2013 -- S 0611

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LC01761

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TAXATION - MAXIMUM TAX LEVY AND FIRE DISTRICTS

     Introduced By: Senators DiPalma, Pichardo, Bates, DaPonte, and Pearson

     Date Introduced: March 06, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 44-5-2, 44-5-22 and 44-5-69 of the General Laws in Chapter 44-5

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entitled “Levy and Assessment of Local Taxes” are hereby amended to read as follows:

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     44-5-2.  Maximum levy. -- (a) Through and including its fiscal year 2007, a city or town

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may levy a tax in an amount not more than five and one-half percent (5.5%) in excess of the

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amount levied and certified by that city or town for the prior year. Through and including its

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fiscal year 2007, but in no fiscal year thereafter, the amount levied by a city or town is deemed to

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be consistent with the five and one-half percent (5.5%) levy growth cap if the tax rate is not more

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than one hundred and five and one-half percent (105.5%) of the prior year's tax rate and the

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budget resolution or ordinance, as applicable, specifies that the tax rate is not increasing by more

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than five and one-half percent (5.5%) except as specified in subsection (c) of this section. In all

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years when a revaluation or update is not being implemented, a tax rate is deemed to be one

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hundred five and one-half percent (105.5%) or less of the prior year's tax rate if the tax on a

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parcel of real property, the value of which is unchanged for purpose of taxation, is no more than

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one hundred five and one-half percent (105.5%) of the prior year's tax on the same parcel of real

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property. In any year through and including fiscal year 2007 when a revaluation or update is

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being implemented, the tax rate is deemed to be one hundred five and one-half percent (105.5%)

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of the prior year's tax rate as certified by the division of property valuation and municipal finance

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in the department of revenue.

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        (b) In its fiscal year 2008, a city or town may levy a tax in an amount not more than

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five and one-quarter percent (5.25%) in excess of the total amount levied and certified by that city

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or town for its fiscal year 2007. In its fiscal year 2009, a city or town may levy a tax in an amount

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not more than five percent (5%) in excess of the total amount levied and certified by that city or

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town for its fiscal year 2008. In its fiscal year 2010, a city or town may levy a tax in an amount

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not more than four and three-quarters percent (4.75%) in excess of the total amount levied and

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certified by that city or town in its fiscal year 2009. In its fiscal year 2011, a city or town may

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levy a tax in an amount not more than four and one-half percent (4.5%) in excess of the total

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amount levied and certified by that city or town in its fiscal year 2010. In its fiscal year 2012, a

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city or town may levy a tax in an amount not more than four and one-quarter percent (4.25%) in

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excess of the total amount levied and certified by that city or town in its fiscal year 2011. In its

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fiscal year 2013 and in each fiscal year thereafter, a city or town or a fire district for its fiscal year

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2014 and thereafter may levy a tax in an amount not more than four percent (4%) in excess of the

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total amount levied and certified by that city or town or fire district for its previous fiscal year.

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        (c) The division of property valuation municipal finance in the department of revenue

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shall monitor city and town and fire districts’ compliance with this levy cap, issue periodic

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reports to the general assembly on compliance, and make recommendations on the continuation

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or modification of the levy cap on or before December 31, 1987, December 31, 1990, and

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December 31, every third year thereafter. The chief elected official in each city and town and the

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appropriate fire district official in each fire district shall provide to the division of property and

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municipal finance within thirty (30) days of final action, in the form required, the adopted tax

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levy and rate and other pertinent information as requested by the division of municipal finance.

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        (d) The amount levied by a city or town or fire district may exceed the percentage

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increase as specified in subsection (a) or (b) of this section if the city or town or fire district

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qualifies under one or more of the following provisions:

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        (1) The city or town or fire district forecasts or experiences a loss in total non-property

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tax revenues and the loss is certified by the department of revenue.

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        (2) The city or town or fire district experiences or anticipates an emergency situation,

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which causes or will cause the levy to exceed the percentage increase as specified in subsection

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(a) or (b) of this section. In the event of an emergency or an anticipated emergency, the city or

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town or fire district hall shall notify the auditor general who shall certify the existence or

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anticipated existence of the emergency. Without limiting the generality of the foregoing, an

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emergency shall be deemed to exist when the city or town or fire district experiences or

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anticipates health insurance costs, retirement contributions or utility expenditures which exceed

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the prior fiscal year's health insurance costs, retirement contributions or utility expenditures by a

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percentage greater than three (3) times the percentage increase as specified in subsection (a) or

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(b) of this section. In addition, with respect to fire districts, the auditor general may determine

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that an emergency exists when the fire district experiences unique financial circumstances

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resulting in expenditures increasing by a percentage greater than three (3) times the percentage

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increase as specified in subsection (a) or (b) of this section.

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        (3) A city or town or fire district forecasts or experiences debt services expenditures

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which exceed the prior year's debt service expenditures by an amount greater than the percentage

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increase as specified in subsection (a) or (b) of this section and which are the result of bonded

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debt issued in a manner consistent with general law or a special act. In the event of the debt

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service increase, the city or town or fire district shall notify the department of revenue which shall

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certify the debt service increase above the percentage increase as specified in subsection (a) or (b)

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of this section the prior year's debt service. No action approving or disapproving exceeding a levy

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cap under the provisions of this section affects the requirement to pay obligations as described in

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subsection (d) of this section.

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        (4) The city or town or fire district experiences substantial growth in its tax base as the

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result of major new construction which necessitates either significant infrastructure or school

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housing expenditures by the city or town or fire district or a significant increase in the need for

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essential municipal services or fire safety services and such increase in expenditures or demand

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for services is certified by the department of revenue.

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     (5) The town is required pursuant to subsection 44-5-69(b) to provide fire protection

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services previously provided by a fire district that has been liquidated and, therefore, imposes a

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special assessment as permitted under subsection 44-5-69(b). As a result, the combination of the

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town’s tax levy and the special assessment causes the town to experience and/or forecast

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expenditures which would result in an increase in the tax levy and which, if the special

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assessment were permitted to be included in the town’s tax levy, then the town’s tax levy would

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increase by more than the percentage increase specified in subsection (a) or (b) of this section. In

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any subsequent year, the town shall comply with the maximum levy pursuant to subsections 44-5-

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2 (a) or (b) for both the town’s levy and the special assessment.

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        (e) Any levy pursuant to subsection (d) of this section in excess of the percentage

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increase specified in subsection (a) or (b) of this section shall be approved by the affirmative vote

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of at least four-fifths (4/5) of the full membership of the governing body of the city or town or

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fire district or in the case of a city or town or fire district having a financial town meeting, or its

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equivalent, the majority of the electors present and voting at the town financial meeting or its

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equivalent, shall also approve the excess levy.    

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     (f) Nothing contained in this section constrains the payment of present or future

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obligations as prescribed by § 45-12-1, and all taxable property in each city or town or fire district

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is subject to taxation without limitation as to rate or amount to pay general obligation bonds or

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notes of the city or town or fire district except as otherwise specifically provided by law or

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charter.

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SECTION 2. Section 44-5-22 of the General Laws in Chapter 44-5 entitled "Levy and

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Assessment of Local Taxes" is hereby amended to read as follows:

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     44-5-22.  Certification of tax roll. -- The tax levy shall be applied to the assessment roll

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and the resulting tax roll certified by the assessors to the city or town clerk, city or town treasurer,

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or tax collector, as the case may be, and to the department of revenue division of municipal

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finance, not later than the next succeeding August 15. In the case of a fire district, the tax levy

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shall be applied to the assessment roll and the resulting tax roll certified by the fire district's tax

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assessors, treasurers or other appropriate fire district officials to the town clerk, town treasurer,

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tax assessor or tax collector, as the case may be, and to the department of revenue, division of

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municipal finance, not later than thirty (30) business days prior to a fire district’s annual meeting.

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     SECTION 3. Section 44-5-69 of the General Laws in Chapter 44-5 entitled "Levy and

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Assessment of Local Taxes" is hereby amended to read as follows:

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     44-5-69. Local fire districts -- Publication of property tax data. -- Local fire districts

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– Requirement of annual financial statements and property tax data – Effect of liquidation

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of fire districts. -- (a) Every fire district authorized to assess and collect taxes on real and

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personal property in the several cities and towns in the state shall be required to have annual

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financial statements prepared and audited by an independent auditing firm approved pursuant to

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section 45-10-4 by the state auditor general. The financial statements for FY 2014 and every year

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thereafter shall be presented at the district’s first annual meeting subsequent to receipt of said

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financial statements. At least ten (10) days prior to said annual meeting, a copy of such financial

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statements shall be filed by the fire district with the  town clerk for the town in which the

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district(s) is located. A copy of the financial statements shall be simultaneously sent to the state

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auditor general and the division of municipal finance in the department of revenue ("division").

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The fire districts shall also provide to the division of property valuation and municipal finance in

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the department of revenue information on tax rates, budgets, assessed valuations and other

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pertinent data upon forms provided by the division of property valuation and municipal finance.

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The information shall be included in the department's annual state report on local governmental

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finances and tax equalization published by the department of revenue.

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     (b) In the event that a fire district is liquidated, the town in which the liquidated fire

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district lies shall be required to provide all services that had previously been provided by such

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district in the manner that the town determines is the most cost effective way. In order to pay for

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the services, the town is authorized to impose a special assessment on the property located within

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the district previously served by the liquidated fire district which assessment shall be based upon

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the certification of the town. In the event of such liquidation, the special assessment is subject to

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the provisions of section 44-5-2 and the  property tax and fiscal disclosure requirements of

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section 44-35-1 et seq.

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     SECTION 4. This act shall take effect upon passage.

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LC01761

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - MAXIMUM TAX LEVY AND FIRE DISTRICTS

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     This act would make fire districts subject to the maximum levy and annual financial

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reporting requirements. It would also provide for situations involving fire district liquidation.

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     This act would take effect upon passage.

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LC01761

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