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PRESENT: Abel G. Collins, President
Bryant DaCruz, Vice President
Deborah J. Kelso
Rory H. McEntee
Joe Viele
1. A. REGULAR SESSION 
The following members of the School Committee are present: Stephanie Canter, Chairwoman, Sarah Markey, Vice Chairwoman, Michelle Brousseau, Alycia Collins, Emily Cummiskey, and Katherine Macinanti.
Also present: Robert C. Zarnetske, Town Manager, Patricia Sunderland, Finance Director, Dr. Kristen Stringfellow, Superintendent, Maryanne Crawford, Business Manager, School Department, Colleen Camp, Executive Assistant, Aimee Reiner, Director of Administrative Services and Chelsea Siefert, Director of Planning.
2. PLEDGE OF ALLEGIANCE TO THE FLAG
The Pledge of Allegiance is given.
3. ROLL CALL
Roll Call is taken and all members are present.
4. PUBLIC HEARING
A. Notice having been duly given, a Public Hearing, with School Committee participation is held relative to the Town Council’s Preliminary Budget for FY 2019-2020 as adopted on March 18, 2019. This Public Hearing will address all funds contained within the Town Council’s Preliminary Budget.
The Town Manager makes a brief presentation in regard to the budget process thus far. The objectives for this evening’s meeting are to review the preliminary budget, review amendments and changes made by the Town Council, summarize outstanding issues, and solicit public comment about the FY 2019-2020 budget.
This is the second of two public hearings. Formal adoption of the budget is scheduled for April 29, 2019. Of every tax dollar appropriated, $0.73 goes to the School Fund, $0.24 goes to the General Fund, $0.02 goes to the Debt Service Fund and $0.01 goes to the Senior Services and Recreation Fund.
The Town Charter says that the Town Council shall provide by ordinance the procedures for administering the budget. The Town Council may transfer part or all of the unencumbered appropriation balance from one major program function to the appropriation for other major program functions. The Town Manager may transfer part or all of any unencumbered appropriation balances among departments. The property tax transfer is for the administration of the budget. It is designed to be a budget management tool.
The 4% cap is not a legal limit on the property tax transfer made to the School Department but a legal limit on how much the town can increase total property taxes for all purposes. For FY 2019-2020, South Kingstown’s 4% cap is equal to $2.9 million. This does not mean that an individual’s household property taxes cannot increase more than 4%. In a revaluation year like this one, some property owners can see more than a 4% increase depending on how they relate to the average. South Kingstown’s real property tax rate is lower than the state average and the automobile tax rate is also lower than the state average.
One of the biggest challenges for South Kingstown is the reduction in state aid to education. State aid to education projection for FY 2019-2020 is $800,342 less than the current year. The municipal state aid projected for FY 2019-2020 is anticipated in the amount of $4,091,535, an increase of $160,319 and School Construction Aid is projected at $496,903, a decrease of $26,740 over the current amount of $523,643.
Some of the other challenges that the community faces are aging road and communication infrastructure, aging facilities, school and other, declining student population, climate change, school facilities project that calls for more debt than we have had in the past, South County Hospital constraints, traffic safety issues, housing affordability, commercial development imbalance, aging population, slow suburbanization, struggling public housing program, and losing students to other school districts and private education providers. Total new debt FY 2021-2022 is projected to be $81,500,000 more than the community has ever taken on in the past. It has a significant impact on our ability to put money toward operations in the future. The industry standard of what a reasonable number of money going towards debt is 10% of your annual budget on debt service. The debt service is projected at 8.08% in FY 2024-2025.
The General Fund contractual obligations are 2.75% increase for non-union and NEA, 2.5% for Council 94, EMS and Police and retirement funding in the amount of $342,716. Health Insurance is anticipated to increase 6% and Dental Insurance is expected to go down $922.
Reclassifications and New Positions budgeted for in this budget include a salary and benefit adjustment in the amount of $15,470 for the Police Chief, $8,935 for the Director of Administrative Services, $4,163 for the Director of Planning, $4,915 for the Director of Leisure Services, $4,360 for the Executive Assistant, $6,444 for the Communications Superintendent, $73,396 for an Arborist and $3,100 for Administrative Support Associate for a total of $120,783. Departmental fees, fines and charges are projected to increase by $60,505. License Fees and rents are projected to decrease by $19,805.
The forces driving the property tax increase are a 1.75% increase in the property tax transfer to the school or $942,422 more than in the current fiscal year, an increase in the tax transfer to the Senior Services Program and the Community Recreation program, an increase of $335,000 to fund future debt service obligations related to the anticipation of approval for a $76 million school bond referendum in November 2019.
The School Funding changes from the initial proposed budget include an operating property tax transfer increase from 1% in the amount of $539,527 to 1.75% in the amount of $944,172. The increase in the property tax transfer resulted in a decrease to the debt service tax transfer of $165,000. The proposed debt service in the amount of $1,600,000 to include $500,000 for future school bonds was subsequently decreased by $165,000 to not exceed the maximum levy.
The tax supported funds increases include a 6.1% increase in the General Fund, 0.31% increase in the School Fund, 6.7% increase in Senior Services Fund, a 9% increase in Community Recreation Center Fund, and an 8.7% decrease in the Debt Service Obligation expenditures.
The unmet needs and unresolved questions include the $500,000 set aside, the remaining school requirement, the four paramedics, the traffic enforcement officer and the Tri – County appropriation.
The Town Council’s FY 2019-2020 Preliminary Budget in the amount of $97,727,399 is $1,107,130 more than the FY 2018-2019 adopted budget in the amount of $96,620,269.
The School Committee does not have a presentation this evening.
Discussion ensues between the Town Council, the School Committee and the Town and School Administrators.
The following members of the public are present, comment and discussion ensues:
Lisa Richter
Grace Major
Brian Macinanti
Theo Belgrave
Tara Apperson
James O’Neill
Brian Nelson
Christian Blaney
Cadence Hansen
Kandilyn Hanson
Erin Pierce
UNANIMOUSLY VOTED: to close the Public Hearing.
Convened to a Work Session at 8:30 PM.
Dale S. Holberton, CMC
Town Clerk
At a WORK SESSION of the Town Council of the Town of South Kingstown, County of Washington, in the State of Rhode Island held at the Town Hall, in and for said Town on the 16th day of April 2019 at 8:30 PM.
PRESENT: Abel G. Collins, President
Bryant DaCruz, Vice President
Deborah J. Kelso
Rory H. McEntee
Joe Viele
5. WORK SESSION
Also present: Robert C. Zarnetske, Town Manager, Patricia Sunderland, Finance Director,
Jean-Paul Bouchard, Tax Assessor, Aimee Reiner, Director of Administrative Services and Chelsea Siefert, Director of Planning.
The Town Manager makes a presentation regarding strategies for designing a fair property tax system and keeping property taxes low. Is a Homestead Exemption a good idea or a bad idea, it is both. Whether it is the best approach to achieve the outcome the Town Council is looking for, or whether there is a different approach that might work better.
Property tax is the cost of the program. The program is what people indicate that they want. Exemptions are holes we make in the budget for the program. They are deviations from the general spending plan. You can spend less or generate more in revenue. You can generate more in terms of property tax revenue or you can generate more in terms of fees. Like businesses, governments must spend money to provide the goods and services their customers want. Citizens indicate what they want and that drives the definition of mandatory and discretionary programs. The discretionary and mandatory programs consist of wages, healthcare, employment-concurrent benefits, post-employment benefits, building maintenance, equipment, real estate acquisition and consumable commodities.
Changes in citizen preferences can change the nature of the spend program. The spend program is driven by citizen tastes and preferences. Seventy-five to eighty percent of municipal spending is on labor costs. Some you can offset with technology changes that make municipal government more efficient. Municipal government is a service industry not a manufacturing enterprise. Capital is a relatively small part of municipal budgets.
Since the ability to constrain local spending is difficult, you have to generate more revenue in order to keep taxes low. The way to generate more is by growth or by going out and finding a new revenue stream. Most taxing schemes deal with growth. The more contributing into the system the less burden on those who were earlier into the system. Fees and fines are a small part of the total revenue generated. It is either growth or some other mechanism. It is cheaper and easier to socialize the costs of maintaining public resources than to account for the consumption of public goods. Fees and fines add up to about 24% of the revenue we generate, it is significant, but it will not outpace the revenue we generate from motor vehicles and real estate taxes.
The question of growth is really the number of parcels, the number of property owners paying into the system and the value of each of those parcels. The average value times the number is your total tax roll. The value depends on quality and scarcity. The cost of subdivision can affect the number of parcels available.
The property tax exemption is not a revenue generator. It loses money, you cannot design an exemption so that it generates more. Exemptions are beneficence, an action taken for the benefit of others rather than non-maleficence, actions that “do no harm” or at least as little as possible under the circumstances. An exemption is a categorical exclusion from tax liability. An incentive is a taxation rule designed to encourage private action. An exemption can be an incentive, but generally property tax exemptions focus on the status of the taxpayer, not the nature of the taxpayer’s activities.
Exemptions we currently provide are for: the blind, the Veterans’, the elderly, Farm, Forest and Open Space Conservation Land, PILOT agreements and statutory exemptions. Property tax exemptions do not change the underlying driver behind higher property taxes, they cannot slow the increase in the cost of health care or fuel and they cannot change the demand for local public services, such as quality K-12 education, public safety and good roads. We already do not collect $21,748,579 of taxes each year.
A Homestead Exemption will take some of the bite out of the increase in values that are beyond the control of long-time residents. It might encourage long-time residents to stay in South Kingstown, might project a taxpayer-friendly tax structure, which might attract new homeowners to South Kingstown and if designed to promote fairness, it might help maintain the economic diversity of the community. Conversely, a Homestead Exemption would increase the tax rate for commercial property owners. It would increase the tax rate for seasonal property owners who contribute to the local economy. If poorly designed, it does not address an individual’s ability to pay or the need for tax relief and can provide a disproportionate benefit to those least in need, and verifying eligibility for the exemption is challenging and requires additional staff/labor resources. A fair and effective Homestead Exemption provides relief in the form of an absolute amount rather than a percentage.
There are other things that we can and should be doing that may yield a better tax relief strategy over time. We should be advocating for an increase in state aid to replace tax revenue, local sales tax and fees. Whatever we design should have a needs element to it. Circuit breaker provisions limit the percentage of a household’s income that the household can be expected to pay in property taxes. Households whose property tax payments exceed that limit get an abatement for all or part of the difference. Circuit breakers are particularly effective in helping senior citizens living in homes purchased many years before, people living in fast-appreciating neighborhoods, and people who have lost income due to unemployment or illness.
The Affordable Housing Collaborative recognizes that an incentive to get folks to build affordable housing would be a good idea. Under the current zoning regulations, most South Kingstown property owners can build one accessory apartment within, or as an accessory structure on the same lot as, a principal residence. An accessory apartment serviced by a public sewer system may be established in any zoning district in which residential dwelling units are allowed. Fifty-four of these units have been built over the past twenty years. There is a law on the books that says you can build them and rent them out and they become affordable rental units, we could incentivize this by coming up with a scheme that for the first five years after you construct an accessory apartment you are not going to be taxed on that. The main house will be taxed but not the accessory unit. In that five years you will have income coming in so there is an economic benefit to it. We are incentivizing the behavior that we want, the construction of affordable units, but not doing it based on it just being good for some group of people and we are not doing harm to anyone else. The same tax revenue is coming in from the main house.
You would be able to do this in areas that have septic systems also. They are not necessarily areas where you want to incentivize that construction. Accessory apartments are allowed in South Kingstown in any zone other than the R200 zone. In R200 zones you must get a special use permit in order to construct an accessory apartment. In every other zone, it can be done as a right. As long as the septic system can receive, it is permissible under current zoning.
We might be able to get Horsley Witten to evaluate this and see if other communities have been successful with this type of incentive.
Discussion ensues between the Town Council and the Town Manager relative to the Homestead Exemption and incentivizing the construction of affordable housing.
Discussion ensues relative to providing a tax abatement for a certain number of years on significant investment in land and buildings by commercial entities. South Kingstown already has that authority.
The Town Solicitor discusses the Town’s current tax treaty. We would need to get authorization from the General Assembly to provide for a tax incentive for affordable housing.
The Director of Planning discusses steps that the Affordable Housing Collaborative have taken in regard to tax incentives for affordable housing. It would take the Affordable Housing Collaborative about three months to get a solid report back to the Town Council. The Town Manager would like Horsley Witten to evaluate the tax incentive for affordable housing.
The Director of Planning discusses the setbacks for these affordable units and the study to be performed by Horsley Witten.
Discussion ensues between the Town Council and the Town Manager in regard to Homestead Exemptions.
UNANIMOUSLY VOTED: to adjourn at 9:53 PM.
ADJOURNED,
Dale S. Holberton, CMC
Town Clerk