The following is testimony that Gary Morse offered during March 15 hearings in the General Assembly concerning the adoption of a Brookings Institution report as the state’s official economic development plan.
I have been studying the Rhode Island property tax system for over 5 years, and as a matter of full disclosure, I currently have a lawsuit in the RI Courts challenging how the Town of Barrington has implemented certain statutory property tax provisions.
The Brookings Study (Study) recognizes the burdensome Rhode Island tax structure as a barrier to economic growth. Examples from the Study include excerpts…
- From page 69 citing “Constraints… including high property taxes”.
- From Page 103 “…businesses look at the tax system when considering a move to a particular jurisdiction.”
- From Page 104 “…the state needs to think as a small business owner in evaluating the impact of taxes.”
- From Page 105 “…the state’s high local property taxes undercuts the effectiveness of its R&D tax credit.”
Where the Study falls short is in providing concrete examples of where government policy has been able to shape economic growth without first addressing the fundamental problems restricting such growth. One such problem within our government is how legislation might have a direct, or indirect impact on taxes, but is adopted in the absence of proper analysis of tax impact.
For example, in 2015, House Bill H6107A was unanimously passed out of the House Finance Committee proposing that residential property tax assessments for any and all deed restricted property be based on a lower statewide formula. When the Barrington Town Council asked the local Representatives for an impact assessment to local property taxpayers, the Representatives reported to the Town Council that no economic impact analysis had been done before the legislation passed out of Committee.
The Brookings Report appears to suggest that targeted business segments will overlook policies that lead to higher taxes. I suggest that this is simply wishful thinking, and dodges a resolution to the fundamental barrier towards economic growth in Rhode Island, being high taxes, and in particular, high property taxes.