The Rhode Island Public Expenditure Council has released its annual report on taxes in Rhode Island. Among the report’s principle findings:
* Rhode Islanders pay more in property taxes than they pay in any other single tax, including personal income, general sales and all business-specific taxes.
* Rhode Island’s local governments collected nearly 58 percent of their fiscal year 1996 revenues from property taxes compared to the U.S. average of 28 percent.
* Rhode Island’s fiscal year 1996 property tax collections per $1,000 of personal income of $48.75 ranked fifth highest nationally, exceeding the U.S. average by 42 percent.
* Based on the estimated full value of property and the fiscal year 2000 levy, fiscal year 2000 effective tax rates ranged from $8.05 in Little Compton to $44.84 in Providence.
* Eleven Rhode Island communities demonstrated at least some level of local fiscal stress in terms of their ability to generate property tax revenues relative to the rest of the state.
RIPEC suggests in its report that over the past couple of years, “there has been significant progress in reforming property tax administration and replacing revenues previously raised through property taxes with broad-based revenue sources.”
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As examples of such sources, RIPEC points to reforms that include replacing the ten-year revaluation cycle with two statistical updates between each nine-year revaluation cycle and phasing out auto and inventory taxes.
But RIPEC also suggests that there is work to be done. Among RIPEC’s recommendations:
* Continue Property Tax Replacement Programs: A high fiscal priority should be to continue implementing recently enacted property tax reduction programs to bring balance into the state-local fiscal system and to reduce the reliance on funding public schools through the property tax.
* Implementing a New Education Funding System: Rhode Island currently lacks a comprehensive school finance system that can support the financial needs of the local community and the educational needs of all students. One cannot continue to tackle the state’s over-reliance on the property tax without dealing with the manner by which public education is financed.
* Enforcing the New Revaluation Cycle: While the new revaluation cycle is in place, ensuring that all communities comply with the law is critical to both the equity of property taxation within and among jurisdictions and property tax administration.
* Standardizing Property Tax Administration: Previous studies have shown that Rhode Island’s current property tax administration structure is complex. Given the increasing need to ensure the tax is administered fairly and efficiently, the state should assume a leadership role in defining and managing the rules of property tax administration.
* Providing Resource Support: In order for the state to take a leadership position in the administration of the property tax, develop accurate and data and analysis and ensure local communities have access to appropriate support, the state should evaluate the resources and authority of the Office of Municipal Affairs. This should include a review of its data collection and assessing standards as well as the development and publication of objective analysis of assessment results.
* Modernizing Data Collection and Reporting: Closely related to the above recommendations is to taking advantage of the available technology to provide uniform methods of collecting and reporting property-related data.
