Bill Sponsors
Representative Michael W. Chippendale
Committee
House Municipal Government & Housing
Summary
Select
This bill changes the rules for how much cities and towns in Rhode Island can increase their property tax collections each year. Normally, municipalities cannot raise their total property tax revenue by more than 4% annually. This legislation allows Providence, Little Compton, and Cranston to exceed this 4% limit for specific upcoming fiscal years. Additionally, it allows all cities and towns to temporarily exceed the tax cap limit when they add new housing units to their tax base, provided the new developments include at least 10% low- or moderate-income housing.
Sponsor
Analysis
Pros for Progressives
- Incentivizes the development of low- and moderate-income housing by allowing municipalities to exceed tax caps when they approve qualifying residential projects.
- Allows local governments to raise additional property tax revenue, which can be used to fund and expand generous public services, schools, and social safety nets.
- Grants specific municipalities the flexibility to address budget shortfalls and maintain community services without being constrained by strict state-imposed revenue limits.
Cons for Progressives
- Higher property taxes could be passed down to renters in the form of higher rent, potentially burdening low-income and working-class tenants.
- Allowing certain municipalities to bypass the tax cap could exacerbate inequality in public school funding and municipal services between different towns.
- The 10% requirement for low- or moderate-income housing to qualify for the new housing exemption might be seen as too low to meaningfully solve the affordable housing crisis.
Pros for Conservatives
- Shifts more control to local municipal governments to determine their own tax rates, aligning with principles of localized governance.
- Encourages the construction of new private housing developments by removing the disincentive of the state tax levy cap for municipalities that approve new builds.
- Requires that the new housing tax cap exemptions be phased into the standard maximum levy over a three-year period, eventually restoring the strict tax growth limits.
Cons for Conservatives
- Weakens the state's hard cap on property tax increases, leading to higher overall tax burdens for property owners and businesses in affected municipalities.
- Mandates a 10% low- or moderate-income housing quota for developments to qualify for the tax cap exemption, which interferes with free-market real estate development.
- Grants special carve-outs for specific cities like Providence and Cranston to significantly raise taxes, expanding the size and cost of local government.
Constitutional Concerns
None Likely
Impact Overview
Groups Affected
- Property owners
- Real estate developers
- Renters
- Low-income families
- Municipal governments
Towns Affected
Providence, Little Compton, Cranston
Cost to Taxpayers
Amount unknown
Revenue Generated
Amount unknown
BillBuddy Impact Ratings
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Freedom Impact
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Public Services
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Regulatory
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Clarity of Bill Language
How clear the language of the bill is. Higher ambiguity equals a lower score.
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Measures enforcement provisions and penalties for non-compliance (if applicable).
Environmental Impact
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Privacy Impact
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Bill Status
Current Status
Held
Comm Passed
Floor Passed
Law
History
• 04/17/2026 Introduced, referred to House Municipal Government & Housing
• 05/11/2026 Withdrawn at sponsor's request
• 05/11/2026 Withdrawn at sponsor's request
Bill Text
SECTION 1. Section 44-5-2 of the General Laws in Chapter 44-5 entitled "Levy and Assessment of Local Taxes" is hereby amended to read as follows:
44-5-2. Maximum levy.
(a) Through and including its fiscal year 2007, a city or town may levy a tax in an amount not more than five and one-half percent (5.5%) in excess of the amount levied and certified by that city or town for the prior year. Through and including its fiscal year 2007, but in no fiscal year thereafter, the amount levied by a city or town is deemed to be consistent with the five and one- half percent (5.5%) levy growth cap if the tax rate is not more than one hundred and five and one- half percent (105.5%) of the prior year’s tax rate and the budget resolution or ordinance, as applicable, specifies that the tax rate is not increasing by more than five and one-half percent (5.5%) except as specified in subsection (c) of this section. In all years when a revaluation or update is not being implemented, a tax rate is deemed to be one hundred five and one-half percent (105.5%) or less of the prior year’s tax rate if the tax on a parcel of real property, the value of which is unchanged for purpose of taxation, is no more than one hundred five and one-half percent (105.5%) of the prior year’s tax on the same parcel of real property. In any year through and including fiscal year 2007 when a revaluation or update is being implemented, the tax rate is deemed to be one hundred five and one-half percent (105.5%) of the prior year’s tax rate as certified by the division of property valuation and municipal finance in the department of revenue.
(b) In its fiscal year 2008, a city or town may levy a tax in an amount not more than five and one-quarter percent (5.25%) in excess of the total amount levied and certified by that city or town for its fiscal year 2007. In its fiscal year 2009, a city or town may levy a tax in an amount not more than five percent (5%) in excess of the total amount levied and certified by that city or town for its fiscal year 2008. In its fiscal year 2010, a city or town may levy a tax in an amount not more than four and three-quarters percent (4.75%) in excess of the total amount levied and certified by that city or town in its fiscal year 2009. In its fiscal year 2011, a city or town may levy a tax in an amount not more than four and one-half percent (4.5%) in excess of the total amount levied and certified by that city or town in its fiscal year 2010. In its fiscal year 2012, a city or town may levy a tax in an amount not more than four and one-quarter percent (4.25%) in excess of the total amount levied and certified by that city or town in its fiscal year 2011. In its fiscal year 2013 and in each fiscal year thereafter, a city or town may levy a tax in an amount not more than four percent (4%) in excess of the total amount levied and certified by that city or town for its previous fiscal year. For purposes of this levy calculation, taxes levied pursuant to chapters 34 and 34.1 of this title shall not be included. For FY 2018, in the event that a city or town, solely as a result of the exclusion of the motor vehicle tax in the new levy calculation, exceeds the property tax cap when compared to FY 2017 after taking into account that there was a motor vehicle tax in FY 2017, said city or town shall be permitted to exceed the property tax cap for the FY 2018 transition year, but in no event shall it exceed the four percent (4%) levy cap growth with the car tax portion included; provided, however, nothing herein shall prohibit a city or town from exceeding the property tax cap if otherwise permitted pursuant to subsection (d) of this section.
(c) The division of property valuation in the department of revenue shall monitor city and town compliance with this levy cap, issue periodic reports to the general assembly on compliance, and make recommendations on the continuation or modification of the levy cap on or before December 31, 1987, December 31, 1990, and December 31, every third year thereafter. The chief elected official in each city and town shall provide to the division of property and municipal finance within thirty (30) days of final action, in the form required, the adopted tax levy and rate and other pertinent information.
(d) The amount levied by a city or town may exceed the percentage increase as specified in subsection (a) or (b) of this section if the city or town qualifies under one or more of the following provisions:
(1) The city or town forecasts or experiences a loss in total non-property tax revenues and the loss is certified by the department of revenue.
(2) The city or town experiences or anticipates an emergency situation, which causes or will cause the levy to exceed the percentage increase as specified in subsection (a) or (b) of this LC006356 - Page 2 of 5 section. In the event of an emergency or an anticipated emergency, the city or town shall notify the auditor general who shall certify the existence or anticipated existence of the emergency. Without limiting the generality of the foregoing, an emergency shall be deemed to exist when the city or town experiences or anticipates health insurance costs, retirement contributions, or utility expenditures that exceed the prior fiscal year’s health insurance costs, retirement contributions, or utility expenditures by a percentage greater than three (3) times the percentage increase as specified in subsection (a) or (b) of this section.
(3) A city or town forecasts or experiences debt services expenditures that exceed the prior year’s debt service expenditures by an amount greater than the percentage increase as specified in subsection (a) or (b) of this section and that are the result of bonded debt issued in a manner consistent with general law or a special act. In the event of the debt service increase, the city or town shall notify the department of revenue which shall certify the debt service increase above the percentage increase as specified in subsection (a) or (b) of this section the prior year’s debt service. No action approving or disapproving exceeding a levy cap under the provisions of this section affects the requirement to pay obligations as described in subsection (d) of this section.
(4) The city or town experiences substantial growth in its tax base as the result of major new construction that necessitates either significant infrastructure or school housing expenditures by the city or town or a significant increase in the need for essential municipal services and such increase in expenditures or demand for services is certified by the department of revenue.
(5) In the city of Providence, for fiscal year 2026, any additional revenue generated from the Class 2B rate exceeding twenty-eight dollars and eighty cents ($28.80) per one thousand dollars ($1,000) may exceed the maximum levy. For the purposes of this subsection, “Class 2A” and “Class 2B” shall have the same meaning as in § 44-5-11.18(1)(ii).
(6) Effective for tax assessment dated on or after December 31, 2025, and subject to all requirements set forth in this section, the taxes levied on new housing units added to the municipal tax base during a fiscal year may exceed the maximum levy. For the purposes of this subsection, subject to the qualifying requirements below, new housing units shall include newly constructed residential properties, meaning single-family homes, two-family homes, single-family attached structures, multi-family dwellings, mixed-use developments where residential units constitute at least fifty percent (50%) of the building’s total square footage as well as existing buildings converted into residential housing units qualifying under adaptive reuse in § 45-24-37; provided such conversions meet all applicable zoning and building code requirements and increase the municipality’s total housing stock. New construction shall also include modular and manufactured homes. This provision shall apply provided that: LC006356 - Page 3 of 5
(i) A city or town has issued over ten (10) certificates of occupancy for new housing units during the fiscal year in which the exemption is sought; and
(ii) Such units are part of a development project that includes at least ten percent (10%) of the units designated as low- or moderate-income housing as defined in §§ 45-53-3 and 42-128-8.1; and
(iii) Such units are taxed utilizing the same valuation methods and rates as similar units in the respective city or town; and
(iv) The taxes levied on these qualifying new housing units may only exceed the maximum levy for the fiscal year in which the certificate of occupancy is issued and two (2) fiscal years thereafter in which the municipality shall phase in the full taxes for these units into the maximum levy by the fourth fiscal year following the issuance of a certificate of occupancy for the new housing unit(s).
(e) Any levy pursuant to subsection (d) of this section in excess of the percentage increase specified in subsection (a) or (b) of this section shall be approved by the affirmative vote of at least four-fifths (⅘) of the full membership of the governing body of the city or town, or in the case of a city or town having a financial town meeting, the majority of the electors present and voting at the town financial meeting shall also approve the excess levy.
(f) Nothing contained in this section constrains the payment of present or future obligations as prescribed by § 45-12-1, and all taxable property in each city or town is subject to taxation without limitation as to rate or amount to pay general obligation bonds or notes of the city or town except as otherwise specifically provided by law or charter.
(g) Notwithstanding anything to the contrary, the town of Little Compton is permitted a one-year levy cap exemption for fiscal year 2026 not to exceed twelve percent (12%), and subject to approval by the Little Compton Financial Town Meeting.
(h) Notwithstanding anything to the contrary, the City of Providence is permitted a one- year levy cap exemption for fiscal year 2026 not to exceed eight percent (8%).
(i) Notwithstanding anything to the contrary, the city of Cranston is permitted a one-year levy cap exemption for the fiscal year ending June 30, 2027, not to exceed seven and forty-five hundredths percent (7.45%).
SECTION 2. This act shall take effect upon passage.
44-5-2. Maximum levy.
(a) Through and including its fiscal year 2007, a city or town may levy a tax in an amount not more than five and one-half percent (5.5%) in excess of the amount levied and certified by that city or town for the prior year. Through and including its fiscal year 2007, but in no fiscal year thereafter, the amount levied by a city or town is deemed to be consistent with the five and one- half percent (5.5%) levy growth cap if the tax rate is not more than one hundred and five and one- half percent (105.5%) of the prior year’s tax rate and the budget resolution or ordinance, as applicable, specifies that the tax rate is not increasing by more than five and one-half percent (5.5%) except as specified in subsection (c) of this section. In all years when a revaluation or update is not being implemented, a tax rate is deemed to be one hundred five and one-half percent (105.5%) or less of the prior year’s tax rate if the tax on a parcel of real property, the value of which is unchanged for purpose of taxation, is no more than one hundred five and one-half percent (105.5%) of the prior year’s tax on the same parcel of real property. In any year through and including fiscal year 2007 when a revaluation or update is being implemented, the tax rate is deemed to be one hundred five and one-half percent (105.5%) of the prior year’s tax rate as certified by the division of property valuation and municipal finance in the department of revenue.
(b) In its fiscal year 2008, a city or town may levy a tax in an amount not more than five and one-quarter percent (5.25%) in excess of the total amount levied and certified by that city or town for its fiscal year 2007. In its fiscal year 2009, a city or town may levy a tax in an amount not more than five percent (5%) in excess of the total amount levied and certified by that city or town for its fiscal year 2008. In its fiscal year 2010, a city or town may levy a tax in an amount not more than four and three-quarters percent (4.75%) in excess of the total amount levied and certified by that city or town in its fiscal year 2009. In its fiscal year 2011, a city or town may levy a tax in an amount not more than four and one-half percent (4.5%) in excess of the total amount levied and certified by that city or town in its fiscal year 2010. In its fiscal year 2012, a city or town may levy a tax in an amount not more than four and one-quarter percent (4.25%) in excess of the total amount levied and certified by that city or town in its fiscal year 2011. In its fiscal year 2013 and in each fiscal year thereafter, a city or town may levy a tax in an amount not more than four percent (4%) in excess of the total amount levied and certified by that city or town for its previous fiscal year. For purposes of this levy calculation, taxes levied pursuant to chapters 34 and 34.1 of this title shall not be included. For FY 2018, in the event that a city or town, solely as a result of the exclusion of the motor vehicle tax in the new levy calculation, exceeds the property tax cap when compared to FY 2017 after taking into account that there was a motor vehicle tax in FY 2017, said city or town shall be permitted to exceed the property tax cap for the FY 2018 transition year, but in no event shall it exceed the four percent (4%) levy cap growth with the car tax portion included; provided, however, nothing herein shall prohibit a city or town from exceeding the property tax cap if otherwise permitted pursuant to subsection (d) of this section.
(c) The division of property valuation in the department of revenue shall monitor city and town compliance with this levy cap, issue periodic reports to the general assembly on compliance, and make recommendations on the continuation or modification of the levy cap on or before December 31, 1987, December 31, 1990, and December 31, every third year thereafter. The chief elected official in each city and town shall provide to the division of property and municipal finance within thirty (30) days of final action, in the form required, the adopted tax levy and rate and other pertinent information.
(d) The amount levied by a city or town may exceed the percentage increase as specified in subsection (a) or (b) of this section if the city or town qualifies under one or more of the following provisions:
(1) The city or town forecasts or experiences a loss in total non-property tax revenues and the loss is certified by the department of revenue.
(2) The city or town experiences or anticipates an emergency situation, which causes or will cause the levy to exceed the percentage increase as specified in subsection (a) or (b) of this LC006356 - Page 2 of 5 section. In the event of an emergency or an anticipated emergency, the city or town shall notify the auditor general who shall certify the existence or anticipated existence of the emergency. Without limiting the generality of the foregoing, an emergency shall be deemed to exist when the city or town experiences or anticipates health insurance costs, retirement contributions, or utility expenditures that exceed the prior fiscal year’s health insurance costs, retirement contributions, or utility expenditures by a percentage greater than three (3) times the percentage increase as specified in subsection (a) or (b) of this section.
(3) A city or town forecasts or experiences debt services expenditures that exceed the prior year’s debt service expenditures by an amount greater than the percentage increase as specified in subsection (a) or (b) of this section and that are the result of bonded debt issued in a manner consistent with general law or a special act. In the event of the debt service increase, the city or town shall notify the department of revenue which shall certify the debt service increase above the percentage increase as specified in subsection (a) or (b) of this section the prior year’s debt service. No action approving or disapproving exceeding a levy cap under the provisions of this section affects the requirement to pay obligations as described in subsection (d) of this section.
(4) The city or town experiences substantial growth in its tax base as the result of major new construction that necessitates either significant infrastructure or school housing expenditures by the city or town or a significant increase in the need for essential municipal services and such increase in expenditures or demand for services is certified by the department of revenue.
(5) In the city of Providence, for fiscal year 2026, any additional revenue generated from the Class 2B rate exceeding twenty-eight dollars and eighty cents ($28.80) per one thousand dollars ($1,000) may exceed the maximum levy. For the purposes of this subsection, “Class 2A” and “Class 2B” shall have the same meaning as in § 44-5-11.18(1)(ii).
(6) Effective for tax assessment dated on or after December 31, 2025, and subject to all requirements set forth in this section, the taxes levied on new housing units added to the municipal tax base during a fiscal year may exceed the maximum levy. For the purposes of this subsection, subject to the qualifying requirements below, new housing units shall include newly constructed residential properties, meaning single-family homes, two-family homes, single-family attached structures, multi-family dwellings, mixed-use developments where residential units constitute at least fifty percent (50%) of the building’s total square footage as well as existing buildings converted into residential housing units qualifying under adaptive reuse in § 45-24-37; provided such conversions meet all applicable zoning and building code requirements and increase the municipality’s total housing stock. New construction shall also include modular and manufactured homes. This provision shall apply provided that: LC006356 - Page 3 of 5
(i) A city or town has issued over ten (10) certificates of occupancy for new housing units during the fiscal year in which the exemption is sought; and
(ii) Such units are part of a development project that includes at least ten percent (10%) of the units designated as low- or moderate-income housing as defined in §§ 45-53-3 and 42-128-8.1; and
(iii) Such units are taxed utilizing the same valuation methods and rates as similar units in the respective city or town; and
(iv) The taxes levied on these qualifying new housing units may only exceed the maximum levy for the fiscal year in which the certificate of occupancy is issued and two (2) fiscal years thereafter in which the municipality shall phase in the full taxes for these units into the maximum levy by the fourth fiscal year following the issuance of a certificate of occupancy for the new housing unit(s).
(e) Any levy pursuant to subsection (d) of this section in excess of the percentage increase specified in subsection (a) or (b) of this section shall be approved by the affirmative vote of at least four-fifths (⅘) of the full membership of the governing body of the city or town, or in the case of a city or town having a financial town meeting, the majority of the electors present and voting at the town financial meeting shall also approve the excess levy.
(f) Nothing contained in this section constrains the payment of present or future obligations as prescribed by § 45-12-1, and all taxable property in each city or town is subject to taxation without limitation as to rate or amount to pay general obligation bonds or notes of the city or town except as otherwise specifically provided by law or charter.
(g) Notwithstanding anything to the contrary, the town of Little Compton is permitted a one-year levy cap exemption for fiscal year 2026 not to exceed twelve percent (12%), and subject to approval by the Little Compton Financial Town Meeting.
(h) Notwithstanding anything to the contrary, the City of Providence is permitted a one- year levy cap exemption for fiscal year 2026 not to exceed eight percent (8%).
(i) Notwithstanding anything to the contrary, the city of Cranston is permitted a one-year levy cap exemption for the fiscal year ending June 30, 2027, not to exceed seven and forty-five hundredths percent (7.45%).
SECTION 2. This act shall take effect upon passage.