Ward 2 Councilman Jeremy Rix says he’s not looking to be Robin Hood – taking from the rich and giving to the poor – but rather to find the “sweet spot” in balancing out the impact of the recent property revaluation that has increased taxes by as much as 30 percent for some homeowners.
Following the initial meeting of the commission he formed, Rix said last Wednesday night taxes on residential properties have “become unbalanced and we can find a way to get some balance back.”
Prompting his effort is the outcome of the revaluation completed as of Dec. 31, 2018, and implemented last April. It reflected dramatic increases in the values of homes that had been valued at $150,000 to $220,000, pushing them to the high $200,000s and into the $300,000 range. The increases were reflective of the strong single-family housing market of the past three years and the demand for houses selling for less than $300,000. The market for houses selling for $400,000 and up, however, lagged by comparison, and in some cases higher valued properties actually depreciated.
Upward adjustment in valuations, especially in the more modestly priced sector of the Warwick residential market, hit the largest portion of Warwick homes. While many homeowners are delighted to learn the value of their property has increased, they were incredulous when got their tax bills.
Rix, his colleagues on the City Council and the mayor’s office were deluged with complaints and the question – if city spending and taxes had increased less than 5 percent, why were they seeing increases of 15 to more than 30 percent?
The answer that the market is driving up values is of little solace to longtime residents who have no plan of selling their homes and in many cases are on fixed incomes. These are the people Rix wants to help.
And how can that happen without taking the money from some place?
Rix points out that because of the revaluation, the tax rate dropped 10 percent, meaning those residents owning higher valued homes, which didn’t appreciate proportionally, are paying the same or less in taxes.
“We need to narrow down the options,” Rix said following the meeting.
The option Rix is leaning toward is an exemption that would be applied to all homeowners, which would have the effect of reducing the taxes of a lower valued home by a bigger percentage than that of a higher valued home.
Rix didn’t share an exemption amount.
“What’s that sweet spot?” Rix asks. What he said he doesn’t want is to be “trading one dollar shock for another dollar shock [to property owners with higher valued homes].”
As Rix talked he was joined by commission members Dean Johnson, City Tax Assessor Neal Dupuis and Eric DeGoosh-DiMarzio.
A landlord, Johnson thinks a shift of the tax burden to higher valued homes through a universal exemption would have disastrous long-term effects on the city. He reasoned it would inhibit home improvements, resulting in a reduction of construction jobs and building permit fees and, eventually, the depreciation of homes across the board. He likened the impact to what is happening in Connecticut, where the shift in the tax burden has forced people to leave. In turn, as the state sees a decline in population, those left are paying more in taxes.
Johnson is in agreement with the argument made by Rob Cote during the public comment portion of the commission meeting. Cote basically said the issue of high taxes couldn’t be addressed until the city looks at trimming costs. He cited as examples the number of paid holidays firefighters get, the uniform allowance and paid sick days. “Tax increases are directly related to the operational costs of the city,” he said.
Further, saying that costs keep rising, Cote called on state legislators to step up aid to cities and towns while being sensitive to legislation that imposes costs. He said the efforts of the commission are “meaningless until you address cutting spending.” Cote has performed an extensive study of pension and post-employment benefits given to municipal employees – legacy costs – projecting that even with maximum tax increases that would bring in an added $8 million, the city would need an additional $10 million a year to sustain operations.
Johnson said many look at the city budget as a pie with expenses taking a larger piece each year. He said the city tax base should be thought of in terms of a balloon that should grow with the addition of taxable properties, thereby spreading the cost of government.
Sen. Mark McKenney, a member of the commission, reasoned the charge of the commission is to examine the impact of the revaluation and “we’re not dealing with city spending … we don’t have control over that.”
Rix concurred that the commission’s scope is limited.
Conimicut resident Lonnie Barham agreed with comments that the city should be seeking additional funding from the Rhode Island Airport Corporation, as the expansion of Green Airport has taken hundreds of properties off the tax rolls. He said a homestead exemption that would offer relief to homeowners would not work as it would simply result in an increase in the tax rate to raise adequate funds to operate the city. And he urged that the commission not seek to lessen the burden of those with lower valued properties by “taking away from the middle class … we’re not rich.”
“At some point the Robin Hood thing becomes socialism,” he said.
Retired Warwick Police officer William Russo called on the city to more aggressively seek grants to offset municipal costs and offered to assist in seeking those sources of revenue.
Melissa Shein, who has done extensive comparisons on the impact of the revaluation and how middle-class homeowners have been hit with double-digit percentage increases in their taxes while owners of higher valued properties are paying the same or less in taxes, questioned the validity of the program. In particular, she cited the sale of one property assessed for about $1 million that sold for more than $2 million.
Tax Assessor Dupuis defended the revaluation, pointing out that overall he views the valuations as being “statistically right on the money.” He emphasized that the job of the assessor is to determine value – “it’s not taxes.”
He pointed out the city has a tiered tax system, in that the commercial rate is 20 percent more than the residential rate, and that there is no statute that would allow the city to differently value one residential property from another.
The city currently provides 13 categories of exemptions totaling $197.3 million in property value reductions. Of that total, $150.5 million makes up elderly exemptions; $21.6 million for veterans and widows of veterans; $9.2 million in $1,000 circuit breaker; and $3.2 million for disabled veterans. There is an additional $14.5 million in motor vehicle exemptions, with the greatest portion of that – $12 million – for the elderly.
Whatever the commission recommends would require City Council approval and most likely enacting legislation from the General Assembly. Rix said that any change would not be applied retroactively. The next commission meeting will be held Dec. 9 at 5:30 p.m. in City Hall.