Council and Mayor Battle Business Tax Rate: Budget Moves Forward

Wednesday, May 29, 2013


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In a heated Providence City Council Ways and Means Committee hearing Tuesday night, the committee voted not to approve the Mayor’s budget for fiscal year 2014, but did move it to the full council for consideration.

"This is rare indeed," said Councilman Luis Aponte, regarding the committee's decision to move the budget forward without committee approval. "I don't see a lot of debate being allowed to occur."

Commercial Versus Residential at Center of Debate

The Committee debated for two hours on the Mayor’s proposed tax increase that primarily hit residential owners and multi-family owners. The Mayor’s budget holds the line on Providence’s heavily taxed commercial properties – ranked to be among the highest in the US.

At the center of the battle are the ordinances for the assessment and collection of city taxes for the coming year. Aponte raised issues during the discussion regarding the Administration's proposal to freeze the commercial tax rate for seven years.

"We're freezing at a point where [property] values are down. It's not as though they're going down any further," said Aponte during the meeting. "Freezing may have come at a time when we did not know what values of commercial property were, as we didn't have those numbers until early May."

Aponte said, "What this looks like is a shift from one class of property [tax] to another."

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Freeze Rate or Freeze Levy

Michael D'Amico, Chief of Staff for the City of Providence told the members of the Ways and Means Committee that, "freezing the levy for one year would just be an increase on the commercial tax rate, and for a number of years, would transfer the burden if the business community shrinks."

"Assessment is based on income," said D'Amico. "Freezing the levy would exacerbate a bad economy, and be a backdoor tax every time the commercial assessment goes down."

Aponte, speaking with GoLocal after the meeting, explained that he along with other committee members were committed to helping commercial property owners but not at the expense of the homeowners.

"We would see a difference of about $3.7 million if we froze the commercial tax levy versus the tax rate -- which would ease the burden on the residential tax hike," said Aponte

"However, what we're hearing is that the Administration wants only to address the tax rate. They have decided that the tax rate is the top indicator of our competitiveness, and have fixated on that,” said Aponte.

Dissenting Views from Council, City Residents

Providence resident Jim Hackett, who listed his address at 70 Elmgrove Avenue, spoke out in opposition to the budget proposal as put forth by the Mayor.

"[The City] is incorrect," said Hackett. "When you look at property, you look at taxes in dollars per square foot. Providence has a rate of $2.50 to $4.50 per square foot...Boston is $8 to $12 per square foot. You can't confuse tax rates and taxes."

Hackett continued, "When you look at property, Providence commercial real estate tax rates are in fact extremely reasonable. Property values are driven by rents -- and Providence has an oversupply. Rents are low. This is a whole way we shouldn't be going," referring to the Administration's proposal.

D'Amico continued to defend the Mayor's plan to freeze the commercial tax rate. "I think that when every single business that wants to come or expand in city and comes to council or Mayor and says I can't do it at that tax rate -- I'll be blunt, some may have been disingenuous -- but for some, it was real. Not one said that rate's fine and we can thrive. When all say it's an impediment, we all have to take it seriously."

"Other states are weighing surpluses," continued D'Amico. "We've truly fallen behind. Let's argue the Administration's idea is terrible. But what we've tried hasn't worked. We need to do 20 things. This is one. We need to tell the business community we're addressing how to be competitive. Non-profits do just fine, they don't pay taxes."


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