Chapter
253
2006 -- S 3050 SUBSTITUTE A AS AMENDED
Enacted 07/03/06
A N A
C T
RELATING TO TAXATION
-- PROPERTY TAXES
Introduced By: Senators
Paiva-Weed, J Montalbano, Alves, Lenihan, and Felag
Date Introduced: April 27,
2006
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) A Through and including its fiscal year
2007, a city and 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 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) 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 local government
assistance in the
department
of administration.
(b)
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.
(b)(c) The office of municipal affairs in the department of
administration 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 office of
municipal affairs
within
thirty (30) days of final action, in the form required, the adopted tax levy
and rate and
other
pertinent information.
(c)(d) The amount levied by a city or town may exceed the five
and one-half percent
(5.5%) percentage increase as specified in subsection
(a) or (b) 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 administration.
(2) The city or town experiences or anticipates an emergency situation, which
causes or
will
cause the levy to exceed five and one-half percent (5.5%) the
percentage increase as
specified
in subsection (a) or (b) 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 which 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) of this
section.
(3) A city or town forecasts or experiences debt services expenditures which are
more
than
one hundred five and one-half percent (105.5%) of exceed the prior year's debt service
expenditures
by an amount greater than the percentage increase as specified in subsection
(a) or
(b)
of this section and which 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 administration which shall certify the debt service increase
above one hundred
five
and one-half percent (105.5%) of the
percentage increase as specified in subsection (a) or (b)
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) of this section.
(4)
The city or town experiences substantial growth in its tax base as the result
of major
new
construction which 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
administration.
(4) (e) Any levy pursuant to subsection (c) (d) of
this section in excess of the five and
one-half
percent (5.5%) percentage increase
specified in subsection (a) of this section shall be
approved
by a majority vote the affirmative vote of at least four-fifths (4/5)
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.
(d) (f) Nothing contained in this section constrains the payment
of present or future
obligations
as prescribed by section 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. Sections 44-35-3 and 44-35-6 of the General Laws in Chapter 44-35
entitled
"Property Tax and Fiscal Disclosure - Municipal Budgets" are hereby
amended to read as
follows:
44-35-3.
Definitions. -- (a) "Adjusted current property tax rate"
means the estimated
property
tax rate that would be necessary in the next fiscal year to raise one
hundred and five and
one-half
percent (105.5%) of the property tax revenues in the next fiscal year that were
levied in
the
town's or city's current fiscal year.
the maximum levy authorized by section 44-5-2 of the
general
laws.
(b) "Chief elected official" means the highest locally elected
official in each town or city.
(c) "Proposed property tax rate" means the estimated property tax
rate that is proposed
by a
town or city to support its operating budget for the town's or city's next
fiscal year.
44-35-6.
Publication of property tax rates. -- At least ten (10) calendar days
prior to the
hearing
for the purpose of adopting the town or city budget, the chief elected official
in each town
or city
shall cause to be published a notice indicating the town's or city's intent to
consider
adopting
a property tax levy. This notice shall be published in a newspaper of general
circulation
in the
town or city. However, this notice may not be placed in that portion of the
newspaper
where
legal notices and classified advertisements appear. This notice shall
constitute notice of
public
hearing which may coincide with the hearing on the proposed budget and shall be
by and
in the
following form:
(CITY, TOWN) of (NAME)
NOTICE OF PROPOSED PROPERTY TAX
RATE CHANGE
The (City, Town) proposes to increase (decrease) its property tax levy to
________ in
the
________ budget year; the property tax levy this year is __________, THIS IS A
PROPOSED
INCREASE (DECREASE) OF ______%.
It has been estimated that the proposed increase (decrease) in property tax
revenues will
result
in a property tax rate of $________ (proposed property tax rate) per $1,000
assessed
valuation,
as compared to the current property tax rate of $________ per $1,000 assessed
valuation.
A property tax rate of $________ (adjusted current property tax rate) would be needed
in
the
coming budget year to raise five and one-half percent (5.5%) more, as an
adjustment for
increased
costs, than the property tax revenues being raised in the current budget year. the
maximum
levy authorized by section 44-5-2 of the general laws.
The (City, Town) budget __________ will be considered at (date, time, place).
The above property tax estimates have been computed in a manner approved by the
Rhode
Island Department of Administration.
Chief
Elected Official
SECTION
3. Section 44-45-2 of the General Laws in Chapter 44-45 entitled "Omnibus
Property
Tax Relief and Replacement Act" is hereby amended to read as follows:
44-45-2.
Legislative findings. -- The general assembly finds and declares that
the
following
conditions confront Rhode Island at this time:
(1) In 1982, the governor's advisory commission to study the financial
operations of state
and
local governments found that "when the state and local tax system is
viewed in its totality, it
becomes
clear that property tax relief and replacement is needed".
(2) Rhode Island has a serious over reliance on the property tax, as evidenced
by the
facts
that:
(i) Rhode Islanders paid forty-nine dollars and ninety-two cents ($49.92) per
capita in
property
tax collections in fiscal year 1983, compared to a U.S. average of thirty-four
dollars and
seventy-one
cents ($34.71), ranking this state sixth highest in the nation;
(ii) Per one thousand dollars ($1,000) of personal income, property tax
collections in
Rhode
Island equaled five hundred and thirty-seven dollars ($537) that year, compared
to a three
hundred
and eighty-one dollar ($381) U.S. average, placing the state ninth highest
nationally; and
(iii) Rhode Island's cities and towns derived fifty-eight and nine-tenths
percent (58.9%)
of their
own-source local general revenue from the property tax in fiscal year 1983,
compared to
an
average of only twenty-eight and eight-tenths percent (28.8%) for all the
states.
(3) In 1983-84, Rhode Island ranked only forty-third nationally in terms of
state support
for
public elementary and secondary school, providing only thirty-six percent (36%)
of these
revenues.
(4) The state educational operations aid formula should be gradually increased
until the
state
and municipalities equally share the cost of providing local education. The
general assembly
remains
committed to that objective and intends to pursue that objective aggressively
upon
receipt
and consideration of the final report of the joint legislative committee to
establish a
permanent
education foundation aid formula in accordance with section 16-7.2-2 of the
general
laws.
(5) The state should also share a greater portion of its economically sensitive
growth
taxes
with its cities and towns in order to further shift the burden of funding
essential municipal
services
from the property tax.
(6) The growth in property tax levies should be capped in accordance with
section 44-5-
2 of
the general laws to five and
one-half percent (5.5%) annual growth as a quid pro quo for
receiving
increased state aid to reduce reliance on the property tax.
(7)
Cities and towns should be assisted in their efforts to control school and
municipal
expenditures
by appropriately amending state arbitration and school budgeting laws.
SECTION
4. Chapter 45-2 of the General Laws entitled "General Powers" is
hereby
amended
by adding thereto the following section:
45-2-3.2.
Availability of funds upon failure of city or town to approve annual
appropriation.
– Unless otherwise provided by
a city or town charter, in an emergency caused
by a
failure of a city or town to approve an annual appropriation measure, the same
amounts
appropriated
in the previous fiscal year shall be available for each department and division
thereof,
subject to monthly or quarterly allotments, in accordance with seasonal
requirements, as
determined
by the city or town's chief financial officer: provided, that expenditures for
payment
of
bonded indebtedness of the city or town and interest thereon shall be in such
amounts as may
be
required, regardless of whether or not an annual appropriation ordinance is
enacted by the city
or
town council.
SECTION
5. Section 16-2-21 of the General Laws in Chapter 16-2 entitled "School
Committees
and Superintendents" is hereby amended to read as follows:
16-2-21.
Pre-budget consultation -- Annual reports -- Appropriation requests --
Budgets.
-- (a) At least sixty (60) days
but not more than ninety (90) days prior to the formal
submission
of the school budget to the appropriate city or town officials by the school
committee,
there
shall be a joint pre-budget meeting between the school committee and the city
or town
council(s).
At or before this meeting:
(1) The highest elected official of the city or town shall submit to the school
committee
an
estimate, prepared in a manner approved by the department of administration, of
projected
revenues
for the next fiscal year. In the case of the property tax, the projections
shall include only
changes
in the property tax base, not property tax rates;
(2) The school committee shall submit to the city or town council a statement
for the
next
ensuing fiscal year of anticipated total expenditures, projected enrollments
with resultant
staff
and facility requirements, and any necessary or mandated changes in school
programs or
operations;
and
(3) The school committee shall prepare and submit, annually, to the department
of
elementary
and secondary education, on or before the first day of August, a report in the
manner
and form
prescribed by the state board of regents for elementary and secondary
education; the
committee
shall also prepare not less than thirty (30) days before the date of the annual
financial
town
meeting, or the date of the meeting of the city council at which annual
appropriations are
made, on
forms prescribed and furnished by the department of elementary and secondary
education,
the estimates and recommendations of the amounts necessary to be appropriated
for
the
support of public schools for the fiscal year ensuing; provided, that a copy of
these estimates
and
recommendations shall be sent to the department of elementary and secondary
education, and
until
the report is made, and if the estimates and recommendations are not presented
to the
department,
it may refuse to draw its orders for the money in the state treasury
apportioned to the
city or
town; provided, that the necessary blank for the report has been furnished by
the
department
on or before the first day of June, next preceding, and the necessary forms for
the
estimates
and recommendations shall have been furnished by the department not less than
sixty
(60)
days before the date of the annual appropriations meeting of the city council;
the committee
shall
also prepare and submit annually to the department of elementary and secondary
education
and at
the annual financial town meeting a report to the city or town, setting forth
its doings, the
state
and condition of the schools, and plans for their improvement, which report,
unless printed,
shall be
read in open meeting; and if printed, at least three (3) copies shall be
transmitted to the
department
on or before the day of the annual financial town meeting in each year.
(b) If the amount appropriated by the town meeting, the city or town council,
or budget
referendum
is either more or less than the amount recommended and requested by the school
committee,
the school committee shall, within thirty (30) days after the appropriation is
made,
amend
its estimates and recommendations so that expenses are no greater than the
total of all
revenue
appropriated by the state or town or provided for public schools under the
care, control,
and
management of the school committee.
(c) Only a school budget in which total expenses are less than or equal to
appropriations
and
revenues shall be considered an adopted school budget.
(d)
Notwithstanding any provision of the general or public laws to the contrary:
(i)
the budget adopted and presented by any school committee for the fiscal year
2008
shall
not propose the appropriation of municipal funds (exclusive of state and
federal aid) in
excess
of one hundred five and one-quarter percent (105.25%) of the total of municipal
funds
appropriated
by the city or town council for school purposes for fiscal year 2007;
(ii)
the budget adopted and presented by any school committee for the fiscal year
2009
shall
not propose the appropriation of municipal funds (exclusive of state and
federal aid) in
excess
of one hundred five percent (105%) of the total of municipal funds appropriated
by the
city or
town council for school purposes for fiscal year 2008;
(iii)
the budget adopted and presented by any school committee for the fiscal year
2010
shall
not propose the appropriation of municipal funds (exclusive of state and
federal aid) in
excess
of one hundred four and three-quarters percent (104.75%) of the total of
municipal funds
appropriated
by the city or town council for school purposes for fiscal year 2009;
(iv)
the budget adopted and presented by any school committee for the fiscal year
2011
shall
not propose the appropriation of municipal funds (exclusive of state and
federal aid) in
excess
of one hundred four and one-half percent (104.5%) of the total of municipal
funds
appropriated
by the city or town council for school purposes for fiscal year 2010;
(v)
the budget adopted and presented by any school committee for the fiscal year
2012
shall
not propose the appropriation of municipal funds (exclusive of state and
federal aid) in
excess
of one hundred four and one-quarter percent (104.25%) of the total of municipal
funds
appropriated
by the city or town council for school purposes for fiscal year 2011; and
(vi)
the budget adopted and presented by any school committee for the fiscal year
2013
and
for each fiscal year thereafter shall not propose the appropriation of
municipal funds
(exclusive
of state and federal aid) in excess of one hundred four percent (104%) of the
total of
municipal
funds appropriated by the city or town council for school purposes for fiscal
year
2012.
(e)
Notwithstanding any provision of the general or public laws to the contrary,
any
judgment
rendered pursuant to subsection 16-2-21.4(b) shall consider the percentage caps
on
school
district budgets set forth in subsection (d) of this section.
SECTION
6. Sections 45-13-7, 45-13-8 and 45-13-9 of the General Laws in Chapter 45-
13
entitled "State Aid" are hereby amended to read as follows:
45-13-7.
State mandated costs defined. -- "State mandate" means any
state initiated
statutory
or executive action or rule, regulation or policy adopted by a state
department or agency
or a
quasi-public department or agency
that requires a local government to establish, expand, or
modify its
activities in a way as to necessitate additional expenditures from local government
revenue
sources where the expenditures are not otherwise reimbursed in whole or in
part. When
state
statutory or executive actions or rules, regulations or policies are
intended to achieve
compliance
with federal statutes or regulations or court orders, state mandates shall be
determined
as
follows:
(1) Where the federal statute or regulations or court order is discretionary,
the state
statutory
or executive action shall be considered a state mandate for the purposes of
sections 45-
13-7 --
45-13-10.
(2) Where the state statutory or executive action or rule, regulation or
policy exceeds
what is
required by the federal statute or regulation or court order, only the
provisions of the state
action
which exceed the federal requirements shall be considered a state mandate for
the purposes
of
sections 45-13-7 -- 45-13-10.
(3) Where the state statutory or executive action or rule, regulation or
policy does not
exceed
what is required by the federal statute or regulation or court order, the state
action shall
not be
considered a state mandate for the purposes of sections 45-13-7 -- 45-13-10.
(4) Where the cost of a single state mandate does not exceed the sum of five
hundred
dollars
($500) the state mandate shall not be reimbursable.
45-13-8.
Reports. -- (a) The department of administration in consultation and
cooperation
with towns and cities shall maintain:
(1) An identification of state mandates created by statute since January 1,
1970;
(2) Specific identification of all state mandates established since July 1,
1979 which are
subject
to reimbursement in accordance with section 45-13-9, and the cost of each of
these
mandates
to each city and town.
(b) The department of administration shall annually by January 1 issue a report
identifying
the state's mandates established during the preceding July 1 -- June 30 period
and
stating
the cost by city and town of all state mandates established after January 1,
1979, for the
next
preceding July 1 -- June 30 period. The department of administration shall
annually issue to
cities
and towns a comprehensive listing of all state mandates established after
January 1, 1979.
(c) (1) Statutes and regulations containing state mandates shall include items
eligible for
reimbursement;
however, failure to include these items shall not exempt any state mandates not
otherwise
exempted from the provisions of sections 45-13-7 -- 45-13-10.
(2) Cities and towns shall submit to the department of administration in any
form that
may be
established by the department, a report of the cost of each state mandate
established after
January
1, 1979, to the city or town. The reports shall be submitted by April 1 each
year and shall
state
costs incurred by the city or town during the preceding July 1 -- June 30
period.
(3) The reports of cities and towns requesting reimbursement for state mandates
are
subject
to audit procedures established under section 45-10-5.1.
(d) The department of administration shall issue by January 1, 1988 and by
January 1 of
each
fourth (4th) year thereafter, a report to the governor and the General Assembly
recommending
the modification or repeal of existing state mandates which are deemed to be
inappropriate
or obsolete and citing the reason for the recommendation on the fourth (4th)
year
anniversary
of those state mandates. This report shall be prepared by the local
government
assistance
division Rhode Island office of
municipal affairs within the department of
administration
in consultation and cooperation with the affected state agencies and the Rhode
Island
league of cities and towns and the Rhode Island association of school
committees.
(e) All reports issued by the department of administration in accordance with
this
subsection
shall be adopted by rule as provided for in chapter 35 of title 42.
45-13-9.
Reimbursement to cities and towns for the costs of state mandates. --
Reimbursement
to cities and towns and school districts for the costs of state mandates. -- (a)
(1) The
department of administration shall submit to the budget office by September
October 1 of
each
year, a report by each city and town, of the cost of state mandates established
after January
1, 1979,
to be reimbursed for the next preceding July 1 -- June 30 period.
(2) The budget office shall annually include the statewide total of the
statement of costs
of state
mandates to be reimbursed in the state budget for the next fiscal year;
provided, that any
costs
resulting from the rules and regulations of state departments or agencies shall
be allocated
to the
budgets of those departments or agencies.
(b) The state treasurer shall in July of each year distribute to cities and
towns the
reimbursements
for state mandated costs in accordance with the report submitted by the
department
of administration to the state budget office.
SECTION
7. Chapter 45-13 of the General Laws entitled "State Aid" is hereby
amended
by
adding thereto the following section:
45-13-11.1.
Excuse, avoidance or suspension of reimbursement requirements. -- The
provisions
of sections 45-13-6 through 45-13-10 of this chapter may be excused, avoided or
suspended
only by law enacted by the affirmative vote of three-fifths (3/5) of the full
membership
of
each house of the general assembly.
SECTION
8. It is the finding of the General Assembly that the most burdensome tax that
the
citizens of this state must pay is the property tax. In order to provide relief
from the adverse
impact
of that tax, the General Assembly requires certain information. The Office of
Municipal
Affairs
in the Department of Administration is therefore authorized to and directed to
undertake
an
inventory of all current property tax treaties; payments in lieu of taxes,
agreements reached
through
ordinance or public law; all exemptions, including delayed payments, freezes or
any
other
programs in any form, and any and all other similar mechanisms for reducing
property taxes
and/or
providing property tax relief within and among the several cities and towns,
including the
legal
basis for the granting of these treaties agreements, and exemptions by the
municipalities.
The
several cities and towns are hereby requested to provide whatever assistance
may be
necessary
or useful to the Office of Municipal Affairs in executing its responsibilities
hereunder.
The
Office of Municipal Affairs is further authorized and directed to review and
analyze
this
material and to make a report and recommendations to the General Assembly by
November
15,
2006, with copies to the President of the Senate, Speaker of the House, the
Chairperson of the
Senate
Finance Committee, the Chairperson of the House Finance Committee, the Senate
Fiscal
Advisor
and the House Fiscal Advisor.
It
is the intention of the legislature that procedures and methodologies utilized
for tax
treaties,
payment in lieu of taxes, tax agreements and other property tax stabilization
vehicles
employed
by the various cities and towns be treated in the same manner with regard to
determination
of value relative to tax rolls and the use of this information for determining
state
aid,
including education state aid to said communities. Payments in lieu of taxes
covered under
section
45-13-5.1 of the General Laws need not be reviewed.
SECTION
9. This act shall take effect upon passage, except that sections 6 and 7 shall
take effect on January 1,
2007.
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LC03048/5
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