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Tuesday, July 20, 2010

Hassett to Propose Alternative Tax Rate for Tax Exempt Institutions

New Rate would require General Assembly Approval
City Council Majority Leader Terrence M. Hassett will push for an alternative property tax rate for tax exempt institutions in an effort to stem Providence’s waning tax capacity, it was disclosed today.

Following a comprehensive property re-evaluation, most of the City’s residential property owners will see a slight to considerable decrease in taxes. On the other hand, property owners on the East Side will see substantial increases in taxes in the coming fiscal year that began July 1st.

According to Hassett, the Cicilline administration proposed eliminating the homestead exemption for owner, non-occupied dwellings, currently at the rate of a 33% tax exemption. The elimination of this exemption will cause major increases for investment property on the East Side because property values there only decreased an average of 9% while the tax rate rose 3%. The elimination of the exemption will not affect most other parts of the City because values have dropped considerably. The proposed tax rate is $30.38 per one-thousand of valuation, according to Hassett.

Owner occupied property will continue to carry a 50% homestead exemption, but overall, property taxes will still increase in most areas of the East Side.

In an effort to broaden the City’s tax base, Hassett said he is preparing a proposal that will seek authority from the General Assembly to establish an alternative tax rate for private tax exempt institutions that own vast property and land in the city that would otherwise be subject to property taxes. The special rate and qualifying institutions is being examined and will be designed to fill the gap that has been caused by the necessary expansion of some large institutions in the city.

“Expansion for some of our larger tax exempt institutions is necessary,” Hassett admitted. “But the reality is that where there is expansion, there is exemption. This is the time to undertake such discussion and then act to resolve a never ending problem.”

Hassett said that the city would be less reliant on state revenue if it could fairly raise its own.