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HB 8473

AN ACT RELATING TO TAXATION -- LEVY AND ASSESSMENT OF LOCAL TAXES

2026 Regular Session Introduced by Mike Chippendale

The bill would adjust the local levy cap framework, allowing limited one-year exemptions for certain municipalities and requiring high-level approval to exceed the cap.

05/11/2026 Withdrawn at sponsor's request
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WeVote Research Nonpartisan
Bill Summary · HB 8473

Overview

HB 8473 (Rhode Island, 2026) is an act relating to taxation—levy and assessment of local taxes. Introduced April 17, 2026 by Rep. Michael W. Chippendale and referred to the House Municipal Government & Housing committee. The bill as introduced would modify the existing levy cap framework for cities and towns, adjust several specified exemptions and special provisions, and set delivery milestones for ongoing monitoring. Note: Action history shows the bill was withdrawn at sponsor’s request on May 11, 2026.

Main purpose and intent

  • To modify and extend the levy cap framework for local governments, defining how much additional local tax revenue a city or town may raise year over year.
  • To establish or adjust certain exemptions and special provisions allowing temporary deviations from the levy cap under specific circumstances.
  • To grant targeted, one-year levy cap exemptions to specific municipalities (Little Compton, Providence, Cranston) for fiscal years 2026–2027, subject to approval processes.

Key provisions and changes

  • Section 44-5-2 (Maximum levy)

    • Fiscal year 2007 and earlier: Allows up to a 5.5% increase over the prior year’s levy, with a 105.5% threshold test on tax rate to determine compliance, and rules linked to valuation updates or revaluations.
    • Fiscal years 2008–2013: Phased reductions in the allowable levy growth (5.25% in 2008, 5% in 2009, 4.75% in 2010, 4.5% in 2011, 4.25% in 2012, and 4% in 2013 and thereafter).
    • Exclusions: Taxes levied under chapters 34 and 34.1 do not count toward the levy cap calculation.
    • FY 2018 transition rule: If excluding motor vehicle tax caused a cap exceedance compared to FY 2017, cities/towns could exceed the cap for FY 2018 transition year, but not beyond a 4% levy cap including the car tax portion; other exceptions may apply under subsection (d).
    • Monitoring and reporting: The Division of Property Valuation in the Department of Revenue must monitor compliance, issue periodic reports, and make recommendations on cap continuation/modification on specified dates. Municipal chief elected officials must provide the adopted levy and rate information to DPVM within 30 days of final action.

  • Subsection (d)—Exceptional circumstances allowing levy above cap
    Cities/towns may exceed the cap if any of the following apply:
    1) Forecasted or actual loss in total non-property tax revenues certified by the Department of Revenue.
    2) Emergence or anticipated emergency (e.g., health insurance costs, retirement contributions, or utility expenditures exceeding prior-year costs by more than three times the allowed increase) certified by the auditor general.
    3) Debt service expenditures rise beyond the prior year due to bonded debt, with notification to the Department of Revenue.
    4) Substantial growth in tax base due to major new construction requiring infrastructure or service expenditures, certified by the Department of Revenue.
    5) Providence-specific provision for FY 2026: additional revenue from Class 2B rate above $28.80 per $1,000 may exceed the cap.
    6) New housing unit exemptions (effective for assessment dates after 12/31/2025) allowing taxes on qualifying new housing units to exceed the cap, subject to conditions:

    • At least 10 certificates of occupancy issued for new housing in the fiscal year.
    • Projects include at least 10% low- or moderate-income housing.
    • Units taxed using the same valuation method and rates as similar units.
    • Exceedance allowed only for the current year of occupancy and the next two fiscal years, with full taxes phased in by the fourth year after occupancy.

  • Subsection (e)—Approval requirements
    Any levy above the cap under subsection (d) requires the affirmative vote of at least 4/5 of the full governing body, or, in municipalities with financial town meetings, majority approval by electors present and voting.

  • Subsection (f) and (g)–(i)–Miscellaneous provisions

    • Subsection (f): The cap does not constrain payment of existing or future obligations; general obligation bonds/notes remain subject to other laws.
    • Subsection (g): Little Compton gets a one-year levy cap exemption for FY 2026 not to exceed 12%, subject to approval by the Little Compton Financial Town Meeting.
    • Subsection (h): Providence gets a one-year levy cap exemption for FY 2026 not to exceed 8%.
    • Subsection (i): Cranston gets a one-year levy cap exemption for the fiscal year ending June 30, 2027, not to exceed 7.45%.

  • Section 2: Effective upon passage.

Who would be affected

  • All Rhode Island cities and towns subject to the state levy cap framework, particularly in matters of annual tax levy growth and compliance reporting.
  • Specific municipalities receiving targeted one-year exemptions: Little Compton, Providence, and Cranston (subject to local approvals and time-limited duration).
  • Departments involved in administration and oversight: Division of Property Valuation in the Department of Revenue; Auditor General; local governments' governing bodies.

Procedural and timeline aspects

  • Monitoring and reporting obligations occur on an ongoing basis, with periodic assessments to be completed on specified historic dates (e.g., December 31 deadlines noted for prior amendments).
  • Approval thresholds for excess levies are strict (4/5 of governing body, or voting majority for financial town meetings).
  • The act includes transitional and special provisions—most notably, one-year exemptions for certain cities for FY 2026 and, in Cranston’s case, FY 2027.
  • Effective date: The act would take effect upon passage.

Potential impacts

  • Provides a structured framework to gradually reduce or limit local property tax levy growth over time, with explicit exemptions for emergencies, debt service, revenue losses, and growth-related needs.
  • Creates stronger safeguards and oversight through reporting requirements and high thresholds for approval of levies above the cap.
  • Offers targeted relief or flexibility for municipalities facing unique circumstances, possibly impacting property tax bills for residents and local fiscal planning.
  • Could influence decisions on housing development, infrastructure investment, and municipal budgeting, given the tie between new construction and cap exemptions.

Compiled from official sources — confirm details with the bill’s official record.

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