2023 -- H 6095

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LC002071

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO TAXATION -- LEVY AND ASSESSMENT OF LOCAL TAXES

     Introduced By: Representatives Casey, Baginski, and O'Brien

     Date Introduced: March 03, 2023

     Referred To: House Municipal Government & Housing

     (Dept. of Revenue)

It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-5-2 of the General Laws in Chapter 44-5 entitled "Levy and

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

     44-5-2. Maximum levy.

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

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

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

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

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

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

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

except as specified in subsection (c)(d) of this section. In all years when a revaluation or update is

not being implemented, a tax rate is deemed to be one hundred five and one-half percent (105.5%)

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

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

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

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

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

of property valuation and municipal finance in the department of revenue.

     (b)(1) In its fiscal year 2008, a city or town may levy a tax in an amount not more than five

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

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

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

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

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

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

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

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

a tax in an amount not more than four and one-quarter percent (4.25%) in excess of the total amount

levied and certified by that city or town in its fiscal year 2011. In its fiscal year 2013 and in each

fiscal year thereafter, a city or town may levy a tax in an amount not more than four percent (4%)

in excess of the total amount levied and certified by that city or town for its previous fiscal year.

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

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

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

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

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

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

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

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

     (2) Notwithstanding any provisions of the general or public laws to the contrary, in its fiscal

year applicable to the assessment date of December 31, 2024 (the "initial fiscal year of inclusion"),

and in each fiscal year thereafter, a city or town shall also include in its levy calculation all amounts

received for any property pursuant to a payment in lieu of tax agreement, a tax treaty agreement, a

tax stabilization agreement, a memorandum of understanding, or any other similar agreement,

whether such agreements are required to be entered into pursuant to law or are entered into

voluntarily. For the initial fiscal year of inclusion and each fiscal year thereafter, a city or town

shall provide to the division of municipal finance the total levy amount received pursuant to such

agreements prior to the approval of its budget. For the initial fiscal year of inclusion, in the event

that a city or town, solely as a result of the inclusion of such amounts in the new levy calculation,

exceeds the property tax cap when compared to its fiscal year preceding the initial fiscal year of

inclusion, said city or town shall be permitted to exceed the percentage increase as specified in

subsection (a) or (b)(l) of this section for the initial fiscal year of inclusion; provided, however,

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

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permitted pursuant to subsection (d) of this section

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

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

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

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

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

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

pertinent information.

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

in subsection (a) or (b)(1) of this section if the city or town qualifies under one or more of the

following provisions:

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

the loss is certified by the department of revenue.

     (2) The city or town experiences or anticipates an emergency situation, which causes or

will cause the levy to exceed the percentage increase as specified in subsection (a) or (b)(1) of this

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

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

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

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

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

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

in subsection (a) or (b)(1) of this section.

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

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

subsection (a) or (b)(1) of this section and that are the result of bonded debt issued in a manner

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

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

percentage increase as specified in subsection (a) or (b)(1) of this section the prior year’s debt

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

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

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

new construction that necessitates either significant infrastructure or school housing expenditures

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

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

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

specified in subsection (a) or (b)(1) of this section shall be approved by the affirmative vote of at

least four-fifths (⅘) of the full membership of the governing body of the city or town, or in the case

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

at the town financial meeting shall also approve the excess levy.

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

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

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

except as otherwise specifically provided by law or charter.

     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

***

     This act would amend the general law relative to levy and assessment of local taxes to

require that, starting on the assessment date directly following the passage of the bill, all existing

and future tax treaties, tax stabilization agreements, and/or payments in lieu of taxes be included in

a municipality's property tax levy. A one-year exemption from the four percent (4%) property tax

levy cap shall be provided to all municipalities where the inclusion of such agreements would result

in a property tax levy increase greater than four percent (4%), but no exemption shall be granted

on future agreements.

     This act would take effect upon passage.

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