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Baldelli questions fairness of supplemental tax plan

March 5, 2013

WOONSOCKET – State Rep. Lisa Baldelli-Hunt (D-Dist. 49) has signaled to the Budget Commission that she might not support the panel’s request for a $2.5 million supplemental tax bill, at least as it’s currently proposed.
Baldelli-Hunt said the plan puts too much of the burden on the owners of single-family homes and condos at the expense of all other classes of properties.
The city lawmaker sat through a two-hour commission meeting in Harris Hall Monday before approaching the lectern, moments before the panel adjourned, and asked whether it is legal for the commission to single out one class of property to carry most of the load.
“Two classes,” one member of the panel corrected her, pointing out that a half-million dollars of the supplemental would be raised from motor vehicles.
Commissioner Peder Schaefer said the city’s bond counsel wouldn’t have accepted the commission’s instructions for drafting the bill if they were legally flawed. Reiterating the panel’s rationale, he said the commission’s goal is to make the city’s tax structure fairer to commercial properties, who’ve been paying comparatively less in peer communities, while single-family homeowners have long enjoyed a generous homestead exemption.
“We would have received guidance from him if there was a problem with that,” said Schaefer.
The supplemental tax bill is a pivotal element of the commission’s five-year plan to erase a deficit on track to reach $23.3 million by the end of the fiscal year. Without it, or for that matter, without any other element of the plan, including rollbacks in retirement and pension benefits for former workers, plus contractual concessions from existing employees, the city will likely lapse into bankruptcy.
The supplemental 2013 tax bill envisions generating most of its revenue by shrinking the homestead exemption on single-family homes from 39 to 29.9 percent, which amounts to a tax bill of about 14 percent on the average home. About a fifth of the $2.5 million would come from a one-time tax on motor vehicles at the rate of about $3 per thousand, or about 6.2 percent more than bills sent out in July.
Baldelli-Hunt urged the commission to ease the blow on single-family homeowners by shifting some portion of it to multi-family homes that are not owner-occupied. She suggested that Finance Director Thomas M. Bruce III “run the numbers” on the multi-family properties before the legislative delegation meets with the commission some time next week to discuss and, it now appears likely, tweak the proposal that lawmakers will actually consider.
“There’s a level of inequity when you’re going after just the single-family and condo-owners,” Baldelli-Hunt told The Call after the meeting.
In order to support any enabling legislation to raise supplemental taxes, she added, lawmakers “have to feel it is in the best interest of our constituents. We have to feel it is fair and balanced. This isn’t very balanced.”
Baldelli-Hunt said going after the absentee-owner multi-families is justified because, generally speaking, they house the largest segment of the population that contributes least to the city’s overall tax burden.
Members of the budget commission are tentatively slated to meet with Baldelli-Hunt and other members of the legislative delegation to discuss the supplemental tax bill sometime next week. Tuesday or Wednesday have been tossed out as possible times, but nothing was settled during yesterday’s session.
Schaefer said he wouldn’t necessarily be opposed to adjusting the legislative proposal along lines suggested by Baldelli-Hunt, calling it a matter for debate.
Though the Fiscal Stability Act gives the Budget Commission sweeping powers, Susanne Greschner, the head of the division of municipal finance for the state Department of Revenue, said she believes state lawmakers have the power to alter the legislation without the panel’s approval if they deem fit.
“I think they can,” she said.
During the 2012 session of the General Assembly, no member of the House, including Baldelli-Hunt, voted in favor of a proposed supplemental tax bill that would have raised about $6.5 million by spreading a 13 percent revenue hike evenly across all classes of property owners. Baldelli-Hunt later criticized the administration of Mayor Leo T. Fontaine for failing to demonstrate how the tax figured into a long-term plan for fiscal sustainability. The bill was introduced months after Baldelli-Hunt commissioned a poll to gauge her chances in a mayoral campaign against Fontaine, a race which, ultimately, she never jumped into.
Immediately after the defeat of the supplemental tax bill during the waning moments of the 2012 legislative session, state Revenue Director Rosemary Booth Gallogly seated the budget commission to take over the city’s hobbled finances. Fontaine is now a member of the commission, and has said he intends to run for mayor again this fall. Many speculate Baldelli-Hunt is also eyeing a run, though she has not made an announcement.

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