PROVIDENCE, R.I. (WPRI) - Several members of the Providence City Council on Wednesday expressed initial support for Mayor Angel Taveras’s plan to freeze the commercial real estate tax for seven years, but said they would seek more details before fully endorsing the proposal.
“I don’t know if seven years is feasible or not,” Council President Michael Solomon told WPRI.com. “I’d like to freeze it for 100 years. It sounds like a good idea if it’s going to expand our tax base. If we do that, it’s win-win. We need to do something to let people know that we’re committed to economic development.”
Taveras’s pledge to not increase commercial tax rates is part of an ambitious 20-point economic development plan that includes offering tax-stabilization deals to surface parking lot owners who commit to building on their properties, streamlining the city’s dated permitting process and redeveloping the Kennedy Plaza bus terminal.
Taveras said the tax freeze is needed because Providence has the second-highest commercial tax rate in the country, according to a 2010 study by the Lincoln Institute of Land Policy. At $36.75 per $1,000 of assessed value, the city’s commercial tax rate is 45% higher than the state average.
“I agree 100% that the commercial real-estate rate is too high and this is a good year to start [addressing it],” East Side Councilman Sam Zurier told WPRI.com.
But winning council passage of any tax freeze could hinge upon what Taveras plans to propose for residential rates in his budget for the 2013-14 fiscal year. The mayor said he does not want to increase residential taxes - the current rate is $31.89 per $1,000 of assessed value - but he stopped short of making any commitments.
“In terms of residential property tax rates, we will do everything we can to try to hold the line on taxes and as we finish up the budget we’ll make it clear where we stand on that,” Taveras told reporters on Wednesday.
South Side Councilman Luis Aponte said he liked much of what he saw in the mayor’s economic plan, but acknowledged that it might be a hard sell to residents and the council if the mayor ultimately proposes raising residential taxes.
“How do we do this at the expense of residents when people are barely getting by?” Aponte asked.
Solomon, the council president and a potential candidate for mayor next year if Taveras runs for governor, said raising taxes should only be considered after all other options are discussed.
“We need to look for ways to bring in new revenues without taxing people more money,” he said. “That’s going to be the challenge this year.”
Providence closed the 2011-12 fiscal year with a $15 million deficit and internal auditor Matthew Clarkin has projected the city will end the current fiscal year $11.2 million in the red.
Councilman John Igliozzi, who represents Silver Lake, said the city is currently in the process of reassessing property values, and those figures need to be released before the council considers any proposal for commercial properties.
“As exciting as it sounds, I think it’s too premature to freeze commercial tax rates for seven years without knowing the impact on residential rates,” Igliozzi told WPRI.com. “There are too many moving parts in the city’s financial picture.”
Councilman David Salvatore, whose Ways and Means Committee will be charged with vetting the Taveras tax freeze proposal, indicated he too wants to consider how the plan will affect city revenues, but said he is looking forward to working with the administration.
“While it is premature to assess the impact on revenue from freezing the commercial tax rate - since the city's property revaluation is not completed - the mayor's strategic approach to economic development in Providence is a step in the right direction,” Salvatore told WPRI.com.
Taveras, a first-term Democrat, is widely expected to run for governor in 2014 but has said he won't make a final decision until later this year. The mayor said he believes he’ll be able to work with the council to implement his proposal.
“Hopefully I’m going to leave a stronger economy, more people working, a bigger tax base, more tax revenue because we’ve expanded the tax base and people feeling even better about the city of Providence,” Taveras said. “That’s what this is about."
Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan