last completed fiscal year; |
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      (ii) The estimated condition of the treasury at the end of the current fiscal year; and |
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      (iii) Estimated condition of the treasury at the end of the ensuing fiscal year if the |
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financial proposals contained in the budget are adopted. |
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      (4) All essential facts regarding the bonded and other indebtedness of the state. |
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      (5) A report indicating those program revenues and expenditures whose funding source |
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is proposed to be changed from state appropriations to restricted receipts, or from restricted |
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receipts to other funding sources. |
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      (6) Such other financial statements and data as in the governor's opinion are necessary or |
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desirable. |
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      (b) Any other provision of the general laws to the contrary notwithstanding |
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     (1) the budget proposed by the governor for fiscal year 2008 shall not propose the |
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appropriation of general revenue expenditures in excess of one hundred five and one-quarter |
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percent (105.25%) of the total general revenue appropriations, excluding any estimated |
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supplemental appropriations, enacted by the general assembly for fiscal year 2007; |
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     (2) the budget proposed by the governor for fiscal year 2009 shall not propose the |
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appropriation of general revenue expenditures in excess of one hundred five percent (105%) of |
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the total general revenue appropriations, excluding any estimated supplemental appropriations, |
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enacted by the general assembly for fiscal year 2008; |
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     (3) the budget proposed by the governor for fiscal year 2010 shall not propose the |
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appropriation of general revenue expenditures in excess of one hundred four and three-quarters |
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percent (104.75%) of the total general revenue appropriations, excluding any estimated |
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supplemental appropriations, enacted by the general assembly for fiscal year 2009; |
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     (4) the budget proposed by the governor for fiscal year 2011 shall not propose the |
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appropriation of general revenue expenditures in excess of one hundred four and one-half percent |
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(104.5%) of the total general revenue appropriations, excluding any estimated supplemental |
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appropriations, enacted by the general assembly for fiscal year 2010; |
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     (5) the budget proposed by the governor for fiscal year 2012 shall not propose the |
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appropriation of general revenue expenditures in excess of one hundred four and one-quarter |
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percent (104.25%) of the total general revenue appropriations, excluding any estimated |
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supplemental appropriations, enacted by the general assembly for fiscal year 2011; and |
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     (6) the budget proposed by the governor for fiscal year 2013 and for each fiscal year |
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thereafter shall not propose the expenditure of general revenue expenditures in excess of one |
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hundred four percent (104%) of the total general revenue appropriations, excluding any estimated |
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supplemental appropriations, enacted by the general assembly for the previous fiscal year. |
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     35-3-20.1. |
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appropriation, supplemental appropriation, or budget act shall cause the aggregate state general |
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revenue appropriations enacted for the fiscal year to exceed ninety-eight percent (98%) of the |
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estimated state general revenues for the fiscal year from all sources, including estimated |
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unencumbered general revenues not continued or reappropriated to the new fiscal year remaining |
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at the end of the previous fiscal year. Estimated unencumbered general revenues are calculated by |
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taking the estimated general revenue cash balance at the end of the fiscal year less estimated |
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revenue anticipation bonds or notes, estimated general revenue encumbrances, estimated |
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continuing general revenue appropriations, and the amount of the budget reserve and cash |
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stabilization account at the end of the fiscal year. The amount of the general revenue estimate and |
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estimated unencumbered general revenue remaining shall be determined by the state controller |
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and approved by the auditor general in conformance with accounting procedures currently in use. |
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The excess of any unencumbered general revenue shall be determined by subtracting from the |
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actual unencumbered general revenues at the end of any fiscal year an amount which together |
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with the latest estimated general revenues is necessary to fund the ensuing fiscal year's general |
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revenue budget, including the required estimated general revenue supplemental and annual |
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appropriations. |
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      (b) The amount between the applicable percentage in subsection (a) and one hundred |
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percent (100%) of the estimated state general fund revenue for any fiscal year as estimated in |
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accordance with subsection (a) shall be appropriated in any given fiscal year into the budget |
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reserve and cash stabilization account; provided, that no payment will be made which would |
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increase the total of the budget reserve and cash stabilization account to more than three percent |
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(3%) of only the estimated state general fund revenues as set by subsection (a). In the event that |
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the payment to be made into the budget reserve and cash stabilization account would increase the |
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amount in the account to more than three percent (3%) of estimated state general revenues, the |
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amount shall be transferred to the state bond capital fund, to be used solely for the purposes of |
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reduction of state indebtedness, payment of debt service, and/or funding of capital projects. |
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However, there shall be no expenditures of money under this section without passage of a specific |
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appropriation by the general assembly. |
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      (c) Within forty-five (45) days after the close of any fiscal year, all unencumbered |
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general revenue in the year end surplus account from the fiscal year shall be transferred to the |
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general fund. |
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     (d) No appropriation, supplemental appropriation, or budget act shall cause the aggregate |
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state general revenue appropriations enacted for any fiscal year to exceed the percentile increase |
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over the aggregate state general revenues appropriated for the previous fiscal year by more than |
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the percentile increase specified in section 35-3-7 of this title, except by the affirmative vote of |
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three-fifths (3/5) of the full membership of each house of the general assembly. |
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     SECTION 6. This act shall take effect upon passage. |
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LC03048 | |
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EXPLANATION | |
OF | |
A N A C T | |
RELATING TO TAXATION -- PROPERTY TAXES | |
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     This act would reduce the percentage increase a city or town may increase property taxes |
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over the previous year from five and one half percent (5.5%) to five and one quarter percent |
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(5.25%) in 2008 and to four percent (4%) in 2013. |
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     This act would take effect upon passage. |
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LC03048 | |
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