RI 2026 H7248: Towns and Cities - State Aid

Plain-English Summary

This legislation updates the formula and funding levels for state aid distributed to Rhode Island's cities and towns. Specifically, it establishes a fixed total of $39 million in state aid for the fiscal year ending June 30, 2027, to be distributed based on population data from the 2020 census. Additionally, the bill mandates that starting in the fiscal year ending June 30, 2028, this aid amount must increase annually based on the percentage increase in the Consumer Price Index (CPI-U), ensuring that municipal funding adjusts for inflation in future years.

For younger readers

This law changes how the state gives money to the cities and towns where people live. This money helps pay for things like parks, trash pickup, and local repairs. For the year 2027, the state will give out a total of $39 million, and the amount each town gets depends on how many people live there. Starting in 2028, the law says the state must increase this amount every year if the cost of buying things goes up. This helps make sure towns can still afford to pay for services even when prices get higher.

Who & Where It Applies

Impacted groups

Municipal GovernmentsProperty TaxpayersCity PlannersPublic School DepartmentsLocal Residents

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

$25.04

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Ensures that state aid to municipalities keeps pace with inflation through an automatic Consumer Price Index adjustment, protecting public services from budget erosion over time.
Provides a guaranteed baseline of $39 million for fiscal year 2027, securing essential funding for local governments to maintain community welfare programs and infrastructure.
Distributes funds based on population counts, which directs resources toward densely populated urban areas where the need for social services and public support is often highest.
Shifts the 2027 distribution formula to rely solely on population, potentially bypassing previous metrics that accounted for a community's wealth and tax capacity, which could disadvantage poorer towns.
Sets the 2027 funding level at $39 million, which is significantly lower than historical funding levels (such as the $64 million allocated in 2007), representing a long-term reduction in state support.
Tying future increases strictly to inflation maintains the status quo rather than actively expanding the social safety net to meet growing or new societal needs.

For Conservatives

Establishes a fixed dollar amount for 2027 rather than a complex percentage of tax revenue, providing greater predictability and stability for state budget planning.
Utilizes a straightforward population-based distribution method for the 2027 allocation, avoiding complex redistribution formulas that often penalize wealthier communities to subsidize others.
Ensures local governments receive predictable funding adjustments based on economic data (CPI), allowing towns to manage their own budgets without constant lobbying for state handouts.
Mandates automatic annual spending increases tied to the Consumer Price Index, removing legislative oversight and locking the state into perpetual budget growth.
Increases the burden on state taxpayers by guaranteeing higher transfers of wealth to municipal governments regardless of the state's actual revenue performance.
Reduces the incentive for local governments to cut costs or streamline operations, as they are guaranteed inflation-adjusted subsidies from the state.

Votes

Loading votes...

Full Bill Text

Changes to existing Rhode Island law · 6 additions

It is enacted by the General Assembly as follows:

SECTION 1. Section 45-13-1 of the General Laws in Chapter 45-13 entitled "State Aid" is hereby amended to read as follows: 45-13-1. Apportionment of annual appropriation for state aid.

(a) As used in this chapter, the following words and terms have the following meanings:

(1) “Income” means the most recent estimate of per-capita income for a city, town or county as reported by the United States Department of Commerce, Bureau of the Census.

(2) “Population” means the most recent estimates of population for each city and town as reported by the United States Department of Commerce, Bureau of the Census.

(3) “Reference year” means the second fiscal year preceding the beginning of the fiscal year in which the distribution of state aid to cities and towns is made provided however that the reference year for distributions made in fiscal year 2007-2008 shall be the third fiscal year preceding the beginning of the fiscal year 2007-2008 and provided further that the reference year for distributions made in fiscal year 2008-2009 shall be the fourth fiscal year preceding the beginning of the fiscal year 2008-2009.

(4) “Tax effort” means the total taxes imposed by a city or town for public purposes or the totals of those taxes for the cities or towns within a county (except employee and employer assessments and contributions to finance retirement and social insurance systems and other special assessments for capital outlay) determined by the United States Secretary of Commerce for general statistical purposes and adjusted to exclude amounts properly allocated to education expenses.

(b) Aid to cities and towns shall be apportioned as follows: For each county, city or town, let R be the tax effort divided by the square of per capita income, i.e., R = (tax effort)/(income x income). The amount to be allocated to the counties shall be apportioned in the ratio of the value of R for each county divided by the sum of the values of R for all five (5) counties. The amount to be allocated for all cities and for all towns within a county shall be the allocation for that county apportioned proportionally to the total tax effort of the towns and cities in that county. The amount to be allocated to any city or town is the amount allocated to all cities or all towns within the county apportioned in the ratio of the value of R for that city (or town) divided by the sum of the values of R for all cities (or all towns) in that county; provided, further, that no city or town shall receive an entitlement in excess of one hundred forty-five percent (145%) of that city or town’s population multiplied by the average per capita statewide amount of the annual appropriation for state aid to cities and towns. Any excess entitlement shall be allocated to the remainder of the cities and towns in the respective county in accordance with the provisions of this section. For fiscal year 2004, notwithstanding the provisions of subsection (a), aid calculations shall be based on a blended rate of ninety percent (90%) of the data from the 1990 census and ten percent (10%) of the data from the 2000 census. In each of the succeeding nine (9) fiscal years, the calculations shall be based on a blended rate that increases the percentage of data utilized from the 2000 census by ten percent (10%) from the previous year and decreases the percentage of the data utilized from the 1990 census by ten percent (10%) from the previous year.

(c) The total amount of aid to be apportioned pursuant to subsection (b) above shall be specified in the annual appropriation act of the state and shall be equal to the following:

(1) For fiscal years ending June 30, 1994 through June 30, 1998, the total amount of aid shall be based upon one percent (1%) of total state tax revenues in the reference year.

(2) For the fiscal year ending June 30, 1999, the total amount of aid shall be based upon one and three-tenths percent (1.3%) of total state tax revenues in the reference year.

(3) For the fiscal year ending June 30, 2000, the total amount of aid shall be based upon one and seven-tenths percent (1.7%) of total state tax revenues in the reference year.

(4) For the fiscal year ending June 30, 2001, the total amount of aid shall be based upon two percent (2.0%) of total state tax revenues in the reference year.

(5) For the fiscal year ending June 30, 2002, the total amount of aid shall be based upon two and four-tenths percent (2.4%) of total state tax revenues in the reference year.

(6) For the fiscal year ending June 30, 2003, the total amount of aid shall be based upon two and four-tenths percent (2.4%) of total state tax revenues in the reference year.

(7) For the fiscal year ending June 30, 2004, the total amount of aid shall be based upon two and seven-tenths percent (2.7%) of total state tax revenues in the reference year.

(8) For the fiscal year ending June 30, 2005, the total amount of aid shall be fifty-two million four hundred thirty-eight thousand five hundred thirty-two dollars ($52,438,532).

(9) For the fiscal year ending June 30, 2006, the total amount of aid shall be based upon three percent (3%) of total state tax revenues in the reference year.

(10) For the fiscal year ending June 30, 2007 the total amount of aid shall be sixty-four million six hundred ninety-nine thousand three dollars ($64,699,003).

(11) For the fiscal year ending June 30, 2008, the total amount of aid shall be sixty-four million six hundred ninety-nine thousand three dollars ($64,699,003).

(12) [Deleted by P.L. 2009, ch. 68, art. 6, section 3.]

(13) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]

(14) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]

(d) For the fiscal year ending June 30, 2008 the apportionments of state aid as derived through the calculations as required by subsections (a) through (c) of this section shall be adjusted downward statewide by ten million dollars ($10,000,000).

(e) For the fiscal year ending June 30, 2009, the total amount of aid shall be twenty-five million dollars ($25,000,000) with such distribution allocated proportionately on the same basis as the original enactment of general revenue sharing of FY 2009.

(f) For the fiscal year ending June 30, 2009 and thereafter, funding shall be determined by appropriation.

(g) For the fiscal year ending June 30, 2027, the total amount of aid shall be thirty-nine million dollars ($39,000,000) to be allocated and distributed based on population as determined by the 2020 census.

(h) For the fiscal year ending June 30, 2028 and thereafter, aid shall be increased by the total percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U).

SECTION 2. This act shall take effect upon passage.