Taxpayers are furious, while politicians scramble to find solutions.
“Reassessments are expensive and create a lot of disruption, as you see in Providence in particular – and in Johnston as well,” said Lieutenant Governor Daniel McKee, former mayor of Cumberland.
At McKee’s request, the state House of Representatives passed a resolution in June establishing a “Rhode Island Town and City Reassessment Study Commission,” to carefully examine the matter and make recommendations. recommendations by January 2020.
“Massachusetts has a good model,” McKee said.
Full reassessments take place every five years in Massachusetts, but McKee said the main difference is that local appraisers make small annual changes to property values based on property sales statistics.
These annual adjustments help cities avoid the “huge swings in value, up and down” that alarmed taxpayers in recent years, when Massachusetts required reassessments every three years, said Christopher Wilcock, president of the Massachusetts Association of Assessing Officers.
Wilcock is chief appraiser in Melrose, a town of some 28,000 people just north of Boston. “It’s one of the most popular postcodes,” he explained. “And you’ll see a 7-8% increase in property value every year. So if there was no adjustment for three years, you would have a 21-24% increase in value at once.
Annual adjustments, often done by the local assessor’s office rather than outside companies, help minimize the change in value (and taxes paid) over the course of a year. “Values remain in sync with the market,” Wilcock said. “So it helps people understand what their assessment is.”
Additionally, the annual adjustments are based on new sales data, Wilcock noted. “If you wait every five years or every three years, it’s a little harder to explain to people where the ratings are coming from,” he said.
McKee said the annual updates make a lot of sense: “You won’t have these huge up and down spikes, and hopefully that will reduce the kind of reactionary strategies that are happening in Providence right now.”
There is also a difference in how Massachusetts handles reassessment appeals. In Rhode Island, reassessment disputes can drag on for years in court, while Massachusetts uses a statewide appeal board to quickly resolve such disputes.
Wilcock said that, like those in Rhode Island, reassessment challenges start at the local level in Massachusetts, but property owners can appeal to the Boston Tax Appeal Board, which hears and decides state tax appeals and local.
In a 2017 budget document, Governor Gina M. Raimondo proposed a more frequent review process — similar to Massachusetts — but lawmakers did not agree to the change.
“The state’s 10-year property reassessment cycle is the longest reassessment cycle in the nation,” the administration wrote. “Infrequent reassessments result in disparities in the property tax burden between property types and classes within and between cities and towns.”
Last week, Raimondo’s press secretary, Josh Block, said, “The governor has been fighting for changes to the property reassessment structure that would save taxpayers money and provide a greater accuracy and fairness among municipalities. She continues to believe that the system needs such reforms.
In Providence, residents have experienced massive fluctuations in property values over the past decade.
This year, home values in Providence have increased by an average of 25%. But some neighborhoods have seen bigger spikes than others. In more affluent neighborhoods, where the volatility of values tends to be less, some have even seen their valuation decline. Raimondo, for example, saw the value of his East Side home drop from $975,000 to $913,000.
Elorza proposed a reduction in the tax rate, but city council leaders argued that this was unfair because it meant that some neighborhoods that had large increases in value would see tax increases while residents living in them richer people could see their bills go down. The council unsuccessfully lobbied the General Assembly to allow it to send larger tax bills to properties valued over $350,000.
In the end, Elorza and the council finally agreed on a tax plan that allows owner-occupied properties to qualify for a 40% exemption. The majority of residents will still see a tax increase, but not as big as the mayor’s original plan.
Councilman David Salvatore, who works as director of government affairs for the Rhode Island Association of Realtors, said the Providence situation is a good example of how the The State Reassessment Act requires local governments to make significant changes to their tax policies.
“Taxpayers are confused when they see these big swings in their taxes every three years,” Salvatore said. “I think we have an obligation to establish a policy that is easily understood by the average taxpayer.”
In Johnston, Mayor Joseph M. Polisena said residential property values rose about 26% in the city’s latest statistical update. “It’s a big hit for people,” he said. “We don’t want to shock people with stickers.”
So the city tried to get creative in getting state approval to use a two-tier tax system that taxes commercial and industrial properties at a higher rate than residential properties.
“It shifts the burden – but not a lot,” Polisena said. “We don’t want to rip off businesses because we’re business friendly.”
With the two-tier tax system, tax increases for homeowners won’t be as big as they otherwise would have been, he said.
“Everyone thinks their property is worth $500,000 when they sell it,” Polisena said. “But when they get this tax bill, they say ‘It’s only worth $100,000 – this house is a dump that I live in. It’s human nature. I say the same thing.
Polisena likes the idea of local appraisers doing annual updates on property values. “It’s going to even things out,” he said. “In addition, upgrading is expensive. The only winners are the reval companies. Giving power back to towns and villages.
But he doesn’t like the idea of a statewide reassessment appeals process. “They don’t know what Johnston is,” he said. “They don’t know the full identity of the 39 towns and villages.”
Edward Fitzpatrick can be contacted at email@example.com. Dan McGowan can be reached at firstname.lastname@example.org.