Commercial Property Tax Levies and the Non-Profit "Problem"

Here is the first of several charts I will present regarding local taxation in Rhode Island. The data on the charts is based on information submitted to the Rhode Island Division of Municipal Finance for taxes payable in the 2009-2010 fiscal year; the Division of Municipal Finance provided me with the "Assessor's Statement of Assessed Value and Tax Levy", and the "Classification of Tax Roll" documents for each RI city and town.

This chart considers at an oft-neglected distinction here in Rhode Island, the commercial/industrial property tax as separated from the residential property tax collected by each Rhode Island community. This information is needed to begin to answer the question of whether non-profit properties are creating a burden on the communities they reside in.

Before going on, I will make one technical note. Assessment and levy figures are not reported to the Municipal Affairs department by the cities and towns in a uniform fashion. All RI municipalities use the same property classification structure, but the reported totals indicate some variation in what is counted as "residential" and what is counted as "commercial or "industrial" from community to community, for the purposes of calculating the levy.

The charts below the fold show official "residential" and "commercial" property tax levy payable for 2009-2010 reported by each municipality, and then a set of estimates I made based on individual tax-code data to try to group the same set of properties as "residential" or "commercial" in each city or town (including counting "mixed use" properties as residential even though the state officials classifies them as commercial). Adjusted figures are used in this and the related posts. If anyone feels that their community is being slighted, send me an email, and I'll explain the adjustment.

Now, back to the substance...

Bristol, home of Roger Williams University, is relatively low in the amount of commercial property tax it has to use per-resident, but other private college towns (Providence, Newport, Smithfield) are near the top of the list in terms of per-resident commercial and industrial property tax revenue collected.

You can always make the argument that something not being taxed means that there is another source of money out there to squeeze more more more out of, but there does not appear to be a strong statewide case that non-profits are overly depressing the amount of commercial and industrial property tax dollars being collected by their communities (unless, of course, you are using the progressive "logic" that someone not holding the #1 spot on a taxation list proves that taxes must be made higher).

In the end, if taxing non-profits is the best solution that a financially-strapped community is able to come up with for solving its fiscal woes, it is highly likely that the new revenue will quickly be absorbed into the same poor budgeting practices that created the original problem, and that a new budget hole will soon reappear. No matter how many "new" sources of revenue are added, there is not enough revenue in the world to sustain faster-than-inflation growth forever.

Finally, the results also suggest, much to the chagrin of the pack-everyone-into-cities land-use planning advocates, that strip-mall/big box development (Warwick, Middletown) seems to be very lucrative in terms of commercial tax revenue.