Business Excellence Awards
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Too many in Rhode Island do not understand in their bones that we have a continuing spending problem. Exhibit A: legislation passed in the just-concluded legislative session that raised the allowable tax on gross rental receipts from affordable-housing projects that towns and cities can charge (in lieu of a standard property tax) from 8 percent to 10 percent.
The stated reason for the change was to raise more money for the state’s strapped towns and cities, but what it shows is the continuing denial of the need to get more control on the spending side of the ledger at the state’s municipalities.
The tax threatened to derail planned or even existing affordable housing projects, just when they are needed most. They are not just a sop to social justice activists. They are an economic-development imperative.
Rhode Island’s economy is weak, with too many people unemployed or underemployed. If they find themselves priced out of the housing market, it will not take long for them to relocate, accelerating the decline in the state’s already shrinking labor force.
This recognition is one of the reasons voters approved an affordable housing bond program in 2006. According to HousingWorks RI, every dollar from the bonds generated $9 in economic activity, for a total near half-a-billion dollars. Voters subsequently approved a $25 million bond program in the 2012 election.
Thankfully, Gov. Lincoln D. Chafee vetoed the tax increase, and the General Assembly seems to have no stomach to set an override. Maybe next year the General Assembly should help the state’s municipalities spend less instead of tax more. •