RIPEC Urges No Changes to Property Tax Cap

Noting that the state’s property tax cap – commonly known as S-3050 – has achieved a measure of success in controlling the rate of growth in the state’s property tax, RIPEC today urged the General Assembly not to act on any bills that would alter the legislation.

The current legislation already provides municipalities with significant methods to adjust their levy in the face of serious fiscal challenges.  Altering the basic controls outlined in the legislation – particularly when there may be alternative methods of addressing any pending issue – undermines the intent of the legislation.  Furthermore, changes to S-3050 open the door to increased modifications, which have the potential to reverse the positive gains the state has made with regard to controlling the growth in property taxes.

Property taxes in Rhode Island continue to represent the most significant burden to taxpayers in the state, accounting for approximately 42 cents of every tax dollar raised in FY 2008, the most recent year for which nationally comparable information is available.  In contrast, property taxes accounted for just 31 cents of every dollar raised through taxes nationally.  Moreover, the state’s overreliance on the property tax to support government services is a contributing factor to both the state’s high overall tax burden and to the state’s poor performance in business climate studies.

While RIPEC recognizes that many communities are facing serious fiscal challenges, this is not the time to modify one of the most significant pieces of tax legislation to come out of the General Assembly in the past decade.  Changes to the tax structure must be done with a view to improve the state’s overall competitive position, increase transparency, minimize regressivity, and ensure that revenues are sufficient to fund needed public services.  In RIPEC’s view, none of the proposed bills achieve these goals, and, in some cases, they would reverse the positive trends in tax legislation that have come out in the past few years.

RIPEC’s most recent “Comments” provides an overview of the property tax legislation, examines the effectiveness of S-3050, and summarizes a number of bills before the General Assembly that would alter the legislation.

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