City council approves bill that would offer split tax system
NEWPORT — After two years of considering ways to establish higher property tax rates for residents who don’t live in the city year-round, City Council has unanimously submitted a proposed bill that local legislators were to sponsor at the General Assembly, which would allow them to do just that.
“It comes from the work that the (ad hoc tax relief committee) has done, based on many discussions of this council where we’ve talked about the need to try to find ways to make life easier in Newport all the time. ‘year for our residents,’ Councilor Jamie Bova said Wednesday. “I think it would really benefit all Newporters and make our town more livable for years to come if we could put this into law.”
This decision comes one month after the City of Middletown’s new tiered tax rate system for full-time residents came into effect.
Newport currently taxes residential and commercial real estate at different rates, but the city has been exploring tax relief options for year-round residents, as opposed to owners of summer homes, since 2020.
The resolution and accompanying bill were presented to the City Council by the Ad hoc tax relief committee as an alternative to enacting a homestead exemption. Like several cities in Rhode Island, Newport has had the authority to create a homestead exemption since 2002, but it has yet to write an ordinance further defining it and has not implemented it in the state budget. the city.
City Manager Joe Nicholson, who worked on the ad hoc tax relief committee, said a homestead exemption does not provide the kind of tax relief the city wants, but the specific law of The city’s homestead exemption in Rhode Island’s general laws limited its power to enact other types of differential tax rates.
Bova presented a similar resolution at City Council in 2020 who would have asked the General Assembly for permission to create a split tax system instead of a homestead exemption. However, after the proposal was rebuffed by Councilor Jeanne Marie Napolitano and Councilor Kathryn Leonard, then-Mayor Bova offered to table the resolution in favor of a workshop instead.
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Napolitano then co-sponsored a resolution in March 2020 alongside Leonard and Councilman Lynn Underwood Ceglie that proposed specifically taxing short-term rentals differently from residential properties. This too was tabled in favor of discussing the options at the tax workshop.
The Ad Hoc Tax Relief Committee grew out of this workshop, as the board decided it needed more research on the subject.
The resolution adopted on Wednesday is the culmination of the work of the ad hoc committee. Comprised of City Manager Joe Nicholson, City Attorney Christopher Behan, City Chief Financial Officer Laura Sitron, other city staff and several members of the public, the committee reviewed the waivers current homesteads in place throughout Rhode Island and a 2021 Nationwide Property Tax Relief report from the Lincoln Institute of Land Policy to recommend a specific model that would increase residential taxes for non-resident homeowners without unexpected side effects for the other properties.
The report’s proposed model calculates a base rate for all residential properties, estimates how much money would be deducted from residents’ taxes year-round based on the average property value, and then raises the rate enough for homeowners. not eligible to compensate for the loss.
Since the proposed model calculates the non-allowable property tax rate based on a lump sum to be increased, year-round residents with higher property values would see less than one percent reduction in their property bill. tax than those with lower property values.
At Wednesday’s meeting, Leonard said the committee’s report, which was attached to the resolution, was too difficult for the general public to understand and that the proposed taxation model unfairly distributed the tax reduction among properties. eligible.
“Maybe I’m wrong, but fairness, I think, is everyone gets what would probably be an equal amount, so it’s fair for everyone,” Leonard said. “I don’t think it’s explicit at all.”
Nicholson agreed the report was complex, but said the issue itself is complex and “has an effect on this city as a whole.” He reminded the board that the resolution was simply to receive authority to enact a split residential tax system from the state, and that the board would need to take other steps to implement any actual changes to tax rates. from the city.
Councilor Angela McCalla also raised concerns about the tax model proposed in the report, although she and Leonard acknowledged that was not what they were acting on. McCalla said she looked forward to having further discussions about the fairness of the proposed model.
“(I think about) how our taxation disproportionately affects our low to moderate income families,” McCalla said. “I think those are the questions I want to know going forward: Is it fair? What mechanisms are in place?
Napolitano ultimately called for a vote, saying discussing the details before acquiring the appropriate enabling legislation could prove problematic, and the board unanimously approved the resolution.