Rhode Island Gets Honorable Taxation
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How to assure that tax limits don't become targets.

Town councils and managers are faced with enormous challenges, especially today with a troubled economy both nationally and locally.  The revenue problems are unprecedented yet the needs remain - we need good schools, good roads, fire and police protection.

On the one hand every effort is made to control spending. Not too long ago the Assembly passed S 3050 which limits the growth of tax levies to an annual 4% by 2013. If we keep well below the limit it's a good thing for the citizens.  It means however that the following year any increase will be based on a smaller number than it could have been had the town increased to the allowable limit.

In other words a town is "punished" for being frugal . This is not in the best interest of the tax payers.

Towns should be able to "bank" unused increases for a certain period to be used if and when needed. Massachusetts has a similar provision in its tax law.

For example, if a town is entitled to a 4% increase or $1 million dollars but holds the levy increase to 2%, or $500,000, the town could "bank" the difference, $500,000 which would then be available in the future.

A town would thus have the incentive to keep budgets as lean as possible but, if the 4% limit based on that prior year's lower budget proved inadequate, they could use their 'banked' revenue and towns wouldn't have to spend money to sue in a Caruolo action.

Details will need to be worked out by legislators, such as how many years of excesses will be available. Let's not punish towns tomorrow for holding the line on spending today.  

 

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Rhode Island Gets Honorable Taxation
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Harvey Waxman
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North Kingstown, RI 02852