City Council Approves Tax Bill Interest Amnesty

If you're overdue on taxes owed to the City of Woonsocket, you may not have to worry about the 15 percent interest penalty if you square up before the end of June. 

The City Council approved a resolution last night asking the city's General Assembly delegation to introduce legislation allowing the city to forgive the the interest on the last three years of overdue real estate bills, and last two years for vehicle and personal property tax.

City Finance Director Thomas Bruce said by his conservative estimate, the measure could encourage enough delinquent taxpayers to settle their bills to generate about $400,000 between May and July, when the city will experience a "severe cash flow". Bruce said the city is about $9 million short for those months, and any revenue generated before then is critical. "This amnesty is only one of eight strategies we're working on," Bruce said Tuesday. 

The amnesty is capped at $3,000 per taxpayer, and must accompany a full payment of overdue taxes (see attached .pdf). For real estate, the amnesty applies to the last three years. For personal property and motor vehicles, the amnesty applies to 2011 and 2012. Outstanding bills on personal property and vehicles from 2010 and before have been sent to collections through an outside attorney, Bruce said, and have to be settled through them.

The Council's resolution was the idea of Councilor Dan Gendron. He said he began thinking of the idea after a call on WNRI's Larry Poitras show from Roland Michaud asking for help for struggling taxpayers. "Right after that radio show, I spoke with Mr. Bruce," Gendron said, and the two came up with the idea that gives taxpayers a break while bringing in revenue for the city it might not see until August tax sales, when property with outstanding tax bills are auctioned off to pay the debts. "It was win-win, actually," Gendron said.

A copy of the resolution will be sent to the city's state senators and representatives, all of whom have expressed support for the idea, Gendron said. Rep. Lisa Baldelli Hunt (D-Dist. 49, Woonsocket) has her own version of a tax amnesty bill in the works already, said Council President John Ward. Baldelli-Hunt's version forgives the interest on the last quarterly bill, he said. 

Ward noted that the city would recoup the outstanding funds eventually at the tax sales. "In any case, it's going to get paid," he said. He also expressed concern that the city wasn't being fair to those who've recently paid their back taxes and the interest penalty.

Gendron said that would be the case with any change they made — in any event there is likely to be someone who misses out on the opportunity. But, he said, that wasn't a good reason not to create the amnesty.

Bruce also noted that while the delinquent bills would be settled eventually, the amnesty has the benefit of bringing in revenue quickly, before the city is likely to otherwise run out of revenue for the second time in as many years. Last year, the freshly appointed Budget Commission advanced $12 million in state aid to fish the city out of the hole. 

Bruce said the other strategies the city is working on to fill the approaching deficit (by June 10, the city could face a total $14.5 million cash deficit, which he said would be "crippling") include:

• Borrowing from other city funds
• Tax Anticipation Notes (TANs) - borrowing $10 million against future revenue.
• Accounts payable financing - invoices received in May and June would be paid within 60 days instead of immediately. Deferring those payments could buy the city time to pay millions of dollars, Bruce said.

Bruce, who said he works personally with many of home owners who've run behind on their tax bills, offered another reason to back the resolution. "The interest amnesty may be all the difference in the world for these families," Bruce said.

The resolution passed 5-1, with Ward voting against. Councilman Christopher Beauchamp was not at the meeting.

The amnesty must still pass muster at the Woonsoket Budget Commission. Their next meeting is Friday, 11 a.m., at Woonsocket City Hall, 169 Main St., in Harris Hall.