2012 -- S 2462

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LC01744

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TAXATION

     Introduced By: Senators Tassoni, Cote, and P Fogarty

     Date Introduced: February 16, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-5-2 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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     44-5-2. 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 five

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

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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 may levy a tax in an amount not

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more than four percent (4%) in excess of the total amount levied and certified by that city or town

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for its previous fiscal year.

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      (c) The division of property valuation in the department of revenue shall monitor city

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and town compliance with this levy cap, issue periodic reports to the general assembly on

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compliance, and make recommendations on the continuation or modification of the levy cap on or

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before December 31, 1987, December 31, 1990, and December 31, every third year thereafter.

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The chief elected official in each city and town 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.

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      (d) The amount levied by a city or town may exceed the percentage increase as specified

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in subsection (a) or (b) of this section if the city or town qualifies under one or more of the

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following provisions:

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

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and the loss is certified by the department of revenue.

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      (2) The city or town experiences or anticipates an emergency situation, which causes or

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will cause the levy to exceed the percentage increase as specified in subsection (a) or (b) of this

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section. In the event of an emergency or an anticipated emergency, the city or town shall notify

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the auditor general who shall certify the existence or anticipated existence of the emergency.

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Without limiting the generality of the foregoing, an emergency shall be deemed to exist when the

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city or town experiences or anticipates health insurance costs, retirement contributions or utility

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expenditures which exceed the prior fiscal year's health insurance costs, retirement contributions

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or utility expenditures by a percentage greater than three (3) times the percentage increase as

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

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      (3) A city or town forecasts or experiences debt services expenditures which exceed the

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prior year's debt service expenditures by an amount greater than the percentage increase as

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

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a manner consistent with general law or a special act. In the event of the debt service increase, the

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city or town shall notify the department of revenue which shall certify the debt service increase

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above the percentage increase as specified in subsection (a) or (b) of this section the prior year's

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debt service. No action approving or disapproving exceeding a levy cap under the provisions of

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this section affects the requirement to pay obligations as described in subsection (d) of this

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section.

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      (4) The city or town experiences substantial growth in its tax base as the result of major

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new construction which necessitates either significant infrastructure or school housing

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expenditures by the city or town or a significant increase in the need for essential municipal

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services and such increase in expenditures or demand for services is certified by the department

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of revenue.

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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 in

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the case of a city or town having a financial town meeting, the majority of the electors present

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and voting at the town financial meeting shall also approve the excess levy.

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      (f) For the purpose of funding targeted economic development investment, incremental

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property tax revenue greater than amounts collected in fiscal year 2011 from property located

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within a municipality’s designated and state-approved "growth centers" may be excluded from

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the levy amount subject to the cap, up to an aggregate maximum of two percent (2%) of the total

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municipal levy, including the increase within the growth center, provided that all such revenue

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shall be deposited into a Municipal Economic Development Trust account to be used exclusively

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to fund capital improvement projects consistent with and corresponding to a municipally adopted

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Capital Improvement Plan (CIP) associated with its designated growth centers. Allowable

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expenditures from the Municipal Economic Development Trust include planning studies,

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design/engineering, land acquisition, transportation and utility infrastructure and public amenities.

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"Approved growth centers" refers to growth centers designated by the city or town and approved

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by the Rhode Island division of planning under established guidelines on local comprehensive

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planning. A municipality that elects to utilize provisions of this subsection shall be required to

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track and provide the following information annually as part of the monitoring and reporting

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referenced in subsection (c): the level public investment being made annually to implement the

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CIP within such “growth centers”; the dollar value of subsequent private real estate development

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investment within such “growth centers”; the number of real estate development projects

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initiated; percentage of vacancies reduced; number of net new businesses and full and part-time

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jobs; or a change in property tax revenues generated with “growth centers”.

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

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obligations as prescribed by section 45-12-1, and all taxable property in each city or town is

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

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of the city or town except as otherwise specifically provided by law or charter.

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     SECTION 2. This act shall take effect upon passage.

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LC01744

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION

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     This act would fund economic development in municipally-designated state approved

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"growth centers" by excluding revenue greater than the amount collected in fiscal year 2011 from

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the levy subject to the cap in an amount up to a maximum of two percent (2%) of the total

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municipal levy provided that the revenue is used to fund projects in growth centers.

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     This act would take effect upon passage.

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LC01744

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