Charlestown Democrats propose tax cut for middle-income full-time residents

News release from the Charlestown Democratic Town Committee

Charlestown Democrats want the town to provide full-time residents with a tax credit of up to $1000 a year on their property taxes, beginning with the tax year that starts July 1, 2012. Their proposal was presented at the November 14 Town Council meeting by CDTC Secretary Tom Ferrio.

Ferrio noted Charlestown’s full-time population of 7,827 people is taxed to support an infrastructure that serves summer visitors who triple the town’s population during June, July and August. Approximately 40% of Charlestown residences are owned by non-residents and that number climbs to 80% for properties valued at one million dollars or more.

Ferrio noted that out-of-state property owners also avoid paying state income taxes that provide essential support for infrastructure and services in Charlestown.

The CDTC proposal is called a “homestead exemption,” a common tax policy tool used in many states and other Rhode Island cities and towns to balance the effect non-residents have on the cost of services paid for by permanent residents.

“Charlestown’s full-time home owners need a break,” said CDTC Chair Catherine O’Reilly Collette. “The economy is bad, housing values have dropped, unemployment is high and pension incomes have been static. Full-time town residents need some relief.”

The proposal presented by Ferrio includes language the Town could provide to its representatives in the General Assembly for passage as “enabling legislation.” Then, it would be up to the town council to enact an ordinance putting the Homestead Tax Credit into effect. “I believe this can easily be done in time to provide Charlestown working families with a break on their July tax bills,” said Ferrio.

An estimated 2600 Charlestown households could qualify for the tax credit. To keep this proposal from un-balancing the town budget, the town would need to adjust the tax rate, leading to higher costs for non-residents and for the small number of permanent residents who own properties in the million dollar range.

Under this proposal, a Charlestown family living in a home assessed at $300,000 would see their property tax reduced by almost $700.