PROVIDENCE, R.I. (WPRI) – Providence City Council leaders successfully pitched their plan to change the city’s tax structure to a panel of senators on Thursday night, hoping the full General Assembly will pass enabling legislation in the waning days before summer adjournment.
The Senate Housing and Municipal Government Committee passed the legislation after a more than three-hour hearing that saw city councilors — who were missing their own meeting to attend the hearing — testifying both for and against the bill. And it included a warning from the city’s finance director, Larry Mancini, who said the city will “not have cash to make payroll” on July 15 if the budget process is delayed.
Council Finance Chair John Igliozzi said he was there to be “the advocate for people who don’t have a voice” in less-affluent neighborhoods in Providence.
Igliozzi’s plan, which is supported by Council President Sabina Matos, would bring back the “homestead exemption” that gives people who live in their houses a discount on their taxes, but make it graduated so that higher values get less of an exemption.
He said he proposed it in an effort to create “stability” and “equity” among taxpayers after a revaluation done this year sent assessed home values soaring in parts of the city.
The Senate bill, which was amended Thursday to match a similar House bill, would give the city the ability to fix a homestead exemption, either with a single rate or variable rate based on value. The bill says the homestead exemption can be anywhere between 20% and 50%.
Igliozzi’s proposal is to set a rate of $24.56 per $1,000 of home value, with a 40% homestead exemption for homes valued up to $350,000, and a 28% exemption for home values exceeding $350,000.
Currently, the city has two fixed tax rates: a lower one for owner-occupied homes and a higher rate for non-owner-occupied homeowners such as landlords.
Mayor Jorge Elorza has expressed strong opposition to the council’s proposal, but has not yet said if he would veto it.
In written testimony to the committee, Elorza said the “last-minute” tax plan would impede the city’s ability to send out tax bills next month.
“Introducing a proposal this late in the process has not allowed for proper vetting and has limited public input,” Elorza said.
At the same time the Senate hearing was going on, the City Council passed a resolution in a vote of 9-1 urging the General Assembly to pass the enabling legislation. Absent from the vote were five councilors, including the council president, who were at the State House for the hearing on the bill.
“My mission statement, like yours, is to represent and advocate for people who don’t have a voice,” Igliozzi told the committee. “Protect the taxpayer, provide quality of life for our constituents.”
He and Matos lamented the fact that Elorza released his proposed budget, including the tax rates for the next fiscal year, on April 30. The fiscal year starts July 1, which they argue gives them little time to vet the $772 million plan or make substantial changes.
“I think it’s about time that the mayor submits the budget in February,” Igliozzi said.
Elorza’s staff argues it’s difficult to know in February, when the state budget has only just been introduced, what the appetite on Smith Hill will be for state aid to Providence.
Councilman Seth Yurdin, who represents Ward 1 on the East Side and opposes the plan, testified that his biggest concern is that the plan has not even been formally introduced, with 10 days left in the fiscal year.
“I want to apologize to you all on behalf of the entire City Council for dragging you into what is a contentious dispute in Providence about process,” Yurdin told the committee.
“A large part of the objections, and confusion on the part of the public, are related to the way that the process has occurred,” he continued. “And I know there are many people that I represent that would be happy to pay additional taxes and have an ability to do that, provided there is a process that articulated to them why, and what the basis was.”
Yurdin also questioned whether Matos and Igliozzi improperly briefed councilors in private about the plan in early June without notice of a public meeting. State open meetings law requires meetings of public bodies to take place in public and with advance notice.
Council spokesperson Billy Kepner said the meeting was not in violation of the law because two councilors left the room in order to avoid there being a quorum.
Word started to spread about the proposal shortly after that, including on an East Side email list that distributed tax rates different from the ones the councilors have proposed. The leadership team then called a last-minute news conference on the morning of June 13, which is the first time the new tax structure was made public.
The proposal has caused a stir on the East Side, where many of the more valuable homes in the city are located. Elorza’s proposal would give many homes there a tax cut, since he’s proposing to lower the tax rate in order to stay under a state-mandated 4% cap on the annual tax increase citywide. (Elorza is still proposing to raise property taxes by $12 million.)
Elorza’s proposal is to set the owner-occupied tax rate at $15.35 per $1,000, and the non-owner-occupied rate at $24.56.
City Treasurer James Lombardi, who is also a special adviser to the City Council, said his calculations show that 86% of homeowners would have a lower tax bill under the council’s plan compared to the mayor’s plan. But he acknowledged the calculation is a “moving target,” since the revaluation data provided by Vision Government Solutions is from before homeowners appealed their assessed values.
Mancini says 6,200 property owners, including residential and commercial owners, appealed their new assessed values this year. Of those, 2,790 appeals resulted in a change in assessment, for a total reduction in city revenue of $1.2 million.
Target 12 requested the document with updated revaluation data, but a city spokesperson said it has not yet been finalized.
Mancini told the committee the city is running “paycheck to paycheck,” and won’t be able to make payments to the pension fund or even make payroll if the tax levy is certified too late.
A House spokesperson said no decision has been made on whether a hearing on the bill will be scheduled before a House committee.
In voting in favor of the bill, Sen. Elizabeth Crowley pointed out that the enabling legislation doesn’t require the city to change anything at all, either this year or in the future.
Sen. Ana Quezada, a Providence Democrat and a sponsor of the bill, also emphasized that it’s up the council and mayor to decide what happens with the city’s tax rates.
“It’s sad to see tonight that we are so divided as a community,” she told the committee. “That’s not the purpose of this legislation.”