Today, RIPEC released a study on revaluation of property in the Ocean State. Periodic revaluation of property is an effort to provide fairness in the process by changing assessments to reflect current values. Revaluations are a necessary process to address the reality that properties appreciate and depreciate at different rates.
During the recent period of significant increase in property valuation, which potentially could have shifted property tax burdens from commercial and industrial properties to homeowners, several municipalities began to implement property tax classification systems. In reaction, legislation was adopted in 2000 that established a statewide standard for local classification schemes. This legislation provides that upon the completion of any revaluation a municipality may adopt a property tax classification plan. However, local classification plans are limited to four classes of property, and the effective tax rate applicable to any class cannot exceed 50 percent of the rate applicable to any other class.
Before changes are made to the system of revaluating property, there needs to be a transparent discussion of the benefits that would accrue to Rhode Island taxpayers if changes are made. Furthermore, if the revaluation cycle is to be changed, RIPEC believes that the most appropriate options would be the legislation that provides revaluation every eight years with statistical updates in the intervening fourth year (H 5718). This legislation would reduce the cost of two statistical updates in a six-year period, but would still provide for a timely comprehensive revaluation.
Highlights from the RIPEC comments on the revaluation cycle include:
- Decreasing the frequency of property revaluations could result in less equity within and among jurisdictions; reduce the accuracy and reliability of data used to calculate and distribute State aid in the future; and result in credit rating agencies having less “real time” data to use in determining the credit worthiness of Rhode Island’s 39 cities and towns;
- Changing the frequency of property revaluations could have a number of impacts on cities and towns and their taxpayers in the Ocean State. Dated property valuations can result in property taxpayers being treated unfairly; and
- Maintaining current values is also critical for a number of reasons. More up-to-date property values will provide State and local policymakers with current and accurate data for use to administer the State’s local aid programs.