Providence’s budgeting season won’t conclude in time for the July 1 start of the new fiscal year. But city officials have found a way to lessen the pain of increased taxes — at least for residents who own multifamily homes.
A revised fiscal 2026 budget seeks a proposed tax levy hike of 5.85% instead of the 7.5% proposed in April by Mayor Brett Smiley and the maximum cap of 8% authorized last week by the Rhode Island General Assembly. The change was announced Thursday by Providence City Council President Rachel Miller and Finance Chairwoman Helen Anthony after negotiating an agreement with Smiley.
The legislature had to get involved because state law caps municipal tax levy increases at 4% annually. Providence officials needed more than that to comply with a $15 million settlement last November between the city and the state education department over funding of the city’s public schools. About $11 million of that settlement needs to be accounted for in the 2026 budget, which is why Smiley proposed increasing the levy — and absorbing as much tax revenue as possible — to cushion the blow without affecting city services too severely.
Smiley’s original proposed budget drew ire from residents and some Providence lawmakers, who argued it unevenly distributed tax rates, and would disproportionately affect small landlords more than commercial properties — the latter would still see a slight reduction in taxes under both versions of the budget.
“We heard residents loud and clear: protect city services and limit the impact of increased taxes, especially on those who can least afford it,” Anthony said in a statement. “Our negotiated agreement with Mayor Smiley does just that.”
The revised budget reduces the average property tax increase on owner-occupied, multifamily homes from 16% to 6%, aligning it with the average increase for owner-occupied single-family homes. City officials estimate the revised structure would save property owners in this category about $400 on their tax bills, compared to the mayor’s original plan.
Tax bills delayed
Providence’s revised fiscal year 2026 budget is not yet finalized and is pending final approval by the City Council. A public hearing on the revised budget will be held Monday, June 30, at 5:30 p.m. in the City Council Chambers. Spanish translation and free child care will be available. Residents can also submit written testimony by emailing the city clerk.
Once the budget moves out the Finance Committee, it needs to pass the full City Council twice. The two votes are tentatively scheduled for July 7 and July 14. Until then, tax bills for the new fiscal year will be delayed, said Josh Estrella, a spokesperson for the mayor, in a Thursday email.
“If FY26 property tax bills are not issued by mid-July the City will need to delay payments to vendors, grantees and the School District in order to fulfill the City’s debt service, payroll, medical and utility financial obligations,” Estrella wrote. “We have already delayed issuing $15M in pension payments and anticipate we will be unable to make the July PPSD appropriation on time.”
Both Smiley’s original proposal and the newly amended version actually lower tax rates across property types, but the readjusted rates are nullified by dramatic increases in property assessments during the recent revaluation.
“Revaluations are sky high and Providence is making up for decades of underfunding schools in just one year,” Miller said in a statement. “But that doesn’t mean working families should carry the burden. These revisions make the system fairer, protecting homeowners, renters, and small local landlords.”
Non-owner-occupied properties with two to five units will still see the highest increase of all, at an average of 13% — a reduction of only 3%, compared to Smiley’s rendition of the budget.
Owner- and non-owner-occupied single-family homes will see a slight increase compared to Smiley’s plan, from 4% to 6%.
“This was a very difficult budget to develop and an even more difficult budget to vet with financial uncertainties at the state level,” Smiley said in a statement Thursday, noting that he respected the City Council for helping to distribute the burden more evenly among the city’s residents.
“Together we developed a streamlined, cost-effective budget that addresses the city’s severe budget shortfall and lessens the burden on our taxpayers,” Smiley continued. “As a result, I am happy to support a budget that underscores my administration’s continued commitment to responsible financial management while supporting the evolving needs of our neighbors.”
In addition to the levy bill passed by the General Assembly and signed by Gov. Dan McKee on Tuesday, state lawmakers also OK’d legislation with a more surgical approach to the city’s tax code: S1116, sponsored by Sen. Jake Bissaillon, and H6394, sponsored by Rep. Rebecca Kislak.
Unlike the blanket increase in property tax revenue, these bills allow for finer detail in how the city defines and taxes properties, allowing it to shift more of the burden onto commercial property owners. The city’s tax assessors will be allowed to target investor-owned or pricey industrial properties by breaking them off into separate categories.
The legislation does rely on the one-year levy cap exemption to absorb any extra revenue that would be generated, but its provisions for tax code are more lasting and could allow the city to more accurately target pricier properties in future taxation schemes.
McKee allowed the legislation to become law, albeit without his signature, on Thursday.
This story was originally published by the Rhode Island Current.
