As Rhode Islanders digest the not-so-surprising data in a recently-released RIPEC report that highlights Rhode Island’s property tax burden as fourth highest in the nation, I am hopeful that when the General Assembly reconvenes for its special session, it will seize the opportunity to bring relief to taxpayers.

Fortunately, legislation already has been introduced that will ease the burden of high property taxes. Known as the “impact fee” bills, H6214 (Slater, Costantino, Almeida and Diaz) and S946 (Goodwin) were heard in June and are pending before the respective finance committees. Last month, on behalf of the Providence City Council, I sent correspondence to Assembly members urging them to act swiftly on this important legislation.

The twin bills would allow cities and towns to charge large tax-exempt institutions—those with more than $20 million in real estate holdings—a fee to help offset the cost of the public services they receive. The fee would be capped at 25% of the amount the institution would pay were it not tax-exempt.

Cities and towns in Rhode Island have only once source of tax revenue, and are forced to pay for municipal services through property tax receipts. The fees proposed in this legislation would immediately offset the cost of municipal services, thus reducing the dependency on property taxes for many cities and towns. In Providence, the impact fee would result in approximately $16 million in additional revenue annually, an amount that would, for instance, cover the entire budget of the Parks and Recreation Department.

Not only would the legislation provide much-needed property tax relief to families throughout Rhode Island, it would give municipalities greater financial security and predictability during these turbulent economic times. 

This year, the state eliminated revenue sharing with cities and towns, and at the same time, reduced state aid for education. Meanwhile, foreclosures are at peak levels, and cities and towns are desperately seeking ways to insulate property owners from devastating tax increases. My Council colleagues and I have worked diligently to make our municipal government leaner and more efficient. Since 2005, we have defunded nearly 400 positions, streamlined services, and negotiated co-pays for employee health care. We approved the 2010 budget only after amending it to include wage freezes, a halt on retroactive pay, and furlough days.

Notwithstanding these efforts, Providence, along with many municipalities, had no other option than to raise property taxes, as a result of the cuts in state aid and the continued erosion of the tax base.

Yet, we are not asking the state for money. We are simply asking the state to provide the necessary tools so that we may more fairly distribute the burden of municipal services. H6214/ S946 would allow cities and towns to do just that.

Tax-exempt institutions create many benefits for their communities, but communities also provide tax-exempts with a great number of services, which residents and businesses pay for with tax dollars. Years of growth and expansion have resulted in large tax-exempts increasing their demand for public services, while a decreasing number of taxpayers are left to pick up their bill.

One example of the heavy demand for city services was seen on a recent Friday night in the Elmhurst and Mount Pleasant neighborhoods when calls for police assistance skyrocketed due to numerous incidents involving unruly college students. The Providence Police district commander had to assign 10 officers to the area just to deal with the college parties that had gotten out of hand; those 10 officers made 75 arrests. Similar incidents have occurred in other parts of the city, with student participants from various colleges and universities.

The impact fee legislation recognizes the important role tax-exempt organizations play in our communities, while acknowledging the drain on cities and towns which must pay for services that benefit the tax-exempt institutions, and their students/clients/patrons.  The legislation would restore the balance of responsibility among individual taxpayers, tax-exempt institutions and municipalities. Again, the important distinction in the language of the bills is that only the largest non-profits would be affected, and they would only be asked to contribute a small fraction of what others pay for the same services.

We consistently hear that Rhode Island is among the most tax-burdened states in the union. The opportunity exists for Rhode Island to change that by significantly reducing its cities’ and towns’ reliance on property taxes. We will continue to advocate for that change, and for the passage of H6214/S946.