Bill Sponsors
Senator Louis P. DiPalma
Committee
Senate Finance
Summary
Select
The bill amends the state's Payment in Lieu of Taxes (PILOT) program. Under current law, the state pays cities and towns a portion of the property taxes they lose from tax-exempt properties like nonprofit hospitals and colleges, but it excludes federal properties. This bill changes the law to allow municipalities that host federal Department of Defense facilities, such as Naval Station Newport, to receive these state payments. This helps those cities and towns cover the costs of providing local services like police, fire, public works, and libraries to those military bases.
Sponsor
Analysis
Pros for Progressives
- Provides crucial funding to local municipalities, ensuring they have the resources needed to maintain generous public services like libraries, senior centers, and parks without cutting budgets.
- Shifts the financial burden of supporting large tax-exempt federal institutions away from local property taxpayers, who may be struggling financially, to the broader state budget.
- Supports the welfare of the community by ensuring adequate funding for essential emergency response services, such as police, fire, and rescue, in areas with large military bases.
Cons for Progressives
- Directs state funds to subsidize municipalities for hosting military and Department of Defense facilities, which some progressives may oppose due to anti-war or anti-military-industrial complex sentiments.
- The state budget appropriation for these payments could divert state funds away from other critical social safety net programs, affordable housing, or environmental initiatives.
- Benefits only specific municipalities that host DoD facilities, potentially exacerbating regional inequalities if those host towns are already relatively affluent compared to poorer urban centers.
Pros for Conservatives
- Demonstrates strong support for the military and national defense by ensuring host municipalities are compensated for accommodating Department of Defense facilities.
- Protect local property taxpayers from being forced to shoulder the financial burden of providing municipal services to large, tax-exempt federal government properties.
- Encourages the continued presence and regional economic benefits of military installations by ensuring local towns have the infrastructure (like public works and utilities) to support them.
Cons for Conservatives
- Increases state government spending by requiring new annual appropriations to municipalities that host federal Department of Defense facilities.
- Creates a new ongoing entitlement for local governments to receive state taxpayer funds, expanding the scope of the state's Payment in Lieu of Taxes (PILOT) program.
- Forces taxpayers across the entire state to subsidize the municipal budgets of a few specific towns that happen to host federal military bases.
Constitutional Concerns
None Likely
Impact Overview
Groups Affected
- Municipal governments
- Local property taxpayers
- Department of Defense personnel
- State budget officials
- Public safety workers
Towns Affected
Newport, Middletown, Portsmouth
Cost to Taxpayers
Amount unknown
Revenue Generated
None
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Bill Status
Current Status
Held
Comm Passed
Floor Passed
Law
History
• 05/05/2026 Introduced, referred to Senate Finance
• 05/05/2026 Scheduled for hearing and/or consideration (05/07/2026)
• 05/07/2026 Committee recommended measure be held for further study
• 05/05/2026 Scheduled for hearing and/or consideration (05/07/2026)
• 05/07/2026 Committee recommended measure be held for further study
Bill Text
SECTION 1. Section 45-13-5.1 of the General Laws in Chapter 45-13 entitled "State Aid" is hereby amended to read as follows:
45-13-5.1. General assembly appropriations in lieu of property tax from certain exempt private and state properties.
(a)(1) In lieu of the amount of local real property tax on real property owned by any private nonprofit institution of higher education, the Pokanoket Management Group, a Rhode Island nonprofit corporation, trustee of the Pokanoket Tribe Land Trust, or any nonprofit hospital facility, or any state owned and operated hospital, veterans’ residential facility, or correctional facility occupied by more than one hundred (100) residents which may have been or will be exempted from taxation by applicable state law, exclusive of any facility operated by the federal government, except as otherwise provided for in subsection (2) of this subsection, the state of Rhode Island, or any of its subdivisions, the general assembly shall annually appropriate for payment to the several cities and towns in which the property lies a sum equal to twenty-seven percent (27%) of all tax that would have been collected had the real property been taxable; provided, however, said percentage shall be subject to adjustment pursuant to subsection (e) of this section.
(2) Provided, any facility operated by the federal Department of Defense including, but not limited to, the Naval Station Newport, shall be eligible for payment in lieu of taxes provided by this section. The reason for this eligibility is the scale of employment, the regional economic benefit, and the specific municipal demands on those municipalities on which federal Department of Defense facilities are operated. These municipal demands include police, fire and rescue, public works infrastructure, utilities oversight, parks and beach operations, planning and permitting, library services, senior center programming, and emergency response services.
(b) In no event shall any city or town record in a fiscal year both: (1) Taxes and/or payments under a stabilization agreement with a for-profit hospital facility; and (2) Distributions of appropriations under this section attributable to the prior nonprofit status of said for-profit hospital facility.
(c) As used in this section, “private nonprofit institution of higher education” means any institution engaged primarily in education beyond the high school level, the property of which is exempt from property tax under any of the subdivisions, and “nonprofit hospital facility” means any nonprofit hospital licensed by the state and which is used for the purpose of general medical, surgical, or psychiatric care and treatment.
(d) The grant payable to any municipality under the provision of this section shall be equal to twenty-seven percent (27%) of the property taxes that, except for any exemption to any institution of higher education or general hospital facility, would have been paid with respect to that exempt real property on the assessment list in the municipality for the assessment date of December 31, 1986, and with respect to such exempt real property appearing on an assessment list in the municipality on succeeding assessment dates. Provided, however, that the grant paid for the fiscal year ending June 30, 2008, shall be based upon the assessment list in the municipality as of December 31, 2004.
(e) The state budget offices shall include the amount of the annual appropriation in the state budget for the fiscal year commencing July 1, 1988, and each fiscal year thereafter. The amount of the annual distribution of appropriation payable to each eligible municipality in any year in accordance with this section shall be reduced proportionately in the event that the total of the annual appropriation in the state budget is insufficient to pay the eligible municipalities the amounts otherwise payable to said communities pursuant to subsection (a) of this section.
(f) Distribution of appropriations shall be made by the state on or before July 31 of 1988 and each July 31 thereafter or following verified receipt of a municipality’s assessment data for the following fiscal year’s payment, whichever is later, and the payments may be counted as a receivable by any city or town for a fiscal year ending the preceding June 30.
(g) Any act or omission by the state with respect to this chapter shall in no way diminish the duty of any town or municipality to provide public safety or other ordinary services to the properties or facilities of the type listed in subsection (a).
(h) Provided, that payments authorized pursuant to this section shall be reduced pro rata, LC006405 - Page 2 of 4 for that period of time that the municipality suspends or reduces essential services to eligible facilities. For the purposes of this section “essential services” include, but are not to be limited to, police, fire and rescue.
SECTION 2. This act shall take effect upon passage.
45-13-5.1. General assembly appropriations in lieu of property tax from certain exempt private and state properties.
(a)(1) In lieu of the amount of local real property tax on real property owned by any private nonprofit institution of higher education, the Pokanoket Management Group, a Rhode Island nonprofit corporation, trustee of the Pokanoket Tribe Land Trust, or any nonprofit hospital facility, or any state owned and operated hospital, veterans’ residential facility, or correctional facility occupied by more than one hundred (100) residents which may have been or will be exempted from taxation by applicable state law, exclusive of any facility operated by the federal government, except as otherwise provided for in subsection (2) of this subsection, the state of Rhode Island, or any of its subdivisions, the general assembly shall annually appropriate for payment to the several cities and towns in which the property lies a sum equal to twenty-seven percent (27%) of all tax that would have been collected had the real property been taxable; provided, however, said percentage shall be subject to adjustment pursuant to subsection (e) of this section.
(2) Provided, any facility operated by the federal Department of Defense including, but not limited to, the Naval Station Newport, shall be eligible for payment in lieu of taxes provided by this section. The reason for this eligibility is the scale of employment, the regional economic benefit, and the specific municipal demands on those municipalities on which federal Department of Defense facilities are operated. These municipal demands include police, fire and rescue, public works infrastructure, utilities oversight, parks and beach operations, planning and permitting, library services, senior center programming, and emergency response services.
(b) In no event shall any city or town record in a fiscal year both: (1) Taxes and/or payments under a stabilization agreement with a for-profit hospital facility; and (2) Distributions of appropriations under this section attributable to the prior nonprofit status of said for-profit hospital facility.
(c) As used in this section, “private nonprofit institution of higher education” means any institution engaged primarily in education beyond the high school level, the property of which is exempt from property tax under any of the subdivisions, and “nonprofit hospital facility” means any nonprofit hospital licensed by the state and which is used for the purpose of general medical, surgical, or psychiatric care and treatment.
(d) The grant payable to any municipality under the provision of this section shall be equal to twenty-seven percent (27%) of the property taxes that, except for any exemption to any institution of higher education or general hospital facility, would have been paid with respect to that exempt real property on the assessment list in the municipality for the assessment date of December 31, 1986, and with respect to such exempt real property appearing on an assessment list in the municipality on succeeding assessment dates. Provided, however, that the grant paid for the fiscal year ending June 30, 2008, shall be based upon the assessment list in the municipality as of December 31, 2004.
(e) The state budget offices shall include the amount of the annual appropriation in the state budget for the fiscal year commencing July 1, 1988, and each fiscal year thereafter. The amount of the annual distribution of appropriation payable to each eligible municipality in any year in accordance with this section shall be reduced proportionately in the event that the total of the annual appropriation in the state budget is insufficient to pay the eligible municipalities the amounts otherwise payable to said communities pursuant to subsection (a) of this section.
(f) Distribution of appropriations shall be made by the state on or before July 31 of 1988 and each July 31 thereafter or following verified receipt of a municipality’s assessment data for the following fiscal year’s payment, whichever is later, and the payments may be counted as a receivable by any city or town for a fiscal year ending the preceding June 30.
(g) Any act or omission by the state with respect to this chapter shall in no way diminish the duty of any town or municipality to provide public safety or other ordinary services to the properties or facilities of the type listed in subsection (a).
(h) Provided, that payments authorized pursuant to this section shall be reduced pro rata, LC006405 - Page 2 of 4 for that period of time that the municipality suspends or reduces essential services to eligible facilities. For the purposes of this section “essential services” include, but are not to be limited to, police, fire and rescue.
SECTION 2. This act shall take effect upon passage.