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Lawmakers, town officials weigh three 5% short‑term rental proposals and local share
Summary
State lawmakers, local officials and Block Island representatives told the New Shoreham Town Council that legislation to expand a 5% short‑term lodging tax to whole‑house rentals is likely this year, but proposals differ on whether the revenue would go to the state, to local towns, or be split under the current formula.
Lede: State and local officials told the New Shoreham Town Council on March 12, 2025, that a 5% tax on whole‑house short‑term rentals is likely to pass this year but that competing bills differ on whether the money would flow to the state for homelessness programs or be returned to the localities where the rentals occur.
Nut graf: The council heard three main versions of the proposal: the governor’s plan would tax whole‑house rentals at 5% with revenue directed to statewide homelessness programs; a bill from Representative Carson and Senator Goo would keep the 5% but route all proceeds to the local community; and a separate measure from Senator LaMountain and Representative Slater would expand the tax base to whole houses while preserving the current percentage split among tourism councils and other recipients. Council members said they will ask the legislature to return short‑term rental revenues to the originating towns.
Body: Rick McCullough, representing a local interest group, briefed the council on the bills being discussed in Providence and said the primary change this year is expanding the taxable base from individual hotel rooms to whole‑house rentals that are commonly listed on platforms such as Airbnb and Vrbo. McCullough said, “I think you're going to see a 5% tax on whole houses this year.”
Senator DiMariu (State Senator) described the three competing allocations under consideration and said the choice before lawmakers is how revenue from whole‑house taxation will be distributed if the tax is enacted. Representative Tina Spears (State Representative) told the council that south‑county legislators are pushing for local retention of the proceeds: “We want it to go to the towns that it's generated in, and we are working at the South County level to push that hard.”
Council members said they have prepared a town resolution expressing preference that revenues generated in New Shoreham return to the community to offset costs such as public safety, water and wastewater, and infrastructure stress during the summer season. Town staff said they expect to forward a council resolution to their representatives in the coming week.
Officials discussed technical questions that would follow any change in tax classification: whether the tax would apply only to platform‑listed rentals or to all whole‑house short‑term leases, and how the change would interact with local tax classification and homestead exemptions. McCullough and town staff noted existing work on local tax classification that would differentiate long‑term leases from short‑term tourist rentals and could change property tax treatment for owners who lease year‑round to residents.
Ending: The council expects to adopt a formal resolution of position before the legislature’s committee deadlines and to provide its legislators with supporting materials showing how retained short‑term rental revenue would be used locally.
