Chris Celeste, Woonsocket tax assessor, presented five plans for collecting the annual extra $2.5 million the city needs to balance its books, with one Budget Commissioner weighing in for commercial taxpayers.
The rest of the Commission took his lead.
"I'm a bad guy on this," warned member Peder Schaefer, noting his opinion that the difference between the commercial and residential tax rates is too high, and the earlier plan to phase-out the homestead exemption through 2026 is too slow.
According to the tax assessor's page on the city website, the residential rate is $32.26 per $1,000 valuation. The commercial rate is $38.27 per $1,000 valuation.
But the homestead exemption gives taxpayers in single-family homes and condos a 39 percent break for tax year 2012 (FY2013), which will be reduced by three percent annually through 2026, when it will end.
"It seems to me the equitable solution is to take care of this now rather than over a long period of years," Schaefer said, referring to the Celeste's Option B/Option 3, which reduces the 39 percent homestead exemption to 27 percent, taxing the difference to make up the entire $2.5 million.
That option would send the average single family taxpayer currently benefiting from the homestead exemption a bill for $547.38.
Celeste said Option B/Option3 addresses both the homestead exemption and the high commericial rate, which he said is driving businesses like Staples, Lowes and Walmart out of the city. "What we want to do is try to avoid more of that," Celeste said.
Schaefer asked Celeste if he agreed the commercial rate was too high. "It's obviously too much," Celeste replied.
Then Schaefer asked if Option 3/Option B fixed the problem. "It begins to," Celeste said, saying that while the homestead exemption should be phased out, doing it over 14 years isn't a good idea.
The options Celeste outlined were: (see attached .pdf for a breakdown of the impact of each on the average taxpayer):
Option A 1: All property owners get a bill that's 4.5 percent of last year's tax.
Option A 2: Residential and motor vehicle owners receive a bill that's 4.5 percent of last year's tax. Commercial taxpayers will not be assessed for the supplemental tax.
Option B 3: Reduce the 39 percent homestead exemption to 27 percent, taxing the difference for single-family home and condo owners.
Option B 4: Issue tax bills, canceling out all exemptions.
Option B 5: Issue tax bills at one rate for all classes, commercial included.
While he prefered Opton B, "I want to be in a position to defend it," Schaefer said, asking Ward's opinion.
"I know a lot of people will be shocked by the bill. I expect that I would, on my house," but, he said, the city has one of the highest commercial tax rates in the state. "We need to make sure that we don't make that worse," Ward said.
"It's going to be painful, but it's a faster way to achieve a goal, and then we can look at the exemptions that we should have corrected nine years ago, for those people who should qualify for them, and deal with that then. There's no easy answer, in any of this," Ward said.
The Commission seemed poised for a vote as Schaefer made a motion to approve Option B, but members said they wanted to disucsss the details to make sure they didn't rush the vote. "The last thing I want is for us to get down to the state house and in the middle of the hearing have somebody say, 'No,' " Ward said.
Mayor Leo Fontaine said he'd like to add motor vehicle taxes into the mix for Option B, noting that's the direction the Commission seemed to be headed in. He said adding vehicle taxes would make sure renting residents of the city participate in solving the problem. The move would show, he said, "That that other sector of the population that have not been contributing is now part of the solution."
"I don't see any reason you couldn't add motor vehicles into it," Schaefer said.
Ward warned that adding motor vehicles into Option B would need some tweaking to avoid hitting homeowners twice, since most also own cars.
The Commission tabled the vote for more discussion next Tuesday, Feb. 26, at 2 p.m., at City Hall, in Harris Hall.