Leaders Call for Changes to City Tax Structure

Leaders Call for Changes to City Tax Structure

A city commission charged with reviewing and making recommendations to improve Providence revenue structure is calling for wholesale changes the city’s taxing habits as well as a series of other changes that will ultimately make the city more friendly to homeowners and business, the group says.

In a draft report issued Monday, the nine-member Commission on Revenue, Sustainability and Efficiency recommended tax exempt nonprofits make larger payments to the city and called or a series of changes that would “restructure the property tax system as a catalyst for economic renewal and growth.”

The proposal suggested the city adopt a property classification system where commercial and industrial property is taxed at twice the effective residential property tax rate and tangible property at three times the effective residential property tax rate while reducing the current homestead exemption from 50 percent to ten percent for owner occupied properties. The proposal also suggests eliminating the homestead exemption for non-owner occupied property.

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Taveras Singles Out Brown

The report noted that early estimates suggest the city will face a possible $15-20 million shortfall during the current fiscal year and that projections have the city facing a structural budget deficit of $ 21.2 million in FY2013 and $37.2 and $58.8 million respectively in FY2014 and FY2015.

The Commission’s plan also calls on the city to adopt a property classification system where commercial and industrial property is taxed at 2.075 times the effective residential property tax rate and tangible property at 3.3 times the effective residential property tax rate.

But the key focus for Mayor Taveras is getting more from the tax-exempt institutions.

“I commend the Commission to Study Revenue Sustainability and Effectiveness for its analysis, which makes very clear that one of our biggest barriers to creating a balanced, competitive revenue structure in Providence is the failure of Brown University and our city’s other tax-exempt institutions to contribute fairly for the city services they use,” Taveras said. “The taxpayers have sacrificed. Our labor unions have sacrificed. It’s time for Brown and the other tax-exempts to step up and contribute fairly to the city they call home.”

We Need New Revenue

The plan also called on the city to implement a “comprehensive revenue diversification agenda in order to implement a property tax restructuring that is vital to improving the Providence economy.”

That would entail determining the net costs to the City for services it provides to non –profit institutions with property valued in excess of $100 million and proposing a voluntary formula to allocate costs as well as pursuing an intergovernmental fiscal fair play agenda that would include accelerating the funding of the school aid formula which is scheduled to be fully funded until 2017.

The proposal also calls for the implementation of “state of the art practices to identify non property revenues that the City can assess and collect without state approval, including a systematic program to maintain an inventory of potential revenues and programs to keep fee level current with operating costs”

City Council President Michael Solomon the city must have two priorities when it comes it comes to reforming its revenue structure.

"I want to thank the members of the Revenue Commission for their commitment to creating a viable and sustainable revenue structure for Providence," Solomon said. "After reading the initial finding I believe this report makes two things clear. First, we must work to reform the property tax system so we can retain business and attract new investment. Second, our dependency on property taxes threatens our ability to promote sound tax policy, and as a result, we must consider new revenue sources, namely increased payments from tax exempts.”

 

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