City Council Balks at Mayor’s Tax Increase
Monday, April 29, 2013
City Councilwoman, Sabina Matos’ (Ward -15, West End, Olneyville, Silver Lake, Valley) initial reaction to the Mayor’s budget was one of concern. Matos having served her ward since 2011, expressed concern that the community would not be able to absorb the cost of the increase.
“I am still analyzing the information but my first reaction is concern. Mortgages will increase. Rents will increase and we have the highest car tax in RI,” she said.
Using dire terms such as "Category five fiscal hurricane" and "financial catastrophe," the Mayor set forth his plans for the 2014 fiscal year, including a tax freeze on commercial and tangible property, with Providence holding two of the highest tax rates in the state and ranking among the highest in the country.
Councilman John Igliozzi has been serving Ward 7 (Silver Lake, Hartford) since 1997. Igliozzi voiced concern with Mayor's budget overall, which he said didn't support the needs of the middle class or those struggling to survive in the current economic climate.
“The tax increase is disproportionate. If your value didn’t go down you will have a greater increase. If your home is valued at $100,000 and the valuation went down 13%, you are going to get about an eight percent (8%) tax increase. If your valuation went down seven percent (7%), you get a sixteen (16.7%) percent increase," he siad.
Igliozzi had already heard from constituents on Friday morning.
“I have one constituent who is an elderly citizen - a veteran - who would see a 25% increase in his property tax. He lives in a modest home. He cannot afford that kind of tax increase. These people are blue collar, middle class workers. A lot of my constituents are barely holding on. They’ve lost investments, their mortgages are upside down, and some are looking for viable work," Igliozzi said.
The tax increase will depress the residential market.
“The tax increase will further depress the residential market and residents’ chances of refinancing. Many people are upside down on their mortgages. They can’t leave their homes, because they can’t afford to. They can’t refinance and they can’t afford to stay. These people are still struggling. The revaluation shows that housing has not stabilized,” said Igliozzi.
“He wants to give out increases. He wants to freeze other tax rates, shifting the burden to the residential market that is in the worse shape in ten years,” he said. “The increase will serve to destabilize that market locally. He is asking for more money to do less.”
Turning to the spending budget, the councilman voiced disappointment with the Mayor's proposed pay raises and freeze on commercial and tangibles.
Deficit spending is counterproductive.
“The city is operating at a deficit this year and will be rolling that deficit into next year’s budget. It is concerning that he would make a move to increase taxes to do less. It doesn’t make sense. In these difficult financial times, it is not acceptable to burden people with six to twenty percent tax increases. We need articulated spending cuts and a better analysis on the application of any revenue and how it is appropriated, said Igliozzi.”
“The numbers show that the housing market and the property market haven’t stabilized. The residential market is not stabilized. It is worse,” he said. “My constituents have lost equity, have less opportunity to refinance, and have less equity in their homes due to the revaluations. This kind of move and more raises further hurt the residents living in the city of providence.”
Concerning the freeze on commercial and tangible properties, Igliozzi expressed the need to find an alternative method to curing the high tax rates at what he and other council members considered a shifting of burden to residential owners who resided in their property.
“On the freeze side, these rates shift the entire tax burden onto the residential market. The average residential rate has a decrease of thirteen percent (13%). The property values went down, but it wasn’t the same from one ward to another,” he said. “There needs to be a fair and equitable process and a little more balance. We need to make these decisions in an even and fair manner, not shift the burden to the residential property owners who are already suffering. Frugality needs to become the watchword for city government.”
A difficult pill to swallow.
Veteran councilman Luis Aponte, who has been serving Ward 10 (Washington Park, South Providence) since 1998, was in agreement with Igliozzi regarding the shift in tax burden to residential owners. Aponte did not support the Mayor's budget proposal.
“I’m not sure that shifting the tax burden to residential owners is the answer,” he said. “We haven’t had the opportunity to review the budget in detail as yet. I know we have to maintain a core balance.”
”Due to the fragile position of the housing market, I’m not sure that I can support it,” said Aponte. “As it stands now, it’s a difficult pill to swallow and I cannot support it.”
Aponte pointed to corporate and institutional tax breaks as contributors to weakened commercial revenue and increased taxation.
“We need to take a look at the commercial rate,” he said. ”There is an erosion of the commercial tax base by the hospitals and the universities. We need to look at expansion possibilities and ways to grow that base. When you look at the 1-95 corridor project and its potential for development, we can look at a way to thoughtfully grow that base. We need to be thoughtful and deliberate in the process of growing the commercial tax base without further burdening the residential side.”
Councilman Samuel D. Zurier, Ward 2, who had not had a chance to review the entire budget also expressed concern regarding a disproportionate tax base.
“We have not had a chance to review and assess the impact on our constituents,” he said. “The increase in rate coupled with the revaluation, for those who had a substantial decrease in their property value may see extensive savings across the boards. Those who had moderate or very little change will have more of a tax increase. It is difficult to say without having examined all aspects. We need to take the valuation data, add the increase in taxes to the process - piece it together.
“Any disproportionate increase in taxes on the residences of non-owner occupied properties would increase the burden proportionally, with landlords being forced to pass the burden onto renters and renters in turn seeing higher rents,” he said.
View and participate in GoLocalProv's poll concerning the Mayor's proposed tax increase here.
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