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S 2552Cities & Towns

Towns and Cities - State Aid

Increases state aid to towns for tax-exempt properties from 27% to 30% and includes Pokanoket Tribe land in eligibility.

Held for study
Population
Affected
35
Email Legislator
Introduced Feb 13, 2026Committee Senate Finance

Plain-English Summary

This legislation increases the state financial aid provided to Rhode Island cities and towns that host tax-exempt properties. Specifically, it raises the state reimbursement rate from 27% to 30% of the property taxes that would otherwise be collected from nonprofit colleges, hospitals, and state facilities. Furthermore, the bill explicitly adds land held by the Pokanoket Management Group (trustee of the Pokanoket Tribe Land Trust) to the list of properties eligible for this state aid. Finally, it removes a provision that previously allowed the state to reduce these payments if the state budget was insufficient.

For younger readers

Towns usually get money to pay for schools, police, and fire trucks by collecting taxes from people who own buildings. However, some places like colleges, hospitals, and state buildings don't have to pay these taxes. Because the towns still need money to protect these buildings, the state government gives the towns some cash to help out. This new rule says the state will give the towns even more money than before. It also says that land owned by the Pokanoket Tribe now counts for this special money, which helps the towns where that land is located.

Who & Where It Applies

Impacted groups
MunicipalitiesPokanoket TribeNonprofit UniversitiesNonprofit HospitalsState Taxpayers
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Increases funding for municipalities, allowing them to better fund public services like schools, infrastructure, and social programs without raising taxes on working-class residents.
  • Recognizes Indigenous presence by explicitly including the Pokanoket Tribe Land Trust in the state aid program, ensuring the host community is compensated for the tax-exempt status of tribal lands.
  • Strengthens the social safety net by ensuring that cities hosting non-profit hospitals and colleges are not financially penalized, thereby encouraging the continued presence of these vital community institutions.
  • Redirects state funds to municipalities without mandating that the extra revenue be spent specifically on social equity programs, affordable housing, or environmental justice.
  • Could place a strain on the general state budget, potentially reducing the pool of funds available for other statewide progressive priorities like universal healthcare or public transportation.
  • Continues to use public funds to subsidize the existence of wealthy private universities and hospitals rather than requiring these wealthy institutions to contribute more directly to their host communities.
For Conservatives
  • Helps suppress local property tax hikes for homeowners and small businesses by providing municipalities with an alternative, stable revenue stream from the state.
  • Ensures that essential services, specifically police and fire departments, are adequately funded in towns that host large tax-exempt facilities, thereby maintaining law and order.
  • Removes the discretion of state bureaucrats to arbitrarily reduce payments to towns during budget processes, ensuring the state honors its financial commitments to municipalities.
  • Increases state government spending and the overall size of the state budget by mandating a permanent increase in aid payments from 27% to 30%.
  • Redistributes state tax dollars to specific municipalities, forcing taxpayers across the state to subsidize the budgets of towns that host specific tax-exempt institutions.
  • Removes fiscal flexibility by striking the language that allowed the state to reduce payments during budget shortfalls, potentially leading to deficits or tax increases elsewhere.

Votes

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Full Bill Text

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

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.