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3.0% Sales Tax: Superior Reform than Car Tax Repeal or Free College Tuition?

Car Tax, Free Tuition Programs Could Mean Loss of Jobs and Lower Municipal Revenues

3.0% Sales Tax Adds Thousands of Jobs, Increases Local Revenues

OVERVIEW:

As taxpayers continue to be asked to fund generous corporate subsidy programs, lawmakers are now dueling over two new spending ideas – reimbursing localities to phase-out the car tax and public funding for free college tuition – each of which would likely further raise taxes and fees on Rhode Islanders.

But would these programs make Rhode Island a better state? Or would the more innovative and bold policy concept of cutting the state sales tax help families become more self-sufficient?

Neither the Speaker nor the Governor have offered research or economic projections on the impact of their respective ideas. The Center, conversely, offers well-researched projections from a credible economic modeling tool.

As will be clearly demonstrated, the Center’s previously proposed 3.0% sales tax reform would help working Rhode Islanders and businesses much more than would car tax repeal or free college tuition. A cut in the state sales tax rate to 3.0% from 7% would :

  • Keep significantly more money in the pockets of Rhode Island families and businesses
  • Produce thousands of new jobs, as opposed to potential job losses with car tax or tuition spending
  • Require lower budget cuts and/or corresponding tax increases than would car tax reform
  • Create a major revenue windfall for municipalities that could go a long way toward funding local “self” phase-out of the car tax, where car tax repeal could result in lower municipal revenues
  • Would allow every Rhode Island family to save for any college education

Funding? Elimination of corporate welfare subsidies and free college tuition funds could go a long way towards paying for the $82.3 million required to dynamically fund a 3.0% sales tax … vs the $229.7 required to dynamically fund car tax repeal.

Regressive? While many view the current car tax play as regressive, a revenue-neutral car tax repeal plan would be further so in that low-income individuals who do not own a car, or who own a car valued under existing exemption thresholds, would be indirectly funding property tax relief for wealthier people. A 3.0% sales tax would disproportionately help low-income families. Similarly the college tuition and corporate welfare plans require lower income families and businesses to pay for benefits that will go, in part, to the more wealthy.

Fairness? The car tax plan would inequitably distribute money to localities, and would reward those cities and towns that imposed excessively high car tax rates.

Business Climate Benefit? The sales tax is a tax on business. Collectively businesses pay almost half-of all sales taxes. A 3.0% sales tax would reduce such costs across the board and improve our state’s last place business climate ranking. Car tax repeal would only impact those businesses that have company owned vehicles.

Municipal Dependency? The car tax repeal plan would make municipalities even more dependent on state aid via its associated reimbursement mechanism. Depending how the policy is implemented, municipalities may simply increase regular property taxes to compensate for the car tax no longer collected, avoiding the state tax cap. A 3.0% sales tax would give new revenues to cities and towns to able to phase-out the car tax on their own, especially when in combination with other “tools”  that could free them from state mandates and regulations.

Ease of Implementation? The car tax plan would require negotiation with low car tax municipalities, given the varying rates and exemption limits set by each municipality. Sales tax reform could be easily and uniformly implemented across the board.

BACKGROUND: Why bold reform is required

Rhode Island is losing the competition to retain and attract families who want to make our state their home-of-choice, where they can work hard, earn a respectable living, and support their families. But many Rhode Islanders feel left out. They are fed up with the status quo of ever-increased spending on special interest causes … and the perpetually high taxes and red-tape that are driving others out of town.

Our state’s stagnant population growth will likely result in the loss of one of our two precious U.S. Congressional seats after the 2020 census. This net-migration problem can be attributed to concerns about present and future financial security. Factors that contribute to this problem are obvious: In 2016 Rhode Island ranked as the worst state business climate in America and ranked just 48th on the national Family Prosperity Index (FPI) and on the Jobs & Opportunity Index (JOI)

People want restored hope that government is working for them and to feel that they have not been forgotten. To accomplish this, a bold reform idea is clearly required.

The RI Center for Freedom & Prosperity agrees with the Speaker of the House and with the Governor that Rhode Island families should keep more of their hard-earned income via tax reductions and that a college education should be more affordable. Car and property taxes, as well as college tuitions, are indeed high; they are an irritating or unbearable cost for most families. However, directly confronting those issues, may not be the most prosperous path forward.

The Center also believes that the state needs to  relieve burdens on employers, increase  our state’s consumer and tax base, and create more opportunities for meaningful work for those who want to improve their quality of life.

As such, not all tax and spending programs are created equally, as adjustments to certain taxes and fees will have greater impact on job creation and can be more of an economic stimulus than others. Given our state’s dismal national status, it is vital that Rhode Island takes bold and well-researched reforms to maximize the impact of every budget dollar.

Years ago the Center researched and proposed major cuts to – even repeal of – the state’s nationally high,  job-killing sales tax. A complex economic modeling tool that has been used by dozens of states and major municipalities, STAMP (State Tax Analysis Modeling Program), showed that for the Ocean State, sales tax reform, among all taxes and fees considered, would produce the greatest and most beneficial dynamic* economic impact.

However, neither the House leadership at that time, nor the special commission that was created to study sales tax cuts, were interested in re-configuring the state’s budget to accommodate for the major economic growth projected by STAMP.

But now today, with House leadership and the Governor apparently appreciating that tax and fee cuts would keep more money in the pockets of Ocean Staters, the Center suggests, once again, that reform to the sales tax would produce more benefit to families and businesses than would the Speaker’s or the Governor’s plan.

Not only would sales tax reform keep more money in the pockets of every Rhode Island family, it would reduce costs for every Rhode Island business. It would also spur increased consumerism by both in-state and out-of-state shoppers, and; most importantly … it would create thousands of good, new job opportunities.

The Center further researched which level of cut to the sales tax would produce the most benefit. It was clearly demonstrated that a cut in the sales tax to 3.0% would produce the best value for taxpayers and for the budget by creating a high number of jobs at the lowest budget-cost per job created.

*Based on 2014 figures from STAMP (State Tax Analysis & Modeling Program) developed by the Beacon Hill Institute. Dynamic scoring impact takes into account the “ripple” impact of tax reforms by projecting increases or decreases to other tax revenues and fees.

BUDGET RECONCILIATION METHODS

There are two primary methods to accommodate the budget to account for the impact of any tax cut or new spending program:

  1. Revenue Neutral” approach by raising other taxes to make up for the anticipated lost revenues or higher spending
  2. Spending Cuts” to other budget items

Or, some combination of the two.

To date, neither the Speaker nor the Governor have identified how they will reconcile, or pay, for their respectively proposed programs.

Revenue Neutrality?

The Center maintains that Rhode Island spends too much taxpayer money for the state to quickly break-out of its economic stagnation. No matter how lawmakers slice and dice the many taxes and fees that are imposed on our citizenry, our high level of spending – and corresponding need for high taxation – creates a permanent negative drag on our state economy.

RI State Budget Versus Inflation and Population Growth and Personal Income Growth (2001 Baseline)

In the past two decades, Rhode Island’s spending trajectory has risen far faster than inflation, population growth, or personal income would otherwise dictate.

By comparison, New Hampshire, which consistently ranks near the top of most national rankings, spends almost 50% less per person than does Rhode Island.

In order for any public policy reform to achieve maximum economic impact, it is necessary that budget cuts – without offsetting tax increases – are used to pay for the reform. However, the reality and history of public policy in the Ocean State tells us that lawmakers will likely consider only “revenue-neutral” scenarios, where revenue losses due to cuts in one tax are offset by increased fees or taxes elsewhere. While this practice would minimize or – as we will show – potentially eliminate any economic benefits in some cases, a revenue-neutral policy is seen as the likely political solution … as economically-unsound as it may be.

To be clear, the Center contends, for a state struggling as much as is Rhode Island, that revenue neutrality should not be the goal of bold tax reform … and that both tax and budget cuts are required if we want to generate maximum stimulus to our state’s stagnant economy.

Found Revenues? It has also been suggested by both the Speaker and the Governor, that “newly found” revenues from debt restructuring, casinos, or other sources, might be used to fund their new proposed spending. It is the Center’s contention that such new revenues should be applied to help pay for sales tax cuts.

In order to set the outside parameters for economic impact, the Center created two tables? Each compares the long-term dynamic* scoring of the two tax reform concepts for Rhode Island: 1) phasing-out the car tax; and 2) phasing-down the sales tax to 3.0%:

  • TABLE-1 assumes “revenue neutrality,” with offsetting tax increases, to pay for each policy option
  • TABLE-2 assumes “spending cuts” to pay for each policy option

Any actual implementation of either of these programs would likely fall within these parameters.

Because the governor’s free college tuition plan and the state’s current corporate welfare strategy technically do not qualify as tax reforms, we are not able to effectively run them through the STAMP model. Their economic impact, based on the findings and theory of the model, is assumed and referred to separately.

FINDINGS

Taxpayer Savings and Increased Purchasing Power: The Speaker’s car tax plan would directly save taxpayers $215 million in property taxes, while a 3.0% sales tax would put $585 million back into the pockets of Rhode Island families and businesses, and eventually back into the economy. However, the net dynamic impact would be far less – or even entirely eliminated – if other taxes and fees are hiked under a revenue-neutral approach.

A 3.0% Sales Tax is is the most beneficial reform in terms of jobs, economic stimulus, business climate, and budget value … regardless of whether a revenue-neutral approach is adopted or not.

Car Tax Phase-Out Could Lead to LOSS of Jobs.  Car tax reform, on its own, is a minor economic stimulus at best, as it does little to improve the state’s dismal business climate.

A revenue-neutral car tax phase-out would necessarily increase statewide taxes and fees (relatively) – even while most car owners would pay lower local property taxes – and would lead to a net loss of jobs. This is because the negative economic impact of increased state-level taxes is significantly greater than the positive impact of lowered local taxes.

If a “spending cut” approach is taken, car tax repeal could spur the creation of a limited number of new statewide jobs, but at a significantly lower level, and with far more required budget cuts, than a 3.0% sales tax with spending cuts.

Free-College Tuition Could Also Lead to a LOSS of Jobs. Similarly, using the same STAMP theory, providing free-tuition  would also increase statewide taxes and fees (relatively) – even while some in-state families would have more disposable income due to lowered fees – and would lead to a net loss of jobs. Again, this is because the negative economic impact of broadly increased state-level taxes is greater than the positive impact of more disposable income for a more narrow base.

Under a ‘spending cut’ approach, free college tuition, as car tax repeal, might produce a limited number of new statewide jobs, but at a significantly higher cost per job, than a 3.0% sales tax with spending cuts.

Rhode Island’s Current Corporate Tax-Credit Economic Development Strategy is highly inefficient as it creates relatively few jobs at an extremely high cost per job to taxpayers. Using the same STAMP theory, the negative impact of requiring increased statewide taxes to pay for the credits is presumed to be greater than the positive impact of a few hundred more people working.

Further, this targeted ‘advanced industry’ approach does little if anything to improve the overall business climate, which is necessary if organic entrepreneurial growth is to occur on its own.

EXPLANATION OF S.T.A.M.P. PROJECTIONS (see Tables 1 & 2)

ECONOMIC EFFECTS

Private Employment (or Jobs). Both the Speaker and Governor claim that “jobs” is their top economic priority. Sales tax reform produces significantly more job-growth, regardless of revenue-neutrality, while car tax reform and, as explained above, free-college tuition could lead to a loss of jobs under a revenue-neutral approach.

Investment. The increase/decrease in capital invested in the state due to tax reforms. As with employment, sales tax reform always produces a positive investment, while revenue-neutral car tax and free-tuition programs could produce a negative impact and a reduced investment.

STATE REVENUES:

Sales Tax Revenue: Under a ‘revenue neutral car tax repeal scenario, to partially fund the state’s $215 million in “Transfer” (reimbursements) to municipalities, and in order set the worst-case economic impact parameter, we assume an increase in “Sales tax” revenues. However, because a sales tax hike will negatively impact commerce and the economy, it will dynamically result in less sales tax revenue than the straight-line (or static) calculation, therefore the “Policy target” for sales tax increases must be higher than the needed revenues.

Conversely, under either budget reconciliation method for a 3.0% sales tax phase-down plan, the straight-line (static) calculated sales tax “Policy target” revenue losses are greater than the actual (dynamic) “Sales tax” revenue loss, because the sales tax cuts will spur more sales tax transactions.

Under a ‘spending cut’ approach, car tax reform would produce a very limited increase in “Sales tax” revenues, because of greater disposable income across the state.

The difference between the static and dynamic sales tax revenue projections is portrayed as the “Dynamic difference”

Personal Income Tax Revenue: Similarly, increased “Personal income tax” revenues are also assumed to fund the rest of  revenue-neutral car tax plan. However, because negative dynamic impact will lessen such revenues, a higher income tax “Policy target” is required.

Under the 3.0% sales tax plan, because of the thousands of new jobs created, “Personal income tax” revenues are projected to dynamically rise by between $304 million to $468 million, regardless of which budget reconciliation process is utilized.

Corporate/Business Tax . As with sales and income taxes, the negative statewide impact of a  revenue-neutral car tax plan that includes other tax hikes, may produce lower “Corporate/business taxes”. Under all scenarios, a 3.0% sales tax will always produce positive and significantly higher “Corporate/business tax” revenues.

Cigarette Tax, Other Taxes & Other Sources.  As with the personal and income taxes, the negative statewide impact of a  revenue-neutral car tax plan, may reduce revenues from “Cigarette taxes”, “Other taxes” and “Other sources”. Under all scenarios, a 3.0% sales tax will produce positive and significantly more revenues in these areas.

MUNICIPAL REVENUES: Additional municipal benefits from sales tax cuts will result from the increased retail and overall economic activity .

Business Property Tax. The stimulus of sales tax cuts would see many existing businesses expand and many other new business established. Cities and towns will likely see an expansion of its local commercial property tax base and will result in increased “Business property tax” revenues. While municipalities must comply with a 4% annual tax-levy cap, this larger tax-base will allow localities to reduce property taxes in other areas, potentially including the car tax.

Conversely, under a revenue-neutral car tax repeal plan, municipalities could actually see reduced municipal “Business property tax” revenues, due to the more potent impact of statewide sales and income tax hikes as compared with local property tax cuts.

In fact, the potential new municipal revenues from a 3.0% sales tax – on their own – could fund over half of the cost of statewide car tax repeal.

Municipal Sales Tax, Other taxes and Other sources of revenues:  Similarly, under a car tax repeal plan, municipal revenues in other areas could increase or decrease in limited amounts. Conversely, under any 3.0% sales tax scenario, these revenue areas would increase, potentially in a significant way.

Statement on RI Dep’t of Education Transgender Guidelines

Click link to read RIDE Transgender students guidance 6-7-16

June 6, 2016

Official Statement from the Center:

“While professing to protect students from bullying and to respect all students, the RI Department of Education (RIDE), via its June 2016 “guidance” document on transgender students, itself appears to have been bullied by the federal government; seeks to bully local school districts into conformity; and openly flaunts its disrespect of of other students.

In perpetuating a disturbing trend of ‘government by political correctness’, RIDE has succumbed to federal pressure and has adopted a one-size-fits-all position that may not be compatible with the morals held by many public school families. There may never be a more obvious reason to empower parents with additional choices to escape an increasingly politicized government school system that does not respect their personal values.

The repeated emphasis in the document on laws dealing with “discrimination” can only be seen as a heavy-handed threat to local school districts by elitist bureaucrats who believe they know what’s in our family’s best interests.

The open and blatant disrespect (page-9, paragraph-2) for the comfort level of the majority of students, in favor of the comfort of a tiny minority of students, along with the disdain for the rights of parents and the sanctity of the family (page-7, paragraph-2), is particularly alarming.

The Center maintains that no statewide or federal dictate can possibly satisfy the varying sentiments among Rhode Island’s diverse array of local communities.”

Statement: Center Applauds House for Taking 1st Step in Mitigating RhodeMap RI Mandates

STATEMENT
June 25, 2015

H6040A Seeks to Protect Localities from Mandated Zoning Changes
Senate and Administration Urged to Follow Suit

Providence, RI — The nonpartisan RI Center for Freedom & Prosperity applauds the RI House of Representatives for responding to the concerns of Rhode Islanders and taking action to preserve local governmental sovereignty from federal and state control over local housing issues, by undoing a portion of the most oppressive components of the controversial RhodeMap RI scheme.

House bill H6040A, which eliminates the requirement for any city or town to be forced to change its local zoning ordinances in order to comply with state guide plan mandates or federal dictates, passed last evening by a vote of 69-1 . It restores the decision making process to where it belongs, with local officials. In recent weeks, multiple national media outlets reported on this federal intrusion into local matters.

The Center, on behalf of the large grassroots movement that has spoken-out vociferously against this centralized-plan, urges Senate and the Administration officials to follow the lead of the House.

“RhodeMap RI, without any approval or direction from the elected representatives of the people of Rhode Island, was adopted into the state’s official guide plan by unelected, unaccountable bureaucrats in December of 2014,” said Mike Stenhouse, CEO for the Center. “This legislation is a first-step towards unraveling this ‘Trojan Horse’ for a federal takeover of local land-use and housing decisions.”

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise think tank. The mission of the 501c3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms

BREAKING: National Media, Federal Lawmakers Support Center’s Research on RhodeMap RI; HUD “Bribes”

FOR IMMEDIATE RELEASE
June 12, 2015

National Figures Express Same Concerns as the Center
HUD Plans to “Bribe” Local Communities into Change Zoning Laws
Constitutionality Questioned

Providence, RI — Fox News and other national media outlets are now reporting on the federal agenda to “bribe” communities into implementing HUD’s “utopian” social equity agenda, as documented by the nonpartisan RI Center for Freedom & Prosperity. The Center, which was derided for its research conclusions at a recent Senate Committee hearing, has been a persistent advocate against the statewide RhodeMap RI plan, claiming it is a Trojan Horse to implement a federal agenda.

“Maybe state and local lawmakers and the public will now give more credence to what we’ve been saying for the past eight months,” commented Mike Stenhouse, CEO for the Center. “There can no longer be any question that RhodeMap RI is a tool of the federal government to supersede the sovereignty of municipalities and to infringe on the rights of private property owners.”

With multiple pieces of bi-partisan legislation currently being considered in the both Rhode Island House and Senate that would provide municipalities with opt-out options, the Center recommends that state lawmakers educate themselves on the true genesis and future agenda of the RhodeMap RI scheme. Rhode Islanders are encouraged to contact their legislators to stop RhodeMap RI via an easy-to-use online tool at The Gaspee Project, a partner organization.

Among the comments from national media reports:

Rep. Mia Love

“The most radical, politically explosive … social engineering of the worst kind.” “An insidious idea … to organize your neighborhood from Washington, DC … will either bribe or blackmail (communities) into changing their zoning policies.” Fox News, The Kelly File, June 11, 2015.

“People being used as pawns in this political game … based on income level, race … ” said Mia Love, US Representative (R, Utah).

“(HUD) would offer grants to municipalities … and in return … the municipalities would change their zoning laws … (HUD) wants to pre-empt local zoning laws … by buying off local(ities) … It’s very questionable from a constitutional point of view.” Judge Andrew Napolitano, Fox business News, The Intelligence File, June 11, 2015.

HUD “shouldn’t be holding hostage grant monies aimed at community improvement based on its unrealistic utopian ideas of what every community should resemble,” said US Representative Paul Gosar (R, Arizona) in a Newsmax article. Gosar added in an article by The Hill, “American citizens … should be free to choose where they would like to live and not be subject to federal neighborhood engineering at the behest of an overreaching federal government.”

The Center has published multiple reports and related analysis pieces on RhodeMap RI which can be viewed at RIFreedom.org/PropertyRights.

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise think tank. The mission of the 501c3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

STATEMENT: Pro Firefighter Bills Infringe on Local Sovereignty as with RhodeMap RI

STATEMENT
June 9, 2015

Pro Firefighter General Assembly Bills Would Interfere with Local Sovereignty
Center Criticizes Trend Towards Centralized Government

At least four bills introduced in the 2015 Rhode Island General Assembly that would bolster firefighter leverage in the collective bargaining process, two of which will be heard in committee today, would infringe on the sovereignty of municipal governments and further represents an unhealthy trend towards centralized government planning, according to the nonpartisan Rhode Island Center for Freedom & Prosperity.

Similar to the arguments against the one-size-fits all RhodeMap RI mandates are now required of every locality, the four bills (H6278/S0961 and H6473/S0533) represent a universal statewide mandate on cities and towns that would restrict management rights of local officials in dealing with increasingly costly public employee collective bargaining contracts.

“America was structured on the concept that local representative government is the best government. These local decisions must be left to local officials; our state legislators must resist the urge to interfere,” said Mike Stenhouse, CEO for the Center. “Every locality has a unique relationship with its employees, and it is not the place of the state government to mandate a single, centralized approach.”

The Center notes that the growing trend of federal and state governments seeking to interfere with or control local decisions, is a dangerous model that runs contrary to the principles of limited government. The most notable analogy is the recent RhodeMap RI plan which was centrally imposed upon cities and towns without any consent from the General Assembly.

With regard to the firefighter bills, the Center points to different paths that different municipalities are upon:

  • In Coventry, local voters and officials chose not to fund their highly costly fire district. After the state interfered in 2014, a state appointed overseer is now attempting to negotiate a more cost-effective arrangement.
  • In North Kingstown, local officials chose to alter the firefighter shift schedule, a right affirmed by the RI Supreme Court. The bills in question would block such action.
  • In Providence, Mayor Elorza is looking to change shift schedules in order to save taxpayer dollars. The bills in question would pre-empt the Mayor from implementing his plan.
  • In Tiverton, local officials voluntarily decided to include shift schedules as part of their firefighter collective bargaining agreement. The bills in question would tie the hands of municipal leaders.

“The Tiverton example demonstrates that a state mandate is not needed for certain issues to be collectively bargained,” commented Justin Katz, research director for the Center and Tiverton resident. “It should be up to each town, not state legislators, to determine when this tactic is appropriate and when it is not.”

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise think tank. The mission of the 501c3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

2015 RhodeMap RI Related Legislation

RhodeMap RI targets individual property rights

A number of recommendations made by the Center earlier this year in its Legislative Antidotes to RhodeMap RI post, are encapsulated in many of the bills below, which have already been introduced in the 2015 RI General Assembly session. Thank you to PRARI (the Property Rights Alliance of RI) for compiling this legislative list and descriptions.

Recently Introduced Legislation, RhodeMap RI Opt Out Provisions

1. H6040 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H6040.pdf

Prohibits affordable housing program requirements, that exceed those set forth in the general laws of the state, from being included in the statewide planning program. Sponsors: Price, Roberts, Chippendale, Costa and Nardolillo

2. H6041 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H6041.pdf

Allows cities and towns to opt out of provisions in the state guide plan that relate to affordable housing and the related land use provisions, by providing timely written notice of that decision to the chief of the RI Division of Planning.   Sponsors: Roberts, Price, Chippendale, Filippi and Nardolillo

3. H6042 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H6042.pdf

Allows cities and towns to opt out of provisions in the state guide plan that relate to affordable housing and the related land use provisions –by providing timely written notice of that decision to the chief of the RI Division of Planning. Sponsors: Costa, Lancia, Giarrusso, Reilly and Corvese

4. H6043 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H6043.pdf

Repeals the provisions and references to compliance with the state guide plan relative to local comprehensive planning for land use. Sponsors: Nardolillo, Chippendale, Price and Roberts

Other Bills

1. H5643 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5643.pdf 

Eliminates the state mandate requiring cities and towns to include an affordable housing program in the local comprehensive plan and actually prohibits its inclusion in the local comprehensive plan.  (section 45-22.2-6, “RI Comprehensive Planning and Land Use Act”) Sponsors: Price, Reilly, Roberts, Costa, and Filippi

2. S653 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0653.pdf (Companion to H 5643)

Eliminates the state mandate requiring cities and towns to include an affordable housing program in the local comprehensive plan and actually prohibits its inclusion in the local comprehensive plan.  (section 45-22.2-6, “RI Comprehensive Planning and Land Use Act”) Sponsors: BIPARTISAN – Cote, Raptakis, ONeill, Gee and Kettle

3. H5644 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5644.pdf

Eliminates the state mandate requiring cities and towns to include an affordable housing program in the local comprehensive plan and provides an opt-out provision for this. It also provides an opt out provision from the state guide plan relating to affordable housing programs.  (section 45-22.2-6, RI Comprehensive Planning and Land Use Act”) Sponsors: Roberts, Price, Filippi, Nardolillo, and Costa

4. S654 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0654.pdf (Companion to H 5644) 

Eliminates the state mandate requiring cities and towns to include an affordable housing program in the local comprehensive plan and actually prohibits its inclusion in the local comprehensive plan.  (section 45-22.2-6, “RI Comprehensive Planning and Land Use Act”) Sponsors: Cote, Raptakis, ONeill, Gee, Kettle

5. H5713 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5713.pdf

Requires General Assembly approval of the state guide plan and any amendments to the state guide plan. (section 42-11-10 “Department of Administration”) Sponsors:  Filippi, Costa, Price, Giarrusso, and Morgan

6. S26 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0026.pdf

Exempts Coventry, E. Greenwich and W. Greenwich from all the terms and provisions of 42-64.17-1 entitled “Long Term Economic Development Vision and Policy”. Sponsors: BIPARTISAN – Raptakis, Kettle, Morgan, Cote and ONeill. Heard March 10, held for further study.

Bills to Address New Definition of Low and Moderate Income Housing

1. S172 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0172.pdf

Allows mobile homes to be included in affordable housing stock in Coventry. (Section 42-128-8.1) Sponsors: BIPARTISAN – Raptakis, Kettle and Fogarty

2. H5714 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5714.pdf

Changes what is included in the calculation of affordable housing stock.  (Section 42-55-21.1 “RI Housing and Mortgage Finance Corporation”) Sponsors: BIPARTISAN – Filippi, Hearn, Marcello, Price, and Ackerman

3. S498 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0498.pdf

Allows mobile and manufactured homes to be counted as low and moderate income housing for purposes of compliance with Comprehensive land use plans. (Section 45-53-3 “Low and Moderate Income Housing”) Sponsors: BIPARTISAN – Fogarty, Ottiano, Kettle, and DiPalma

Bills to Address Eminent Domain

1. H5774 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5774.pdf

Public use is defined as it relates to eminent domain. (Chapter 37-6 “Acquisition of Land”) Sponsors: BIPARTISAN – Costa, Trillo, Newberry, Giarrusso, and Shekarchi

2. S622 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0622.pdf (Companion to H 5774)

Requires that condemning land cannot include taking for private entity for purpose of economic development. (Chapter 37-6 “Acquisition of Land”) Sponsors: Cote, Lombardo, Archambault, Lombardi, McCaffrey

Bills to Increase the Maximum Property Tax on Qualifying Low Income Property

1. H5328 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5328.pdf

Increases the maximum tax rate on qualifying low income property from 8% to 12% of previous years gross rent. (Section 44-5-13.11 “Levy and Assessment of Local Taxes”) Sponsors: Phillips, Morin, Casey, Bennett, Almeida

2. S32  http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0032.pdf

Increases the maximum tax rate on qualifying low income property from 8% to 10% of prospective gross rent.  (Section 44-5-13.11 “Levy and Assessment of Local Taxes”) Sponsors: Picard, Cote and Goodwin

3. S33 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0033.pdf

Increases the maximum tax rate on qualifying low income property from 8% to 10% of previous years gross rent. (Section 44-5-13.11 “Levy and Assessment of Local Taxes”) Sponsors: Picard and Goodwin

4. S562 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0562.pdf

Allows an increase in the maximum tax rate on qualifying low income property from 8% to 10%  if  LMIH stock represents 12% or more. (section 44-5-13.11 “Levy and Assessment of Local Taxes”) Sponsor: Picard

5. S112 http://webserver.rilin.state.ri.us/BillText/BillText15/SenateText15/S0112.pdf

Allows an increase in the maximum tax rate on qualifying low income property from 8% to 15% when budget commission or court appointed individual involved with city/town. Sponsor: Picard

BAD BILLS

Bills to Allow State Intrusion on Municipal Property Taxation

1. H5518 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5518.pdf

Mandates that municipalities do not charge impact fees to developers for 36 months or until 1,500 permits statewide. (section 45-22.4 “RI Development Impact Fee Act”) Sponsors:  Shekarchi, Edwards, Solomon, Ucci, and McKiernan

2. H5545 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5545.pdf

Mandates that municipalities do not charge impact fees to developers for 36 months and mandates the reduction of municipal permit fees. (section 45-22.4 “RI Development Impact Fee Act” and section 23-27.3 “State Building Code”) Sponsor:  Jacquard

3. H5550 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5550.pdf

Mandates that permit fees and special fees for new construction will be determined by the state building code commission, not the local municipality.  (Chapter 23-27.3 “State Building Code”) Sponsors: BIPARTISAN – Shekarchi, McKiernan, Trillo, Lima, and Edwards

Bills to Divert Funds To Densely Populated Cities

1. H5552 http://webserver.rilin.state.ri.us/BillText/BillText15/HouseText15/H5552.pdf

Creates an Urban Infrastructure Commission (to include 4 members of a 2,000 per square mile municipality) along with an Urban Renaissance Fund and provide that the state plays a central role in developing and supporting a targeted urban infrastructure program. (Title 42 – “State Affairs and Government”) Sponsors: McKiernan, Shekarchi, Lombardi, Carnevale, and Almeida

COMMENTARY: State Property Tax Proposal Right out of RHODEMAP RI Playbook

By Mike Stenhouse

We warned you about RhodeMap RI.

While Gov. Gina Raimondo’s proposed new statewide property tax has already inspired arguments among various constituent groups, there are much larger, more fundamental issues to be concerned about.

Disguised as a wealth tax, the “Taylor Swift tax” is really an assault on private property rights and an infringement on municipal sovereignty, all part of a national agenda. Sound familiar? This tax idea is right out of the RhodeMap RI playbook, and it was probably designed by a nationally prominent sustainable-living, urban-planning advocate.

The month before the governor introduced this controversial new tax, a Feb. 18 WPRI-12 report confirmed that the Raimondo administration was bringing Brookings Institution scholar Bruce Katz to Rhode Island for private meetings and hinted that the state should find a role for him. Also, in 2013, Ms. Raimondo, in conjunction with the Rhode Island Foundation, brought Mr. Katz, a prominent national expert on urban economic development, to the Ocean State. Mr. Katz also has a relationship with Grow Smart RI, the primary architect for RhodeMap RI.

Like RhodeMap RI, the proposed state property tax targets wealthy property owners.

As our center informed the public during last fall’s RhodeMap RI debate, the underlying philosophy of the sustainable living and urban planning movement is that suburban sprawl, manifested largely through development of private single-family homes, is an unsustainable and inequitable ailment in our world.

In their view, such prime real estate would be more beneficial to society by being turned into “common,” “open space” or “high density” use. The goal of these central planners is to make it incrementally less attractive to own private property by making it more expensive (via tax policy) and by limiting development rights (through regulatory policy).

Since this would be politically unpopular at the local level, the strategy of the central planners is to supersede the authority and ordinances of local town governments by creating new regional authorities and statewide laws, such as the governor’s.

This strategy is clearly represented in the language of the governor’s proposed tax scheme, which describes property ownership as a “privilege.” It then takes the extraordinary step of taxing those properties, much like a “sin” tax.

Home and property ownership is not a privilege, nor is it a sin; it is a cornerstone of the American Dream, of our free-enterprise system, and the foundation of our constitutional rights. By demoting private property ownership to a mere privilege, sustainable living radicals can justify eventually restricting or removing that privilege.

Further, with the state exerting control over property taxes, local governments would find themselves with diminished sovereignty to manage real-estate issues. Cities and towns will have less authority to ensure that they remain attractive to in- or out-of-state homeowners and landlords, which are vital to their local economies.

A March 17 Providence Journal article described even more of the rationale, via familiar “sustainable” terms such as “fair share,” property “deterioration” and “stock of … real estate.” Urban planning advocates such as Bruce Katz believe it is not fair that some have the “privilege” of living in exclusive neighborhoods. Property deterioration, or blight, is a common rationale for governments to justify eminent domain seizures to increase the stock of available real estate for open space or high density developments.

Given the timing of Bruce Katz’ visit and the familiar language, there is little doubt in my mind that this ill-founded state property tax concept was originally devised by Mr. Katz. If he were to assume a role in the Raimondo administration, Rhode Island would become the model test-tube state for the sustainable development movement. Last year saw RhodeMap RI’s adoption; with Bruce Katz on board, RhodeMap RI will be on a fast-track for its implementation.

It’s one thing if this tax plan was merely about the Taylor Swifts in Rhode Island. If so, the discussion would be about whether or not it drives real-estate investors to other states and whether your home might be taxed next.

It’s a completely different and alarming matter if this tax is the first-step in a highly coordinated federal-state scheme to diminish municipal sovereignty and encroach on the property rights of Rhode Islanders — a scheme like RhodeMap RI.

Mike Stenhouse is CEO for the Rhode Island Center for Freedom & Prosperity, a nonprofit free-market think tank.