The bill amends Section 44-5-2 of the General Laws in Chapter 44-5, which governs the levy and assessment of local taxes by cities and towns. It establishes a new maximum levy structure that allows municipalities to increase their tax levies by specified percentages over the years following fiscal year 2007, with maximum increases set at 5.25% for fiscal year 2008, decreasing gradually to 4% for fiscal year 2013 and beyond. The bill also permits cities and towns to exceed these caps under certain circumstances, such as loss of non-property tax revenues, emergencies, or significant growth in the tax base due to new construction.

Additionally, the bill introduces a provision that allows municipalities to exceed the levy cap based on the assessed value of new housing units added to the tax base, including newly constructed residential properties and converted buildings, provided they meet specific criteria. Municipalities that utilize this exemption are required to report the number of exempt housing units and related tax information to the division of property valuation in the department of revenue. The bill aims to enhance the flexibility of local governments in managing tax levies while promoting housing development, and it will take effect immediately upon passage. The specific deletions from current law are not detailed in the provided text.