That will help lessen the burden on the individual homeowner here in town.”

Keith Hamilton, Portsmouth Town Council

PORTSMOUTH — In an effort to lower the tax burden on residential property owners, the Town Council is considering a change to the way it sets the tax rate for the next fiscal year beginning July 1.

The council is also hoping to see passage of state legislation, introduced recently on the urging of council member Keith Hamilton, to restore about $625,000 in general revenue sharing to Portsmouth which could further help keep residential property taxes in line.

Hamilton was also behind the idea of making a change to the tax rate, which he outlined to the council during an overview Monday night of Town Administrator Richard Rainer, Jr.’s proposed $71,431,755 total budget for 2023-24. The council continued deliberations on the budget Tuesday and was scheduled to proceed on Wednesday and, if necessary, Thursday of this week.

Hamilton explained that the town has the ability to impose three different property tax rates: a residential tax rate, a commercial tax rate, and a tangible tax rate (also known as a personal property tax rate). The latter is assessed by a city or town on all personal property owned and used in connection with a business.

“Tangible tax is only on properties within a business or, in most of our cases, the utilities — your cable lines, power lines. Larger properties like Raytheon pay tangible property taxes,” Hamilton said, adding that other businesses such as restaurants pay tangible property taxes “on their stoves, dishwashers, tables and chairs — things like that.”

Traditionally, the town has kept all three tax rates the same, but other municipalities set two or three different tax rates. Matthew Helfand, the town’s tax assessor/collector, said 11 of the 39 municipalities in Rhode Island have different tax rates for residential, commercial, and tangible property.

How would it work?

Under Rainer’s proposed spending plan, the total budget of about $71.43 million represents a 1.92-percent increase over last year. 

The tax rate next fiscal year would decrease from the current $15.65 per $1,000 of assessed valuation to $12.86 — representing a $2.79, or 17.8-percent decrease. That doesn’t mean you’ll necessarily be paying less property taxes next year, however, as the decrease is mainly a reflection of the recent revaluation in town, where most property values went up. 

“The total property levy on residential, commercial, and tangible property increases 3.757 percent, to $61,904,267,” Rainer said in his report to the council, noting that the proposed increase is substantially lower than the current inflation rate of 6.4 percent. The property tax cap also falls below the 4-percent increase limit as mandated by the state, he said.

Hamilton made a motion, which was approved unanimously, to lock the tangible tax rate at the current $15.65 for next fiscal year as well. He said the action could give tax relief to residential homeowners who saw their property values increase much higher than others under this year’s revaluation. 

“Because of the huge revaluation this year, the revaluation dropped the tangible tax rate even though the tangible property did not get revalued like your house or my house,” Hamilton said after Monday’s meeting. “So what I’m suggesting is, if we keep the tangible tax rate the same, most businesses will actually see a decrease based on the depreciation of their property. That will help lessen the burden on the individual homeowner here in town.”

Revenue sharing bill

Hamilton also informed the council that at his suggestion, Reps. Cortvriend and Michelle McGaw have submitted legislation in the R.I. House of Representatives to restore general revenue sharing funds to every city and town in the state as another means of reducing residents’ tax burden. (Note: Rep. McGaw is the wife of this story’s author.)

If the bill passes, Portsmouth would seek to gain $625,485 to offset budget costs.

“That legislation is just to restore general revenue sharing that used to exist here in the state,” Hamilton said. “In 2009 it was taken away when the market crashed. Sales revenues were down, and Gov. (Donald) Carcieri said ‘I need to save some money in the budget,’ and he took $86 million out of the budget at that point in time.”

With inflation, the $86 million would translate to anywhere from $110 to $120 million today, he noted. The bill asks for $39 million in restored revenue sharing — $1 million per municipality — which would be “doled out on a per-resident basis, which gives Portsmouth $625,245,” Hamilton said.

Of course, more money would go to bigger municipalities such as Providence and less to smaller ones like Foster, “but again that reduces the burden on the individual property taxpayer,” Hamilton said.

Budget drivers

Rain said some of the biggest budget drivers for next year include a projected $257,630 (6.86 percent) reduction in state aid for the school district, the elimination of the car tax, increased health care costs, a “historic” inflation rate, bond debt service, contracted salary increases and other issues. 

What’s next?

The council was expected to wrap up its budget review by Wednesday or Thursday of this week. The council will adopt a provisional budget on May 8, if it hadn't already done so during the review.

A public hearing on the spending plan will be held Wednesday, June 14, and the council will formally adopt the 2023-24 budget on Monday, June 26, after which it will be sent to the state.