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H 7468Cities & Towns

Towns and Cities - State Aid

Increases state reimbursement for tax-exempt properties to towns to 30% and adds Pokanoket Tribe Land Trust properties to eligibility.

Held for study
Population
Affected
35
Email Legislator
Introduced Jan 30, 2026Committee House Finance

Plain-English Summary

This legislation amends the state's "State Aid" laws concerning payments in lieu of taxes (PILOT). Currently, the state reimburses cities and towns for a percentage of property taxes lost due to the presence of tax-exempt institutions like private colleges and non-profit hospitals. This bill increases that reimbursement rate from 27% to 30%. It also specifically adds property owned by the Pokanoket Management Group (trustee of the Pokanoket Tribe Land Trust) to the list of properties eligible for these state payments. Finally, it removes a provision that previously allowed the state to reduce payments if the budget was insufficient.

For younger readers

Cities and towns usually collect money called taxes from people who own land. This money pays for things like schools, police, and fire trucks. However, some places, like hospitals and colleges, do not have to pay these taxes. This bill says the state government will give the towns more money to help make up for what they don't get from those places. It raises the amount the state pays. It also says that land belonging to the Pokanoket Tribe now counts for getting this money, which helps the towns afford to take care of everyone.

Who & Where It Applies

Impacted groups
MunicipalitiesPokanoket Management GroupPrivate Nonprofit Institutions of Higher EducationNonprofit Hospital FacilitiesLocal Property Taxpayers
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Formally recognizes and supports the Pokanoket Tribe by including the Pokanoket Management Group in the state aid program, ensuring their land trust is treated with the same financial consideration as other major non-profits.
  • Increases the reimbursement rate to municipalities from 27% to 30%, providing essential funding for local public services like schools and infrastructure in communities that host tax-exempt institutions.
  • Eliminates the statutory loophole that allowed the state to cut these payments if the budget was insufficient, thereby creating a more reliable and robust safety net for municipal finances.
  • Continues the reliance on state taxpayers to subsidize the presence of wealthy private institutions (like elite universities) rather than reforming tax laws to require those institutions to contribute directly to their host communities.
  • The increase to 30% may still be insufficient to fully offset the cost of services provided by municipalities to these institutions, leaving a burden on local working-class residents.
  • By mandating higher fixed costs for the state budget without a new revenue source, it could theoretically compete for funding with other progressive priorities such as direct social welfare programs.
For Conservatives
  • Provides financial relief to municipalities, which may reduce the pressure on local governments to raise property taxes on homeowners and small businesses to cover budget deficits.
  • Upholds the principle that if the state mandates tax exemptions, the state should compensate the local communities for the lost revenue, rather than passing the cost down to local taxpayers.
  • Ensures that essential public safety services (police and fire) in towns with large institutions are funded, maintaining law and order without expanding local bureaucracy.
  • Increases mandatory state spending by raising the reimbursement rate, which expands the size of government and places a higher burden on state taxpayers.
  • Removes the fiscal restraint clause that allowed the state to reduce payments when funds were low, potentially forcing the state into deficit spending or tax hikes during economic downturns.
  • Creates a specific legislative carve-out for the Pokanoket Management Group, which could be viewed as the government engaging in identity politics or favoring specific groups over a uniform application of the law.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 4 additions · 11 deletions

It is enacted by the General Assembly as follows:

SECTION 1. Section 45-13-5.1 of the General Laws in Chapter 45-13 entitled "State Aid" is hereby amended to read as follows: 45-13-5.1. General assembly appropriations in lieu of property tax from certain exempt private and state properties.

(a) In lieu of the amount of local real property tax on real property owned by any private nonprofit institution of higher education, the Pokanoket Management Group, a Rhode Island nonprofit corporation, trustee of the Pokanoket Tribe Land Trust, or any nonprofit hospital facility, or any state owned and operated hospital, veterans’ residential facility, or correctional facility occupied by more than one hundred (100) residents which may have been or will be exempted from taxation by applicable state law, exclusive of any facility operated by the federal government, the state of Rhode Island, or any of its subdivisions, the general assembly shall annually appropriate for payment to the several cities and towns in which the property lies a sum equal to twenty-seven percent (27%) thirty percent (30%) of all tax that would have been collected had the real property been taxable; provided, however, said percentage shall be subject to adjustment pursuant to subsection (e) of this section.

(b) In no event shall any city or town record in a fiscal year both: (1) Taxes and/or payments under a stabilization agreement with a for-profit hospital facility; and (2) Distributions of appropriations under this section attributable to the prior nonprofit status of said for-profit hospital facility.

(c) As used in this section, “private nonprofit institution of higher education” means any institution engaged primarily in education beyond the high school level, the property of which is exempt from property tax under any of the subdivisions, and “nonprofit hospital facility” means any nonprofit hospital licensed by the state and which is used for the purpose of general medical, surgical, or psychiatric care and treatment.

(d) The grant payable to any municipality under the provision of this section shall be equal to twenty-seven percent (27%) thirty percent (30%) of the property taxes that, except for any exemption to any institution of higher education or general hospital facility, would have been paid with respect to that exempt real property on the assessment list in the municipality for the assessment date of December 31, 1986, and with respect to such exempt real property appearing on an assessment list in the municipality on succeeding assessment dates. Provided, however, that the grant paid for the fiscal year ending June 30, 2008, shall be based upon the assessment list in the municipality as of December 31, 2004.

(e) The state budget offices shall include the amount of the annual appropriation in the state budget for the fiscal year commencing July 1, 1988, and each fiscal year thereafter. The amount of the annual distribution of appropriation payable to each eligible municipality in any year in accordance with this section shall be reduced proportionately in the event that the total of the annual appropriation in the state budget is insufficient to pay the eligible municipalities the amounts otherwise payable to said communities pursuant to subsection (a) of this section.

(f) Distribution of appropriations shall be made by the state on or before July 31 of 1988 and each July 31 thereafter or following verified receipt of a municipality’s assessment data for the following fiscal year’s payment, whichever is later, and the payments may be counted as a receivable by any city or town for a fiscal year ending the preceding June 30.

(g) Any act or omission by the state with respect to this chapter shall in no way diminish the duty of any town or municipality to provide public safety or other ordinary services to the properties or facilities of the type listed in subsection (a).

(h) Provided, that payments authorized pursuant to this section shall be reduced pro rata, for that period of time that the municipality suspends or reduces essential services to eligible facilities. For the purposes of this section “essential services” include, but are not to be limited to, police, fire and rescue.

SECTION 2. This act shall take effect upon passage.