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Thursday, July 15, 2010

Tax Relief for Providence Residents: Finance Committee approves levy that will bring tax relief to most

Finance Chairman John J. Igliozzi (Ward 7) announced that the Committee on Finance last night approved a new tax rate for the city. The levy ordinance, which sets the City’s tax rate for real estate, tangible personal property, and motor vehicles, will be voted on by the full Council at a special meeting on July 26th. 

Igliozzi stated that the ordinance implements four important measures that will benefit the majority of Providence residents, as follows:
1)       Tax relief for approximately 70 percent of residential property owners;
2)       Continuation of the $6,000 exemption on motor vehicle excise taxes;
3)       Affordable housing development tax relief; and
4)       Elimination of the homestead exemption for “absentee landlords.”
The councilman noted that these measures “simultaneously protect working families, stabilize that City’s neighborhoods, and balance the budget.”

Igliozzi emphasized that the biggest priority for the Committee when setting the levy was mitigating the impact on city homeowners. “As such, the Committee voted on a rate that, when applied, will result in tax relief for the vast majority of residential property owners.” The councilman explained that, “Although the actual levy represents an increase over last year, due to the fact that residential property values citywide on average have decreased by approximately 30 percent, most homeowners will see a decrease in their tax bill.” Additionally, the 50 percent homestead exemption for owner-occupied residential property will remain intact.

The assertion is based on an analysis presented to the Committee by the Office of the Internal Auditor, which estimates that the average rate for owner-occupants of single family homes will be 15% less than 2009, translating into close to $400 in savings annually. The average rate for multi-family homes will be nearly 6% less, or about $300 less annually (the average savings will be greater for owner-occupants of multi-family properties). Finally, the average commercial tax rate will be slightly higher, increasing by approximately 1.49%, or $226 annually. Igliozzi observed that, “The silver lining for homeowners who have lost significant value in their property is that their taxes will be lower.”
The levy ordinance also includes a motor vehicle tax exemption of $6,000, which maintains the previous level established by the State. As a result, residents with vehicles valued at under $6,000 will be exempt from the motor vehicle excise tax. “By holding the line on car taxes,” Igliozzi said, “residents who own modest vehicles will not be asked to bear a new burden of generating revenue for the City.”
Another new measure established by the ordinance is tax relief for affordable housing projects that are under construction. The tax exemption would apply only to property being developed as owner-occupied residential property, and defined as “affordable” under existing regulations. “This exemption will provide needed relief to community development corporations that are working to remediate foreclosed properties, and remove blight in city neighborhoods,” said Igliozzi.
Finally, the Committee voted to include a significant change to the tax payment structure: the removal of the exemption for non-owner-occupied residential property. “Absentee landlords will no longer receive a tax subsidy from the City of Providence,” stated Igliozzi.

The ordinance as passed by the Committee established the 2011 levy at $284,385,060, an $8.3 million or 3 percent increase over the 2010 levy of 276,102,000. The Chairman noted that in the coming weeks, the Committee will be making difficult decisions with regard to departmental reductions, and employee wages and benefits. “We’re doing our part to reduce spending, and address the long-term stability of the City. The steps taken by the Committee are common-sense, practical steps the City must take to improve the short- and long-term outlook for its economic viability.” 

Property owners should receive their new tax bills by mid-August.