It is enacted by the General Assembly as follows:

SECTION 1. Section 44-5-2 of the General Laws in Chapter 44-5 entitled "Levy and Assessment of Local Taxes" is hereby amended to read as follows:

44-5-2. Maximum levy -- (a) A city and town may levy a tax in an amount not more than five and one-half percent (5.5%) in excess of the amount levied and certified by that city or town for the prior year. The amount levied by a city or town is deemed to be consistent with the five and one-half percent (5.5%) levy growth cap if the tax rate is not more than one hundred and five and one-half percent (105.5%) of the prior year's tax rate and the budget resolution or ordinance, as applicable, specifies that the tax rate is not increasing by more than five and one-half percent (5.5%) except as specified in subsection (c). In all years when a revaluation or update is not being implemented, a tax rate is deemed to be one hundred five and one-half percent (105.5%) or less of the prior year's tax rate if the tax on a parcel of real property, the value of which is unchanged for purpose of taxation, is no more than one hundred five and one-half percent (105.5%) of the prior year's tax on the same parcel of real property. In any year when a revaluation or update is being implemented, the tax rate is deemed to be one hundred five and one-half percent (105.5%) of the prior year's tax rate as certified by the division of local government assistance in the department of administration.

(b) The office of municipal affairs in the department of administration, shall monitor city and town compliance with this levy cap, issue periodic reports to the general assembly on compliance, and make recommendations on the continuation or modification of the levy cap on or before December 31, 1987, December 31, 1990 and December 31, every third year thereafter. The chief elected official in each city and town shall provide to the office of municipal affairs within thirty (30) days of final action, in the form required, the adopted tax levy and rate and other pertinent information.

(c) The amount levied by a city or town may exceed the five and one-half percent (5.5%) increase as specified in subsection (a) if the city or town qualifies under one or more of the following provisions:

(1) The city or town forecasts or experiences a loss in total nonproperty tax revenues and the loss is certified by the department of administration.

(2) The city or town experiences or anticipates an emergency situation which causes or will cause the levy to exceed five and one-half percent (5.5%). In the event of an emergency or an anticipated emergency, the city or town shall notify the auditor general who shall certify the existence or anticipated existence of the emergency.

(3) A city or town forecasts or experiences debt services expenditures which are more than one hundred five and one-half percent (105.5%) of the prior year's debt service expenditures and which are the result of bonded debt issued in a manner consistent with general law or special act. In the event of the debt service increase, the city or town shall notify the department of administration which shall certify the debt service increase above one hundred five and one-half percent (105.5%) of the prior year's debt service. No action approving or disapproving exceeding a levy cap under the provisions of this section affects the requirement to pay obligations as described in subsection (d).

(4) Any levy pursuant to subsection (c) in excess of the five and one-half percent (5.5%) shall be approved by a majority vote of the governing body of the city or town or in the case of a city or town having a financial town meeting, the majority of the electors present and voting at the town financial meeting shall approve the excess levy.

(d) Nothing contained in this section constrains the payment of present or future obligations as prescribed by section 45-12-1, and all taxable property in each city or town is subject to taxation without limitation as to rate or amount to pay general obligation bonds or notes of the city or town except as otherwise specifically provided by law or charter.

SECTION 2. This act shall take effect upon passage.