Many Providence residents are reeling from sticker shock on the new property tax bills landing in their mail boxes. But there are few easy answers for how to reduce the tax bite in Rhode Island’s capital city.
Mark Mikula and his wife moved from Bristol to Providence last year because they wanted to be closer to the city’s cultural scene. But they got a nasty surprise after calculating their revised property tax. Mikula said the bite for their historic cottage in the Armory District soared by more than 41 percent, while comparable neighborhood properties rose mostly by the single digits.
“We have no problem paying taxes," he said. "We just want it to be fair in terms of all of us being in this together.”
Mikula and his wife are appealing their assessment. The big bump in their property tax may be an extreme case. But they’re hardly the only Providence taxpayers feeling the sting of higher property taxes.
“My email was deluged with community input – 'help us, I’m not going to be able to stay in my home,' " said City Council Majority Leader Jo-Ann Ryan, who got an outpouring of anxiety from residents alarmed about early signs of higher taxes.
They told her things like this: “I’m a single mom or I’m a senior. I raised my family here in this house. I’m going to have to move, I’m going to have to move out of Providence. I don’t want do that – can you help us?”
Providence homeowners are getting new tax bills due to a state law that requires local cities and towns to revalue their properties every nine years. The impact was especially sharp this time around. That’s because the revaluation followed the run-up in property values after the Great Recession.
“The biggest increases were seen in the poorest neighborhoods," Ryan said.
Values soared by as much as 50 percent in some parts of the city away from the more prosperous East Side. And according to the real estate site Zillow, prices for some multi-family units on the city’s West Side are more than double their estimated value from five years ago.
How to help property owners cope with those higher property taxes made for sharp debate when the City Council considered a new budget.
Mayor Jorge Elorza wanted owners of rental properties to continue paying taxes at a higher rate than owner-occupied buildings. The majority on the council responded by passing a single tax rate of $24.56 per thousand dollars of value. That’s up from the previous residential rate of $18.80 per thousand of value. The council also re-introduced a steep discount for owner-occupied properties. That so-called homestead exemption cuts property taxes by 40 percent.
Even even with the big homestead exemption discount, many homeowners will pay more in property taxes over the next year, because of higher property values.
To help make that point, Ward 14 Councilor David Salvatore met with me on a quiet residential street, Rosebank Drive in the Elmhurst section of Providence.
“This is a middle class neighborhood in Providence," he said. "It’s similar and different from the East Side, but these are hard working folks that get up in the morning every day.”
Salvatore said neighborhoods like this, where home values exceed $350,000, will face a bigger share of the property tax burden due to the new budget backed by the council majority and signed by Mayor Elorza. And Salvatore said reintroducing the homestead exemption creates a distorted picture by offering a deep discount on a publicly listed tax rate.
“When you’re branding a city, you want to be upfront, honest with folks," he said. "But Providence and other municipalties can’t control the narrative and information that’s published on the internet so I think what prospective homebuyers will see is a rate of 24.56 on certain web sites and that could deter homeownership in folks who aspire to live in Providence.”
This type of concern led Salvatore, who represents the Elmhurst and Wanskuck neighborhoods, to join three East Side councilors in voting against the budget. He says the process was not honest.
Council Majority Leader Jo-Ann Ryan responds in part by noting how Salvatore works as a lobbyist for the Rhode Island Association of Realtors. She remains unapologetic about the council majority’s approach on the property tax. Ryan said they made the best of a bad situation and cut the size of the tax increase for most city residents.
“The argument that we’re trying to provide relief to 86 percent of the population and reduce taxes across the board is a stronger argument than providing tax relief for the well-advantaged – the small number of well-advantaged,” she said.
Salvatore and Ryan landed on different sides of the property tax debate. Yet both councilors say there’s got to be a better way of revaluing properties without subjecting residents to wild swings in their annual tax bill.
In Massachusetts, for example, there are statistical updates on property value every year and a full revaluation about every five years.
Meanwhile, Governor Gina Raimondo has proposed changing the state’s approach on property taxes, but her plan has gone nowhere at the General Assembly.