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SB 2552

AN ACT RELATING TO TOWNS AND CITIES -- STATE AID

2026 Regular Session Introduced by Sam Bell and 7 co-sponsors

Raises state aid for exempt properties to 30% of would-be property taxes to municipalities, up from 27%.

05/07/2026 Committee recommended measure be held for further study
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Bill Summary · SB 2552

Summary of SB 2552 (Rhode Island, 2026) – State Aid for Exempt Properties

Overview

  • Title: AN ACT RELATING TO TOWNS AND CITIES — STATE AID
  • Session: 2026
  • Introduced: February 13, 2026
  • Primary purpose: Increase the amount of state aid distributed to municipalities in lieu of property taxes for certain exempt private and state properties.

What the bill does (main purpose and intent)

  • The bill modifies the statutory framework governing state aid in lieu of property tax for properties that are exempt from local property tax. Specifically, it sets the state to appropriate a larger share of tax-equivalent revenue to municipalities.
  • It increasing the in-lieu-of-tax payment to 30% (previously 27%) of the property taxes that would have been collected on exempt properties, with adjustments possible under subsection (e).

Key provisions and changes

  1. Expanded eligibility and payment basis (Section 45-13-5.1(a), (d))

    • The state shall annually appropriate to cities and towns a sum equal to:
      • 27% (now 30%) of the property taxes that would have been collected on exempt real property owned by:
      • Private nonprofit institutions of higher education
      • Pokanoket Management Group (trustee of Pokanoket Tribe Land Trust)
      • Nonprofit hospital facilities
      • State-owned and operated hospitals, veterans’ residential facilities, or correctional facilities occupied by more than 100 residents
      • This applies to properties that would have been exempt from taxation under state law, excluding federal facilities.

  2. Limitations on interaction with other agreements (Section 45-13-5.1(b))

    • A city or town cannot simultaneously (a) have tax or payment under any stabilization agreement with a for-profit hospital facility and (b) receive distributions under this state-aid provision related to the prior nonprofit status of that facility.

  3. Definitions (Section 45-13-5.1(c))

    • Narrow definitions:
      • “Private nonprofit institution of higher education” = institution primarily engaged in higher education; property exempt from tax.
      • “Nonprofit hospital facility” = state-licensed nonprofit hospital used for general medical, surgical, or psychiatric care.

  4. Grant calculation and historical baseline (Section 45-13-5.1(d))

    • The grant to a municipality equals 30% of the property taxes that would have been paid on exempt property, using a baseline:
      • For assessment lists as of December 31, 1986 (and subsequent assessment dates), except:
      • The grant for the fiscal year ending June 30, 2008 shall be based on the December 31, 2004 assessment list.

  5. Budgetary adjustment for shortfalls (Section 45-13-5.1(e))

    • The annual state appropriation for this program will be included in the state budget.
    • If total appropriations are insufficient to cover all payable amounts, distributions to eligible municipalities shall be reduced proportionately.

  6. Payment timing (Section 45-13-5.1(f))

    • Distributions are to be made by July 31 of each year (or after verification of the following year’s assessment data, whichever is later).
    • Payments may be counted as a receivable by municipalities for a fiscal year ending the prior June 30.

  7. Public safety and essential services (Section 45-13-5.1(g)-(h))

    • The state’s act or omission does not diminish municipalities’ duty to provide public safety and other ordinary services to the listed facilities.
    • Payments under this section may be reduced pro rata if the municipality suspends or reduces essential services (including police, fire, rescue) to eligible facilities.

Who is affected

  • Municipalities (cities and towns) in Rhode Island that contain exempt private nonprofit higher-ed properties, Pokanoket Tribe properties, nonprofit hospital facilities, or certain state-operated facilities (hospitals, veterans’ homes, correctional facilities with 100+ residents).
  • State budget processes, as the program requires annual appropriations and potential proportional reductions if funds are insufficient.

Procedural and timeline notes

  • Effective date: This act takes effect upon passage.
  • Payment timing: Administrative distributions occur on or before July 31 of each year, following assessment data verification.
  • Oversight: Referred to the Senate Finance Committee; scheduled hearings/consideration noted.

Potential impact

  • Increased state support to municipalities for exempt properties (30% baseline vs. prior 27%), enhancing local revenue stability where properties would otherwise contribute no property tax.
  • Budgetary risk if total state appropriations are insufficient, due to pro rata reductions.
  • Interplay with other tax arrangements (stabilization agreements) and with essential service obligations for affected municipalities.

This summary captures the bill’s substantive changes, affected actors, and potential fiscal and service implications. If you’d like, I can provide a side-by-side comparison with the current law and a fiscal impact estimate based on hypothetical assessment data.

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

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