WOONSOCKET – The Budget Commission has scuttled its original plan for raising $2.5 million in supplemental taxes largely on the backs of single-family homeowners in favor of an across-the-board hike on all classes of real estate, coupled with higher motor vehicle taxes.
All residential property, including multi-families, would pay a supplemental bill equivalent to 4.4 percent more than what they were billed in July if the plan passes muster with state lawmakers. The same hike would extend to apartment complexes of 11 or more units, which are currently classified as commercial real estate.
The new plan also calls for a supplemental tax on motor vehicles equivalent to 12.5 percent of what they were billed in July, or twice the amount envisioned in the commission’s earlier proposal.
The supplemental would boil down to a tax bill of $1.42 per thousand for residential property; $1.68 per thousand for apartment buildings housing more than 11 units; and $5.82 per thousand for motor vehicles. If approved, the measure would raise about $1.5 million from real estate and $1 million from motor vehicles.
Members of the commission voted 5-0 Tuesday afternoon in favor of a resolution asking state lawmakers to pass a bill allowing the plan to be implemented before the end of the fiscal year. The vote came just hours after the panel met privately in City Hall with the lawmakers, some of whom had criticized the earlier plan as unfairly burdensome to the owners of single-family homes and condos.
The now-defunct plan would have reaped the lion’s share of the needed $2.5 million by scaling back the generous homestead exemption of 39 percent for single-family homes by roughly a third. About a fifth of the money would have come from increasing the motor vehicle excise tax. Commercial property, which is currently taxed at the highest rate in the state – nearly $40 per thousand – would have been completely spared.
Commissioner Peder Schaefer had been a leading proponent of the latter plan, which he said was needed to eradicate longstanding inequities in the city’s tax structure. Compared to “peer communities,” including Pawtucket, he argued, single-family homeowners in Woonsocket pay comparatively less, and commercial property owners comparatively more.
Schaefer said that he still thinks there are problems with the city’s tax structure, but he voted in favor of the new plan in a spirit of compromise.
“Obviously I wasn’t happy about it, but it wasn’t bad enough for me to vote against,” he said.
For single-family homeowners, the average supplemental bill would have been about $437. Critics argued that was too much, particularly while other classes of real estate would have been entirely spared.
“That was a legitimate argument,” Schaefer said. “I think we went down a compromise path that I’m comfortable with.”
All members of the city’s legislative delegation were on hand for the executive session prior to the open portion of the meeting in Harris Hall. That includes State Rep. Lisa Baldelli Hunt (D-Dist. 49), State Rep. Stephen Casey (D-Dist. 50), State Rep. Robert Phillips (D-Dist. 51), State Sen. Marc Cote (D-Dist. 24) and State Sen. Roger Picard (D-Dist. 20).
All departed before the open portion of the meeting began and none were immediately available for comment afterward. But it was the second closed-door meeting of state lawmakers with commissioners on the issued of supplemental taxes since last week, when the delegation met with the panel at the State House.
Commissioner John F. Ward, president of the City Council, credited Cote with brainstorming the plan for ditching the homestead rollback in favor of a flat-tax approach to the supplemental.
“It’s more affordable as a one-time billing,” said Ward. “If you’re only going to have a month to pay, we should make it as affordable as possible for as many people as possible.”
Chairman William Sequino said state lawmakers appear to have agreed to introduce a supplemental tax bill, but he stopped short of saying what will happen next. There is no guarantee they will approve it, or they could tweak the measure to spread the burden around differently.
“It’s in their house now,” he said. “What they do with it is up to them.”
The supplemental tax is a key component of the commission’s five-year plan to wipe out a projected budget deficit on track to reach $105 million by 2017. Other critical pieces call for permanent suspension of cost of living adjustments for members of the local pension system, shifting eligible retirees from private health care plans to Medicare by March 31, contractual concessions from existing employees and rollbacks in health benefits.
It’s likely the city will fall into receivership if any one of the pieces fails to come to fruition, and quickly. Finance Director Tom Bruce III told commissioners Tuesday the city is just weeks away from lapsing into an illiquid cash position. He said debts will exceed the cash on hand to pay them by more than $10 million by July 6 without an infusion of revenue.