Guthrie Bill Would Set Taxing Authority for Fire Districts

The financial troubles of the Central Coventry Fire District are about to be compounded this year when tax bills go out. Unlike previous years, when the district sent out tax bills on a two-tiered system – one for residences, one for businesses – the receiver appointed to oversee the district’s operation has determined that the fire district does not have authority to designate tax classes.

As a result, bills from the fire district this year will all be at one rate – the residential rate – which may please businesses owners whose bills will be lower, but will add stress to the district’s financial problems.

“The receiver is correct that state law does not permit fire districts to set and administer tax classification plans,” said Rep. Scott J. Guthrie (D-Dist. 28, Coventry). “Unfortunately, being correct in this case is going to cause a world of problems, and not just in Coventry but in fire districts across the state.”

Without the ability to administer a tiered-tax system for homeowners and businesses, Representative Guthrie said districts face the prospect of bringing in less tax money unless they set one, higher rate, which is not going to please homeowners.

Legislation introduced by Representative Guthrie will create law clearly establishing powers and duties of fire districts in Rhode Island, including taxing ability and administering a tax classification plan. The bill also calls for an annual independent audit, calls for a majority vote of electors of a district for any supplemental tax increase, and puts restrictions on the disparity between the various tax classifications.

“Fire districts across the state have employed a tax classification plan, even though state law does not give them the authority to do so. They were not doing it knowing it was not legal, but rather because they assumed that if their municipality could tax this way, so could the fire districts,” said Representative Guthrie. “The bill I’ve introduced provides districts with the power to formally adopt tax classification rates and should prevent fire districts around the state from facing the kind of havoc that is now going on in Central Coventry.”

The legislation, 2013-H 5176, would allow districts to adopt a tax classification plan, by a majority vote of the electors of the district. The designated classes would be limited to four classes – residential of no more than five dwelling units, open space and dwellings (including mobile homes) on leased land; commercial and industrial, residential properties containing partial commercial or business use, and dwellings of more than five unites; all ratable tangible personal property, and motor vehicles and trailers.

Under the bill, the effective tax rate applicable to any class (excluding vehicles) would not be allow to exceed by 50 percent the rate of any other class. (For instance, if the residential rate is $1.50, the commercial/industrial could be no more than $2.25.)

The bill requires that the Division of Municipal Finance in the Department of Revenue monitor fire district compliance with the requirements and issue periodic reports to the General Assembly regarding compliance.

Finally, the bill provides that, if enacted, it would not apply if it is specifically prohibited by the charter of a fire district.

The bill has been referred to the House Committee on Finance. Among the co-sponsors are Rep. Lisa P. Tomasso (D-Dist. 29, Coventry, West Greenwich) and Rep. Patricia A. Serpa (D-Dist. 27, West Warwick, Coventry, Warwick).