Assessed Value	District Tax	Assessed Value	District Tax
$100,000	$15	$400,000	$60
$200,000	$30	$500,000	$75
$300,000	$45	$600,000	$90

The District’s property tax is treated like any other municipal property tax with regard to federal income tax deductions.

 

 

About the District Tax

The statutory authority for the Portsmouth Water and Fire District property tax lies in Section 10 of the District’s enabling legislation. In essence, like most other water and fire districts in Rhode Island, the District has been granted taxing authority to be used as necessary to create, operate and maintain a water supply system to supply water for domestic use and fire protection within the District.

 

While the property taxes provide only seventeen (17%) percent of the District’s total annual revenue, the tax is an important component of the District’s fiscal management plan and equitable rate making strategy. The rationale for maintaining a District property tax is:

 

• Bonding – Tax revenue allows the District to obtain capital funding through general obligation bonds. These bonds provide a lower interest rate and have lower bonding costs than revenue bonds, which are supported by variable water sales, and would otherwise be required without tax revenue. General obligation bonds supported by taxes can usually be obtained in a quicker time frame than revenue bonds, which require a detailed, pro forma financial analysis due to the variable nature of water sales revenue. The speed with which capital financing can be obtained is particularly important during a catastrophic emergency when public health and safety is paramount.
• Revenue Stability – Water sales revenue is significantly influenced by weather, whereas predictable tax revenue provides an element of stability to the District’s total annual revenue stream. The guaranteed tax revenue helps dampen the impacts of the variable nature of water sales, and results in more accurate budgeting and water rate stability from year to year.
• Rate Fairness – All properties within the District benefit from the public water system, whether or not they are water customers. The extensive system of pumps, tanks, pipes and fire hydrants provide water for fire protection throughout the District to all properties. In addition, undeveloped property values are positively impacted by the presence of the water system throughout the District and the potential to connect existing and future subdivided property thereto. Without the property tax, which is assessed to all properties within the District whether or not the properties receive water service, our water ratepayers would unfairly subsidize the benefits received by non-water using property owners.
• Water Conservation – Some argue that tax charges in lieu of water charges do not encourage water conservation. In order to address this, one must look at the overall picture. The District has had a successful, comprehensive water conservation plan in effect since 1988. The conservation plan includes leak detection, meter replacement, public education, school education and, most importantly, pricing. The District’s increasing block rate pricing structure, with significant increases between rate blocks, is one of the most aggressive conservation-oriented rate structures in Rhode Island. The District’s water rates, coupled with the other facets of the conservation plan, have resulted in an annual water demand that has increased 15% since 1991, despite a 26% increase in the customer base. In essence, the Administrative Board believes that it has achieved the best of both worlds by attaining significant water conservation results through its comprehensive plan, while retaining the overall, long-term fiscal benefits of a modest tax revenue stream.

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