New Shoreham Council Digs In Against State Tax on High-Value Homes, Citing Botched Bills

The New Shoreham Town Council spent roughly a half hour Monday on the state's new tax on high-value homes, and the discussion made clear that the town's position remains full repeal rather than a higher dollar threshold.

According to the town's published recording of the August 3 meeting, the council heard from two contracted legislative representatives who lobby on the town's behalf at the State House. One of them, who handled the tax issue, told the council the effort would resume in the fall with a coalition of coastal towns, and that the goal is to persuade the governor to address it in the budget he submits in January.

The tax, adopted in the state budget passed last year, applies to homes assessed above $1 million. As described to the council, the charge is $2.50 for every $500 of value above the $1 million mark, and an owner who occupies the home at least 183 days a year is exempt. The revenue is directed to a state low-income housing tax credit fund. The council's lobbyist estimated that fund takes in roughly $35 million to $40 million a year.

Much of the discussion was about how the first round of bills has landed. A council member said she received a bill despite living in her house for 33 years, and that she encountered neighbors with the same experience at the library and the gas station. Another problem raised repeatedly: year-round residents being rejected because the address on a driver's license does not match the house they actually live in. People here move around the island and do not always update the license, one member said, and they are getting denied for that reason.

A council member also objected that the tax is reaching seasonal houses with no furnace, no basement and no insulation — homes she said the owners could not live in year-round even if they wanted to, meaning the 183-day exemption is unavailable to them by construction rather than by choice.

The refund path drew particular skepticism. A member said she asked state officials whether someone who pays the bill in error can get the money back, and was told there is a process. She said her reaction was to doubt how easy that process would be. She added that some people will simply pay rather than fight, including residents who work during the day, cannot reach the office, or are older and confused by the notice.

Council members and the lobbyist described legislators in other coastal communities fielding the same complaints. Constituents are showing up with tax bills in hand, the lobbyist said, and legislators are calling the state tax office the next day.

Why the town is not taking a higher threshold

One council member floated a strategic question: whether the town should have pushed from the start for a $5 million threshold instead of $1 million, noting that almost no house on the island is worth under $1 million and calling the current threshold unworkable for New Shoreham.

The lobbyist said he had thought about it and rejected it. Accepting a $5 million or $3 million threshold, he argued, concedes that a state property tax is legitimate. Property taxation, he said, is a municipal function, not a state function, and the town's position, taken early, was that the tax is wrong and should be repealed. Several members agreed that chipping away at the number signals acceptance. The only compromise the group considered, the lobbyist said, was a sunset provision that would end the tax in 2027 or 2028.

He also acknowledged the marketing problem. The nickname he uses — the "Taylor Swift tax" — resonates statewide precisely because it sounds like a levy on the very rich, and he said the town needs a better public-relations approach built on the argument that the state should not be levying property taxes at all.

The political math

The lobbyist laid out why he expects the fall to be difficult. Leadership in the General Assembly turned over, and the new House speaker did not take the position until May 7, less than five weeks before the session ended. The new speaker represents an east side district running into downtown Providence, with students and retirees rather than second-home owners. The new Senate president is from East Providence, the House majority leader from East Providence, and another top leader from Providence — meaning, as he put it, the top four positions are split between Providence and East Providence.

He described a direct meeting with the previous speaker in late April, attended by town managers from the coastal communities, where the town argued that no other state does this and that the tax constrains local councils' own taxing capacity. The speaker understood the argument but disagreed, he said.

Council members were blunt about the results so far. The council passed a resolution seeking action, and, as one member said, nothing came back — no bill, no formal response. The lobbyist said the resolution went to the town's state senator and representative, both of whom called him and pursued meetings with leadership, but that legislators were unwilling to sponsor a repeal bill alone in an election year. Not one person wants to sponsor it unless a group sponsors it together, he said.

One member called the silence the most disappointing part, saying there was no record on which residents could register their frustration.

What happens next

The lobbyist said he wants to convene the coalition — town managers and councils from what he counted as roughly 13 communities — between November and December, after the election, and then meet with the governor's office. His reasoning was procedural: it is easier to keep something in a budget than to add it, and the governor submits a budget in January. He said legislators routinely tell municipalities to take budget questions to the governor first.

A council member asked whether the November election changes that timetable. It does not, the lobbyist said, because the budget is not submitted until January regardless of who wins.

Council members also asked the lobbyist to return after the election with a read on the new landscape, so they can answer residents' questions about who holds which office.

Amy, the town manager, offered one factual correction to the room's framing. She said the low-income housing tax credit fund was funded in the two years before the new tax took effect, that specific projects funded through it are listed publicly, and that she could send the link. But she said eligibility requires a federally qualifying low-income housing project, which she said New Shoreham and many similar communities will never be able to build. So the money is being spent consistent with the fund's rules, she said, while much of the state's land mass cannot participate — meaning many of the same owners paying the tax live in communities that cannot use the proceeds.

The fund also sunsets, she and the lobbyist noted, raising the question of why a tax credit program would expire while the revenue stream feeding it does not.

Separately, one council member asked that the town seek a legal opinion on whether an accessory dwelling unit on a property could affect a homeowner's exposure to the state tax, and asked for the item to be placed on a fall agenda.

Residents can follow the issue through the council's regular meeting agendas. The next milestone the council identified is the coalition's post-election meetings in November and December, ahead of the governor's budget submission in January.