2025 -- S 1116

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LC002980

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

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A N   A C T

RELATING TO TAXATION -- LEVY AND ASSESSMENT OF LOCAL TAXES

     Introduced By: Senator Jacob Bissaillon

     Date Introduced: May 23, 2025

     Referred To: Senate Housing & Municipal Government

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 44-5-2, 44-5-11.8, 44-5-11.18 and 44-5-12 of the General Laws in

Chapter 44-5 entitled "Levy and Assessment of Local Taxes" are hereby amended to read as

follows:

     44-5-2. Maximum levy.

     (a) Through and including its fiscal year 2007, a city or 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. Through and including its fiscal year 2007, but in no fiscal year

thereafter, 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) of this section. 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 through and including fiscal year

2007 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 property

valuation and municipal finance in the department of revenue.

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

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

town for its fiscal year 2007. In its fiscal year 2009, a city or town may levy a tax in an amount not

more than five percent (5%) in excess of the total amount levied and certified by that city or town

for its fiscal year 2008. In its fiscal year 2010, a city or town may levy a tax in an amount not more

than four and three-quarters percent (4.75%) in excess of the total amount levied and certified by

that city or town in its fiscal year 2009. In its fiscal year 2011, a city or town may levy a tax in an

amount not more than four and one-half percent (4.5%) in excess of the total amount levied and

certified by that city or town in its fiscal year 2010. In its fiscal year 2012, a city or town may levy

a tax in an amount not more than four and one-quarter percent (4.25%) in excess of the total amount

levied and certified by that city or town in its fiscal year 2011. In its fiscal year 2013 and in each

fiscal year thereafter, a city or town may levy a tax in an amount not more than four percent (4%)

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

For purposes of this levy calculation, taxes levied pursuant to chapters 34 and 34.1 of this title shall

not be included. For FY 2018, in the event that a city or town, solely as a result of the exclusion of

the motor vehicle tax in the new levy calculation, exceeds the property tax cap when compared to

FY 2017 after taking into account that there was a motor vehicle tax in FY 2017, said city or town

shall be permitted to exceed the property tax cap for the FY 2018 transition year, but in no event

shall it exceed the four percent (4%) levy cap growth with the car tax portion included; provided,

however, nothing herein shall prohibit a city or town from exceeding the property tax cap if

otherwise permitted pursuant to subsection (d) of this section.

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

within thirty (30) days of final action, in the form required, the adopted tax levy and rate and other

pertinent information.

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

in subsection (a) or (b) of this section 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 non-property tax revenues and

the loss is certified by the department of revenue.

     (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

section. 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. Without

limiting the generality of the foregoing, an emergency shall be deemed to exist when the city or

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

expenditures that exceed the prior fiscal year’s health insurance costs, retirement contributions, or

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

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

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

year’s debt service expenditures by an amount greater than the percentage increase as specified in

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

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

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

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

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

new construction that necessitates either significant infrastructure or school housing expenditures

by the city or town or a significant increase in the need for essential municipal services and such

increase in expenditures or demand for services is certified by the department of revenue.

     (5) In the city of Providence, for fiscal year 2026, any additional revenue generated from

the Class 2B rate exceeding the base Class 2A rate may exceed the maximum levy. For the purposes

of this subsection, "Class 2A" and "Class 2B" shall have the same meaning as in § 44-5-

11.18(1)(ii)(B), and the "base Class 2A rate" shall mean twenty-eight dollars and eighty cents

($28.80) per one thousand dollars ($1,000).

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

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

four-fifths (⅘) of the full membership 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 also approve the excess levy.

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

as prescribed by § 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.

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     44-5-11.8. Tax classification.

     (a) Upon the completion of any comprehensive revaluation or any update, in accordance

with § 44-5-11.6, any city or town may adopt a tax classification plan, by ordinance, with the

following limitations:

     (1) The designated classes of property shall be limited to the classes as defined in

subsection (b) of this section.

     (2) The effective tax rate applicable to any class, excluding class 4, shall not exceed by

fifty percent (50%) the rate applicable to any other class, except in the city of Providence and the

town of Glocester and the town of East Greenwich; however, in the year following a revaluation or

statistical revaluation or update, the city or town council of any municipality may, by ordinance,

adopt tax rates for the property class for all ratable tangible personal property no greater than twice

the rate applicable to any other class, provided that the municipality documents to, and receives

written approval from, the office of municipal affairs that the rate difference is necessary to ensure

that the estimated tax levy on the property class for all ratable tangible personal property is not

reduced from the prior year as a result of the revaluation or statistical revaluation.

     (3) Any tax rate changes from one year to the next shall be applied such that the same

percentage rate change is applicable to all classes, excluding class 4, except in the city of

Providence and the town of Glocester and the town of East Greenwich.

     (4) Notwithstanding subsections (a)(2) and (a)(3) of this section, the tax rates applicable to

wholesale and retail inventory within Class 3 as defined in subsection (b) of this section are

governed by § 44-3-29.1.

     (5) The tax rates applicable to motor vehicles within Class 4, as defined in subsection (b)

of this section, are governed by § 44-34.1-1 [repealed].

     (6) The provisions of chapter 35 of this title relating to property tax and fiscal disclosure

apply to the reporting of, and compliance with, these classification restrictions.

     (b) Classes of property.

     (1) Class 1: Residential real estate consisting of no more than five (5) dwelling units; land

classified as open space; and dwellings on leased land including mobile homes. In the city of

Providence, this class may also include residential properties containing partial commercial or

business uses and residential real estate of more than five (5) dwelling units.

     (i) A homestead exemption provision is also authorized within this class; provided

however, that the actual, effective rate applicable to property qualifying for this exemption shall be

construed as the standard rate for this class against which the maximum rate applicable to another

class shall be determined, except in the town of Glocester and the city of Providence.

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     (ii) In lieu of a homestead exemption, any city or town may divide this class into non-

owner and owner-occupied property and adopt separate tax rates in compliance with the within tax

rate restrictions; provided, however, that the owner-occupied rate shall be construed as the standard

rate for this class against which the maximum rate applicable to another class shall be determined,

except in the town of Glocester and the city of Providence.

     (2) Class 2: Commercial and industrial real estate; residential properties containing partial

commercial or business uses; and residential real estate of more than five (5) dwelling units. In the

city of Providence, properties containing partial commercial or business uses and residential real

estate of more than five (5) dwelling units may be included in Class 1.

     (3) Class 3: All ratable, tangible personal property.

     (4) Class 4: Motor vehicles and trailers subject to the excise tax created by chapter 34 of

this title.

     (c) The town council of the town of Glocester and the town council of the town of East

Greenwich may, by ordinance, provide for, and adopt, a tax rate on various classes as they shall

deem appropriate. Provided, that the tax rate for Class 2 shall not be more than two (2) times the

tax rate of Class 1 and the tax rate applicable to Class 3 shall not exceed the tax rate of Class 1 by

more than two hundred percent (200%). Glocester shall be able to establish homestead exemptions

up to fifty percent (50%) of value and the calculation provided in subsection (b)(1)(i) shall not be

used in setting the differential tax rates.

     (d) Notwithstanding the provisions of subsection (a) of this section, the town council of the

town of Middletown may hereafter, by ordinance, adopt a tax classification plan in accordance with

the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or

after the assessment date of December 31, 2002.

     (e) Notwithstanding the provisions of subsection (a) of this section, the town council of the

town of Little Compton may hereafter, by ordinance, adopt a tax classification plan in accordance

with the provisions of subsections (a) and (b) of this section and the provisions of § 44-5-79, to be

applicable to taxes assessed on or after the assessment date of December 31, 2004.

     (f) Notwithstanding the provisions of subsection (a) of this section, the town council of the

town of Scituate may hereafter, by ordinance, change its tax assessment from fifty percent (50%)

of value to one hundred percent (100%) of value on residential and commercial/industrial/mixed-

use property, while tangible property is assessed at one hundred percent (100%) of cost, less

depreciation; provided, however, the tax rate for Class 3 (tangible) property shall not exceed the

tax rate for Class 1 (residential) property by more than two hundred thirteen percent (213%). This

provision shall apply whether or not the fiscal year is also a revaluation year.

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     (g) Notwithstanding the provisions of subsections (a) and (b) of this section, the town

council of the town of Coventry may hereafter, by ordinance, adopt a tax classification plan

providing that Class 1, as set forth in subsection (b) “Classes of Property” of this section, may also

include residential properties containing commercial or business uses, such ordinance to be

applicable to taxes assessed on or after the assessment date of December 31, 2014.

     (h) Notwithstanding the provisions of subsection (a) of this section, the town council of the

town of East Greenwich may hereafter, by ordinance, adopt a tax classification plan in accordance

with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on

or after the assessment date of December 31, 2018. Further, the East Greenwich town council may

adopt, repeal, or modify that tax classification plan for any tax year thereafter, notwithstanding the

provisions of subsection (a) of this section.

     (i) Notwithstanding the provisions of subsection (a) of this section, the town council of the

town of Middletown may hereafter, by ordinance, adopt a tax classification plan in accordance with

the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or

after the assessment date of December 31, 2022.

     (j) Notwithstanding the provisions of subsection (a) of this section, the town council of the

town of New Shoreham may hereafter, by ordinance, adopt a tax classification plan in accordance

with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on

or after the assessment date of December 31, 2023.

     (k) Notwithstanding the provisions of subsection (a) of this section, the town council of the

town of Bristol may hereafter, by ordinance, adopt a tax classification plan in accordance with the

provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after

the assessment date of December 31, 2023. Further, the Bristol town council may adopt, repeal, or

modify that tax classification plan for any tax year thereafter, notwithstanding the provisions of

subsection (a) of this section.

     (l) The city council of the city of Providence may, by ordinance, provide for, and adopt, a

tax rate on various classes as they shall deem appropriate. Provided, that the tax rate for Class 2

shall not be more than two (2) times the tax rate of Class 1; that the tax rate for Class 3 shall not be

more than three (3) times the tax rate of Class 1; and that the tax rate for Class 2 shall not be more

than three and one-half (3½) times the effective owner-occupied tax rate of Class 1, whether by

homestead exemption or separate rates provisions of § 44-5-11.18(4) shall apply.

     44-5-11.18. Tax classification — Providence.

     Notwithstanding any provision of § 44-5-11.8 to the contrary, the city of Providence may

adopt a tax classification with unrestricted tax rates by ordinance as follows:

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     (1) Classes of property.

     (i)(A) Class 1A: Residential real estate consisting of one dwelling unit.

     (A)(B) Class 1AB: Residential real estate consisting of fewer than six (6) two (2) to five

(5) dwelling units; land classified as open space; and dwellings on leased land including mobile

homes.

     (B)(C) Class 1BC: Residential real estate consisting of six (6) to ten (10) dwelling units.

     (C)(D) Class 1CD: Residential real estate of more than ten (10) dwelling units.

     (ii)(A) Class 2A: Commercial and industrial real estate.

     (B) Class 2B: Industrial real estate.

     (iii) Class 3: Properties containing partial residential and commercial or business uses. The

city is authorized to adopt a tax rate for this class or to apply the appropriate residential tax rate to

the residential portion of the property and the commercial rate to the commercial portion of the

property. The city may apportion property by square footage, by number of units, or by any other

reasonable and consistent manner.

     (iv) Class 4: All ratable, tangible personal property.

     (2) A homestead exemption is also authorized within Class Classes 1A and 1B. In lieu of

a homestead exemption, the city of Providence may divide Class Classes 1A and 1B into non-owner

and owner-occupied property and adopt separate tax rates.

     (3) In any tax year after the first in which the city of Providence adopts such a tax

classification, the city council of the city of Providence may by ordinance change the number of

dwelling units to be included in Class 1A, Class 1B, and Class 1C, and Class 1D.

     (4) The tax rate for Class 2A shall not be more than two (2) times the base tax rate of Class

1A; and the tax rate for Class 2A shall not be more than three and one-half (3½) times the effective

owner-occupied tax rate of Class 1A, whether by homestead exemption or separate rates. The tax

rate for Class 2B shall not be more than one and one-half (1.5) times the tax rate for Class 2A.

There shall be no further differential tax rate limits for a tax classification adopted pursuant to this

section.

     44-5-12. Assessment at full and fair cash value.

     (a) All real property subject to taxation shall be assessed at its full and fair cash value, as

of December 31 in the year of the last update or revaluation, or at a uniform percentage thereof, not

to exceed one hundred percent (100%), to be determined by the assessors in each town or city;

provided, that:

     (1) Any residential property encumbered by a covenant recorded in the land records in

favor of a governmental unit or the Rhode Island housing and mortgage finance corporation

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restricting either or both the rents that may be charged or the incomes of the occupants shall be

assessed and taxed in accordance with § 44-5-13.11;

     (2) In assessing real estate that is classified as farmland, forest, or open space land in

accordance with chapter 27 of this title, the assessors shall consider no factors in determining the

full and fair cash value of the real estate other than those that relate to that use without regard to

neighborhood land use of a more intensive nature;

     (3) Warwick. The city council of the city of Warwick is authorized to provide, by

ordinance, that the owner of any dwelling of one to three (3) family units in the city of Warwick

who makes any improvements or additions on his or her principal place of residence in the amount

up to fifteen thousand dollars ($15,000), as may be determined by the tax assessor of the city of

Warwick, is exempt from reassessment of property taxes on the improvement or addition until the

next general citywide reevaluation of property values by the tax assessor. For the purposes of this

section, “residence” is defined as voting address. This exemption does not apply to any commercial

structure. The property owner shall supply all necessary plans to the building official for the

improvements or addition and shall pay all requisite building and other permitting fees as now are

required by law; and

     (4) Central Falls. The city council of the city of Central Falls is authorized to provide, by

ordinance, that the owner of any dwelling of one to eight (8) units who makes any improvements

or additions to his or her residential or rental property in an amount not to exceed twenty-five

thousand dollars ($25,000), as determined by the tax assessor of the city of Central Falls, is exempt

from reassessment of property taxes on the improvement or addition until the next general citywide

reevaluation of property values by the tax assessor. The property owner shall supply all necessary

plans to the building official for the improvements or additions and shall pay all requisite building

and other permitting fees as are now required by law.

     (5) Tangible property shall be assessed according to the asset classification table as defined

in § 44-5-12.1. Renewable energy resources shall only be taxed as tangible property under § 44-5-

3(c) and the real property on which they are located shall not be reclassified, revalued, or reassessed

due to the presence of renewable energy resources, excepting only reclassification of farmland as

addressed in § 44-27-10.1. Subject to the aforementioned exception for farmland, all assessments

of real property with renewable energy resources thereon shall revert to the last assessed value

immediately prior to the renewable developer’s purchasing, leasing, securing an option to purchase

or lease, or otherwise acquiring any interest in the real property. However, notwithstanding the

above, but without any limitation on taxpayer rights under § 44-5-26, no municipality shall be liable

or otherwise responsible for any rebates, refunds, or any other reimbursements for taxes previously

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collected for real property with renewable energy resources thereupon.

     (6) Provided, however, that, for taxes levied after December 31, 2015, new construction on

development property is exempt from the assessment of taxes under this chapter at the full and fair

cash value of the improvements, as long as:

     (i) An owner of development property files an affidavit claiming the exemption with the

local tax assessor by December 31 each year; and

     (ii) The assessor shall then determine if the real property on which new construction is

located is development property. If the real property is development property, the assessor shall

exempt the new construction located on that development property from the collection of taxes on

improvements, until such time as the real property no longer qualifies as development property, as

defined herein.

     For the purposes of this section, “development property” means: (A) Real property on

which a single-family residential dwelling or residential condominium is situated and said single-

family residential dwelling or residential condominium unit is not occupied, has never been

occupied, is not under contract, and is on the market for sale; or (B) Improvements and/or

rehabilitation of single-family residential dwellings or residential condominiums that the owner of

such development property purchased out of a foreclosure sale, auction, or from a bank, and which

property is not occupied. Such property described in subsection (a)(6)(ii) of this section shall

continue to be taxed at the assessed value at the time of purchase until such time as such property

is sold or occupied and no longer qualifies as development property. As to residential

condominiums, this exemption shall not affect taxes on the common areas and facilities as set forth

in § 34-36-27. In no circumstance shall such designation as development property extend beyond

two (2) tax years and a qualification as a development property shall only apply to property that

applies for, or receives, construction permits after July 1, 2015. Further, the exemptions set forth

in this section shall not apply to land.

     (7) The office of energy resources shall promulgate regulations for the determination of

full and fair cash value for facilities for the generation of electricity from natural gas designed or

capable of operating at a gross capacity of forty megawatts (40 MW) or more. Such regulations

shall take effect beginning in fiscal year 2027. For fiscal year 2026, the assessment of such facilities

shall be the value determined by the assessors in each city or town or five hundred thousand dollars

($500,000) per megawatt (MW) of gross capacity at which the facility is capable of operating,

whichever is greater.

     (b) Municipalities shall make available to every land owner whose property is taxed under

the provisions of this section a document that may be signed before a notary public containing

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language to the effect that they are aware of the additional taxes imposed by the provisions of § 44-

5-39 in the event that they use land classified as farm, forest, or open space land for another purpose.

     (c) Pursuant to the provisions of § 44-3-29.1, all wholesale and retail inventory subject to

taxation is assessed at its full and fair cash value, or at a uniform percentage of its value, not to

exceed one hundred percent (100%), for fiscal year 1999, by the assessors in each town and city.

Once the fiscal year 1999 value of the inventory has been assessed, this value shall not increase.

The phase-out rate schedule established in § 44-3-29.1(d) applies to this fixed value in each year

of the phase out.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- LEVY AND ASSESSMENT OF LOCAL TAXES

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     This act would adopt a new tax classification system for the city of Providence.

     This act would take effect upon passage.

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