2020 -- H 7686

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LC004931

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

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A N   A C T

RELATING TO TAXATION -- LEVY AND ASSESSMENT OF LOCAL TAXES

     

     Introduced By: Representatives Kislak, Amore, Tobon, Knight, and Craven

     Date Introduced: February 26, 2020

     Referred To: House 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.

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     (a) Through and including its fiscal year 2007, a city or town may levy a tax in an amount

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not more than five and one-half percent (5.5%) in excess of the amount levied and certified by that

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city or town for the prior year. Through and including its fiscal year 2007, but in no fiscal year

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thereafter, the amount levied by a city or town is deemed to be consistent with the five and one-

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half percent (5.5%) levy growth cap if the tax rate is not more than one hundred and five and one-

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half percent (105.5%) of the prior year's tax rate and the budget resolution or ordinance, as

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applicable, specifies that the tax rate is not increasing by more than five and one-half percent (5.5%)

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except as specified in subsection (c) of this section. In all years when a revaluation or update is not

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being implemented, a tax rate is deemed to be one hundred five and one-half percent (105.5%) or

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less of the prior year's tax rate if the tax on a parcel of real property, the value of which is unchanged

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for purpose of taxation, is no more than one hundred five and one-half percent (105.5%) of the

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prior year's tax on the same parcel of real property. In any year through and including fiscal year

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2007 when a revaluation or update is being implemented, the tax rate is deemed to be one hundred

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five and one-half percent (105.5%) of the prior year's tax rate as certified by the division of property

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valuation and municipal finance in the department of revenue.

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     (b) In its fiscal year 2008, a city or town may levy a tax in an amount not more than five

 

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and one-quarter percent (5.25%) in excess of the total amount levied and certified by that city or

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town for its fiscal year 2007. In its fiscal year 2009, a city or town may levy a tax in an amount not

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more than five percent (5%) in excess of the total amount levied and certified by that city or town

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for its fiscal year 2008. In its fiscal year 2010, a city or town may levy a tax in an amount not more

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than four and three-quarters percent (4.75%) in excess of the total amount levied and certified by

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that city or town in its fiscal year 2009. In its fiscal year 2011, a city or town may levy a tax in an

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amount not more than four and one-half percent (4.5%) in excess of the total amount levied and

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certified by that city or town in its fiscal year 2010. In its fiscal year 2012, a city or town may levy

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a tax in 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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For purposes of this levy calculation, taxes levied pursuant to chapters 34 and 34.1 of this title shall

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not be included. For FY 2018, in the event that a city or town, solely as a result of the exclusion of

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the motor vehicle tax in the new levy calculation, exceeds the property tax cap when compared to

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FY 2017 after taking into account that there was a motor vehicle tax in FY 2017, said city or town

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shall be permitted to exceed the property tax cap for the FY 2018 transition year, but in no event

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shall it exceed the four percent (4%) levy cap growth with the car tax portion included; provided,

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however, nothing herein shall prohibit a city or town from exceeding the property tax cap if

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otherwise permitted pursuant to subsection (d) of this section.

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     (c) The division of property valuation in the department of revenue shall monitor city and

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town compliance with this levy cap, issue periodic reports to the general assembly on compliance,

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and make recommendations on the continuation or modification of the levy cap on or before

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December 31, 1987, December 31, 1990, and December 31, every third year thereafter. The chief

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elected official in each city and town shall provide to the division of property and municipal finance

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within thirty (30) days of final action, in the form required, the adopted tax levy and rate and other

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pertinent information.

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     (d) The amount levied by a city or town may exceed the percentage increase as specified

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in subsection (a) or (b) of this section if the city or town qualifies under one or more of the following

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provisions:

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     (1) The city or town forecasts or experiences a loss in total non-property tax revenues and

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the loss is certified by the department of revenue.

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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 the percentage increase as specified in subsection (a) or (b) of this

 

LC004931 - Page 2 of 5

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section. In the event of an emergency or an anticipated emergency, the city or town shall notify the

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auditor general who shall certify the existence or anticipated existence of the emergency. Without

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limiting the generality of the foregoing, an emergency shall be deemed to exist when the city or

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town experiences or anticipates health insurance costs, retirement contributions, or utility

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expenditures that exceed the prior fiscal year's health insurance costs, retirement contributions, or

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utility expenditures by a percentage greater than three (3) times the percentage increase as specified

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in subsection (a) or (b) of this section.

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     (3) A city or town forecasts or experiences debt services expenditures that exceed the prior

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year's debt service expenditures by an amount greater than the percentage increase as specified in

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subsection (a) or (b) of this section and that are the result of bonded debt issued in a manner

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consistent with general law or a special act. In the event of the debt service increase, the city or

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town shall notify the department of revenue which shall certify the debt service increase above the

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percentage increase as specified in subsection (a) or (b) of this section the prior year's debt service.

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No action approving or disapproving exceeding a levy cap under the provisions of this section

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affects the requirement to pay obligations as described in subsection (d) of this section.

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     (4) The city or town experiences substantial growth in its tax base as the result of major

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new construction that necessitates either significant infrastructure or school housing expenditures

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by the city or town or a significant increase in the need for essential municipal services and such

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increase in expenditures or demand for services is certified by the department of revenue.

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     (5) The city or town experiences substantial growth in its tax base as a result of the

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expiration of a tax-stabilization agreement, as authorized pursuant to § 44-3-9, or tax treaty

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provided that the resultant increase in taxes at the time of expiration of the agreement is certified

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by the department of revenue and that the taxes collected in excess of the permitted percentage

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increase are allocated for education.

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     (e) Any levy pursuant to subsection (d) of this section in excess of the percentage increase

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specified in subsection (a) or (b) of this section shall be approved by the affirmative vote of at least

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four-fifths (4/5) of the full membership of the governing body of the city or town, or in the case of

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a city or town having a financial town meeting, the majority of the electors present and voting at

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the town financial meeting shall also approve the excess levy.

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     (f) Nothing contained in this section constrains the payment of present or future obligations

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as prescribed by § 45-12-1, and all taxable property in each city or town is subject to taxation

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without limitation as to rate or amount to pay general obligation bonds or notes of the city or town

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except as otherwise specifically provided by law or charter.

 

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     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

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     This act would provide that if a city or town experiences substantial growth with tax base

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as a penalty of the expiration of a tax-stabilization agreement or tax treaty the increase would be

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allocated for education.

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     This act would take effect upon passage.

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