2015 -- H 5317

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LC000414

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO TAXATION - LEVY AND ASSESSMENT OF LOCAL TAXES - TAX

CLASSIFICATION

     Introduced By: Representatives Morgan, Price, Chippendale, Giarrusso, and Nardolillo

     Date Introduced: February 05, 2015

     Referred To: House Municipal Government

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-5-11.8 of the General Laws in Chapter 44-5 entitled "Levy and

Assessment of Local Taxes" is hereby amended to read as follows:

     44-5-11.8. Tax classification. -- (a) Upon the completion of any comprehensive

revaluation or any update, in accordance with § 44-5-11.6, any city or town may adopt a tax

classification plan, by ordinance, with the following limitations:

      (1) The designated classes of property shall be limited to the classes as defined in

subsection (b) of this section.

      (2) The effective tax rate applicable to any class, excluding class 4, shall not exceed by

fifty percent (50%) twenty-five percent (25%) the rate applicable to any other class, except in the

city of Providence, and the town of Glocester; however, in the year following a revaluation or

statistical revaluation or update, the city or town council of any municipality may, by ordinance,

adopt tax rates for the property class for all ratable tangible personal property no greater than

twice the rate applicable to any other class provided that the municipality documents to, and

receives written approval from, the office of municipal affairs that the rate difference is necessary

to ensure that the estimated tax levy on the property class for all ratable tangible personal

property is not reduced from the prior year as a result of the revaluation or statistical revaluation.

      (3) Any tax rate changes from one year to the next shall be applied such that the same

percentage rate change is applicable to all classes, excluding class 4, except in the city of

Providence and the town of Glocester.

      (4) Notwithstanding subdivisions (2) and (3) of this subsection, the tax rates applicable

to wholesale and retail inventory within Class 3 as defined in subsection (b) of this section are

governed by § 44-3-29.1.

      (5) The tax rates applicable to motor vehicles within Class 4 as defined in subsection (b)

of this section are governed by § 44-34.1-1.

      (6) The provisions of chapter 35 of this title relating to property tax and fiscal disclosure

applies to the reporting of and compliance with these classification restrictions.

      (b) Classes of Property.

      (1) Class 1: Residential real estate consisting of no more than five (5) dwelling units,

land classified as open space, and dwellings on leased land including mobile homes. In the city of

Providence, this class may also include residential properties containing partial commercial or

business uses and residential real estate of more than five (5) dwelling units.

      (i) A homestead exemption provision is also authorized within this class; provided

however, that the actual effective rate applicable to property qualifying for this exemption shall

be construed as the standard rate for this class against which the maximum rate applicable to

another class shall be determined, except in the town of Glocester.

      (ii) In lieu of a homestead exemption, any city or town may divide this class into non-

owner and owner occupied property, and adopt separate tax rates in compliance with the within

tax rate restrictions.

      (2) Class 2: Commercial and industrial real estate, residential properties containing

partial commercial or business uses, and residential real estate of more than five (5) dwelling

units. In the city of Providence, properties containing partial commercial or business uses and

residential real estate of more than five (5) dwelling units may be included in Class 1.

      (3) Class 3: All ratable, tangible personal property.

      (4) Class 4: Motor vehicles and trailers subject to the excise tax created by chapter 34 of

this title.

      (c) The city council of the city of Providence and the town council of the town of

Glocester may, by ordinance, provide for, and adopt, a tax rate on various classes as they shall

deem appropriate. Provided, that the tax rate for Class 2 shall not be more than two (2) times the

tax rate of Class 1; the tax rate applicable to Class 3 shall not exceed the tax rate of Class 1 by

more than two hundred percent (200%). Glocester shall be able to establish homestead

exemptions up to fifty percent (50%) of value and the calculation provided in subsection (b)(1)(i)

shall not be used in setting the differential tax rates.

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      (d) Notwithstanding the provisions of subsection (a) of this section, the town council of

the town of Middletown may hereafter, by ordinance, adopt a tax classification plan in

accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes

assessed on or after the assessment date of December 31, 2002.

      (e) Notwithstanding the provisions of subsection (a) of this section, the town council of

the town of Little Compton may hereafter, by ordinance, adopt a tax classification plan in

accordance with the provisions of subsections (a) and (b) of this section and the provisions of §

44-5-79, to be applicable to taxes assessed on or after the assessment date of December 31, 2004.

      (f) Notwithstanding the provisions of subsection (a) of this section, the town council of

the town of Scituate may hereafter, by ordinance, change its tax assessment from fifty percent

(50%) of value to one hundred percent (100%) of value on residential and

commercial/industrial/mixed-use property, while tangible property is assessed at one hundred

percent (100%) of cost, less depreciation; provided, however, the tax rate for Class 3 (tangible)

property shall not exceed the tax rate for Class 1 (residential) property by more than two hundred

thirteen percent (213%). This provision shall apply whether or not the fiscal year is also a

revaluation year.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - LEVY AND ASSESSMENT OF LOCAL TAXES - TAX

CLASSIFICATION

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     This act would reduce the permitted differential between various classes of taxable

property from fifty percent (50%) to twenty-five percent (25%).

     This act would take effect upon passage.

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