By Elizabeth F. McNamara
The Town Council reviewed Acting Town Manager Joe Duarte’s proposed budget Monday night, including the move to a two-tiered tax rate, one for homeowners and a higher rate for business owners. At the meeting, EG Chamber executive director Steve Lombardi said the chamber would support the move, especially since the tax rate increase was relatively small.
“We recognize the fiscal challenges the town faces. In view of these challenges, the EG Chamber will support this very modest proposed increase,” Lombardi said during the meeting Monday. However, “the chamber remains concerned about future increases.”
Under the proposed budget (find it here), the rate for homeowners would increase 0.9 percent over the current year, from $23 to $23.21 per $1,000 assessed value. For businesses, the tax rate would increase by 1.9 percent, to $23.44 per $1,000 assessed value.
The budget, released last week, actually cuts spending (the proposed 2020 budget is set at $62.6 million; the 2019 budget was set at $63.3 million) by just over 1 percent, but because of a built in deficit from this year, and a $600,000 proposed decrease in state aid, the 2020 budget started in the hole.
Lombardi said he recognized that. In an interview Tuesday, he elaborated.
“They told us about this months ago and told us of the challenges the town had. At that point, we testified on the importance of keeping the tax rate as low as possible for the business community. We had several members say that small business has a very tough time indeed without any increased tax burden. So we’re very concerned about tax increases. However, we recognize the town faces fiscal challenges.
The Chamber could accept the tiered tax plan, Lombardi said, “in view of those challenges and because this was a very modest increase.” He emphasized the chamber would want to be “at the table” at any future discussions if significant tax increases were discussed.
Councilman Mike Donegan, who campaigned on the idea of a tiered tax rate, said in future the Town Council could include exemptions for small businesses based on their taxable property (business owners are taxed on their property, if they own it, and on the value of business’s furniture and fixtures) but there are no plans for exemptions this year.
“It didn’t make any sense, given the size of the increase” this year, Donegan said Tuesday, but in future he said he could see an exemption for any business with a tax valuation in excess of $10,000. Under the 2020 proposal, a business assessed at $500,000 would see a $220 increase in its tax bill over 2019; a homeowner with a house valued at $500,000 would see a $105 tax increase. The difference between the business tax and the homeowner tax would be $115 under this proposal.
Not all business owners are supportive to the plan.
“I am opposed to a two-tiered tax rate. We have been on Main Street for 37 years and the tax rate has always been equal,” said Back to Basics owner Bob Hartman. “Small business is trying to stay competitive in this new economy of online shopping and big box stores. This new tax system makes being competitive that much harder.”
Hartman added, “Now that EG thinks it’s acceptable to tax businesses more, our margins will continue to slip. I feel the people who work on Main Street deserve equal consideration as the people who work in local government. My suggestion would be to cut government spending, keep taxes level and give us brick-and-mortar stores a chance to compete with this fast-changing shopping world.”
At the meeting Monday, the council also heard from nongovernmental entities that receive money from the town, including the EG Chamber.
The Chamber got $20,500 from the town this year; it is budgeted to get $15,500 in 2020 but Executive Director Steve Lombardi asked for level funding. He said the chamber acted as the “defacto marketing arm” of the town, through its year-round promotion of local restaurants and the popular Main Street strolls, among other actions.Lombardi reminded the Town Council the chamber years ago took over the Main Street coordinator work that used to be paid for ($18,000) by the town. Lombardi also talked about the EG booklet that goes to all new residents visitor centers and the annual East Greenwich Restaurant Week, all things he said brought people and business to town.
Representatives from the Main Street Association and Summer’s End also spoke to how their organizations supported the town and made life better for residents. MSA was cut out of the budget in 2019 but is proposed to get $5,000 in 2020. Among other things, MSA puts on the Hill and Harbor Turkey Trot 5K, Chalk-a-Block, and outdoor movies at Academy Field.
Summer’s End is in its 26th year and is slated to get $6,500 from the town in 2020, the same as this year. That event – a concert with the Navy Band and several local acts at Eldredge Field the Friday of Labor Day weekend – costs around $55,000 to present. Most of the rest of the money comes from corporate sponsorships with only about 25 percent coming from personal donations.
The EG Free Library, which is a separate organization, is slated to get $536,000 from the town next year, an $11,000 boost over 2019*. By state law, the library – acting as the town’s official library – must be funded by the town and that funding must remain consistent. The town also agreed to resume payroll and tax filings for the library, something that was stopped under the previous administration at a large cost to the library. According to head librarian Karen Taylor, the library had to engage a payroll company and buy accounting software but perhaps more significantly, Taylor said, it took hours and hours of staff time away from library duties.
According to Acting Town Manager Joe Duarte, the finance department said it could easily resume the work.
The town charter-mandated public hearing on the budget takes place Monday, May 13, with both the Town Council and the School Committee, at Swift Community Center at 7 p.m. The Town Council must approve a budget by June 10.
For more information about the budget, check out this article.
* The original version of this story stated an incorrect number for the library’s 2019 budget. We regret the mistake.
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