Taxes and Fiscal Responsibility

Communities can make very important decisions on how they want to grow. Part of this decision involves analyzing the advantages and disadvantages of possible land uses. A Cost of Community Services Study (COCS) is an inexpensive way to evaluate the economic contributions of open space, farmland, and residential and commercial development. These studies help communities evaluate the costs of different combinations of land uses, and balance goals such as maintaining affordable housing, creating jobs, and conserving land and resources.

It has become conventional in COCS studies to divide land use into three categories: residential, commercial/industrial, and farmland/open space. One of the most common procedures for analyzing fiscal impact is to calculate a COCS ratio for each land use category The ratio compares how many dollars worth of local government services are demanded for each dollar collected. A ratio greater than 1.0 suggests that for every dollar of revenue collected from a given category of land, more than one dollar is spent.

A Cost of Community Services has not been preformed yet for Charlestown, but studies have been performed for other towns in Rhode Island. The ratios below show that even in Little Compton, residential development costs more than it pays.

Of course in Charlestown, some forms of residential development do pay more than they cost in services. Waterfront properties pay large tax bills and are often used as summer homes and do not send students to school or require other services. In Charlestown 67 percent of the tax bill is paid by coastal properties. But most of Charlestown\’s future growth potential is not in the waterfront areas, meaning that future growth is likely to become increasingly expensive.

According to the COCS studies, the largest single expenditure category for communities is the public school system. Since open space and commercial development in themselves do not place any burden on the schools, it should not be surprising that their ratios are lower than those for the residential category.

CCA believes that land use decisions in Charlestown should be based in both community and financial planning. Before we make significant changes to our town\’s Zoning Ordinance or other important land use decisions we should conduct cost of community services studies to determine what fiscal impacts will result from the changes. If the community is gaining something of value from increased costs, it might still be something we would choose to do, but if we are going to have increased costs for an undesirable change to the community, then we should know those costs in advance so we have the option of declining to make this change.

There are a number of threats looming that could greatly impact Charlestown\’s tax rate. These are Tax Equalization to fund the Chariho School System, an IGRA Casino in Charlestown, and a Statewide Property Tax.

The current Chariho Act assigns each community\’s school costs to the number of students from each town. Hopkinton demands that there instead be a district wide property tax to fund the schools. This would result in dramatic increases in Charlestown\’s property tax rates.

If the Narragansett Tribe is successful in forcing a casino into Charlestown, they will be exempt from property tax, but Charlestown taxpayers will be required to maintain roads and deal with traffic and other impacts. For more in depth discussion of this issue, visit our casino page.

The Rhode Island Legislature in recent sessions has considered a Statewide Property Tax to fund education. Each year this has been turned down, but the issue is revived again the next year. This would have a similar effect to tax equalization in Chariho, but would have even more adverse consequences for Charlestown.

All of these tax threats and others will require a vigilant town government and an active and vocal citizenry. CCA is committed to protecting Charlestown\’s relatively low tax rate. We want to make sure that we don\’t find ourselves in the future in a community we can\’t afford to live in.