Car tax relief

Governor says Speaker's plan can't be sustained

By John Howell
Posted 2/21/17

By JOHN HOWELL The governor's office took to the road last week to promote her plan to provide car tax relief starting next year and to underscore elimination of the tax, as House Speaker Nicholas Mattiello's proposes, can't be sustained. But the

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Car tax relief

Governor says Speaker's plan can't be sustained

Posted

The governor’s office took to the road last week to promote her plan to provide car tax relief starting next year and to underscore elimination of the tax, as House Speaker Nicholas Mattiello’s proposes, can’t be sustained.

But the governor’s argument hasn’t swayed Mattiello. His spokesman, Larry Berman, said Friday the Speaker wants to eliminate the car tax in five years and he is confident that can be achieved through a combination of a growth in state revenues resulting from improved economic conditions and “savings.” What’s more is that Mattiello aims to implement the first step of his plan this year, even though legislation may not be in place until after municipalities have finalized their budgets and even mailed out tax bills.

David Ortiz, press secretary to Gov. Gina Raimondo, visited Beacon Communications offices Thursday for what he termed “a bit of a road show on this.” Ortiz came prepared with an 18-page presentation outlining what municipalities generate in car tax revenues and would need to be reimbursed to cities and towns if the tax came off the books. In the case of Warwick with 110,000 motor vehicles on the city tax rolls, the tax generates $23.3 million. Warwick is second to Providence, which has a car tax nearly three times of Warwick, where motor vehicle taxes generate $35 million. Municipal car taxes collectively generate $215 million.

Mattiello has suggested elimination of the tax by increasing exemptions. He has yet to roll out the specifics of a plan, but basically it appears similar in nature to the tax phaseout plan implemented in 1998 where the state incrementally increased exemptions and reimbursed municipalities for lost revenues. Former Governor Donald Carcieri, faced with declining tax revenues because of the Great Recession, abruptly ended the program and the reimbursements in 2010.

Mattiello has suggested $45 million in car tax relief in the current budget to revive the exemption program. The following year the sum would be doubled with the amount the state would be reimbursing climbing to $215 million annually by the fifth year. Mattiello has said the added revenues would come from the improving economy and what that means to the state income and other taxes.

In order for that to happen, Ortiz said, state revenues would need to grow by 60 percent relative to the current trend of 3.27 percent per year. According to the statistics provided by the governor’s office, since the 1998 fiscal year Rhode Island has never had more than three consecutive years of 3 percent or greater growth.

In place of staged exemptions, the governor’s plan would discount vehicle valuations. Car values became a flashpoint when the state did away with all but $500 of the exemption program. Suddenly, taxpayers found they were paying taxes based on values that were greater than what their car was worth. The outrage led to the car tax revolt, with some communities reinstituting a reduced exemption to quell the rage.

What Raimondo’s plan would do is to reduce motor vehicle valuations across the board by 30 percent. The cost of this is $55 million that would go back to municipalities to cover their loss in revenues. Ortiz says this plan is sustainable through growth in state revenues and could be implemented in the 2019 fiscal year.

Berman points out that the governor’s plan wouldn’t eliminate the municipal car tax.

“Her plan is a one-shot deal and you still have a car tax,” Berman said. “The Speaker wants to eliminate it. It’s a much different vision. She wants to continue to tax people and he doesn’t.”

Berman’s read on why the governor is focused on a partial car tax relief is because “she wants the free college tuition.”

Does that mean Mattiello won’t support the governor’s plan for two years of free college? Berman said, “there are lots of questions” about the free tuition proposal.

Doing it now, whether the Mattiello exemption plan or the governor’s motor vehicle valuation reduction plan gains legislative approval, Ortiz said, would be a nightmare.

Municipalities are in the process of drafting their budgets, but the General Assembly is not likely to approve a plan and a state budget until June. Mattiello has suggested municipalities could send refunds to taxpayers. Apart from the work of issuing checks, Ortiz imagined because of changes in address people never getting their money and those funding ending up with the state as unclaimed property.

“Let’s do it right and start in 2019,” he said.

Warwick City Assessor Christopher Celeste said he consistently hears complaints over car valuations, so he thinks an across the board 30 percent reduction would be favorably received. He can’t see doing it, however, in time for the upcoming fiscal year. As the governor’s office is proposing, he said it makes more sense to pass the legislation this year and for the program to begin in 2018 with the 2019 fiscal year.

That’s not what Mattiello wants.

“When the budget is enacted in June for the next fiscal year beginning on July 1, he is committed to providing each municipality with car tax relief immediately. It would be up to each community to work out a plan as to passing on that relief to the taxpayers; it could come in the form of rebates or future bill reductions,” said Berman.

Comments

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  • richardcorrente

    The car tax is the most unfair tax in Rhode Island's history.

    I have testified on several occasions at the State House as well as Warwick City Hall to get this tax repealed.

    HOW we do it should not be a matter of discussion. (I suggest that we just reduce spending by the same amount but there are many other ways to solve this overburden to the taxpayers.) It's the right thing to do. We need to do it. We have senior citizens that pay more on their car tax than they could sell their car for. In Warwick, the exempted value (that part of the cars value that is not taxed) is less than half of what it is in East Greenwich. In many cases that means a tax that is DOUBLE in Warwick than it is in East Greenwich.. We're losing more and more taxpayers because of the over-taxing of Warwick. This is one we can afford to make history. If we matched the tax of East Greenwich, Warwick would lose fewer taxpayers. Each person that stays covers the car tax for dozens of others.

    It's basic economics. Cranston is lowering taxes, gaining population and receiving the benefit of a greater total tax revenue. The opposite is happening here in Warwick. It's time to reverse this trend. We can't afford not to.

    Happy Spring everyone.

    Rick Corrente

    The Taxpayers Mayor

    Tuesday, February 21, 2017 Report this

  • Bob_Cushman

    Richard on so many previous posts you have criticized the Warwick School Committee and its spending. However in the most current budget year and for almost tens years the school department budget has been level funded. That means 100% of the property tax increase is attributed to new city spending.

    So in order to eliminate the car tax you suggest that " we just reduce spending by the same amount". Are you suggesting that the school budget be reduced or the city budget or both? As someone who campaign for mayor on a platform to "cut spending cut taxes", explain what areas should be reduced in order to eliminate part of or all of the $23.3 million car tax.

    Tuesday, February 21, 2017 Report this

  • Thecaptain

    Rick,

    You testified once and you made the statement that the taking of the car taxes was just like what the "mafia" did. Totally embarrassing. Your quote. However, no to beleaguer once again your inaccuracies.

    Just some minor corrections on numbers in this report and the current facts:

    Warwick car tax revenue is $24, 683, 738.00

    109,000 cars in Warwick

    Increasing the exemption back to $6000 removes 28.9% of vehicles on the tax roles. That also means that many less bills to process and the labor cost savings in which to do so.

    Net revenue loss to the city is about $4 million + or - a couple of bucks

    Here's why the Mattiello plan is a failure from jump.

    1. The man is unable to recite the revenue facts for his own city which I have cited above for Warwick.

    2. Implementation of any plan as of this date will not work as the budgets for the coming fiscal year have already been made, and, in-particular, the Vehicle Value Commission has already adopted the presumptive methodology for taxation for fiscal year 2017-18. It simply will not work for this year and it will not get passed as Mattiello has not thought out the process. Dope doesn't even know the numbers for his own city, shameful.

    3. Any departure from the NADA values system will require complete new software for the registry and for all of the cities and towns as the DMV buys the values from NADA and they import them into the computer program. How confident are you that Rhode Island can implement a new computer system correctly? Uh, not very.

    Here's why the Raimondo plan wont work this year.

    1. Again, the Vehicle Value Commission has already adopted the presumptive methodology for taxation for fiscal year 2017-18.

    2. Her plan as stated is for "calendar year 2018, which is fiscal year 2018-19. So she has bamboozled all of you that aren't paying attention. And car taxes are derived from the previous year days on the registration roles so there would be no savings until 2019-20.

    3. She decided to adopt the bill that I authored moving the value from the "full clean retail" to the "average trade in value" per NADA. She has stated that "all taxpayers will see a 30% reduction in car taxes this year". Unfortunately, the IVY league scholar herself has not done the math as the reduction across the board reduces the values on average approximately 14% - 16%, and she doesn't understand that the tax is from the previous year on the days the car was registered "LAST YEAR". DOPE

    4. She also has not done the math as to what the loss of revenue would be to the towns and what the reimbursement number would be. Not withstanding the fact that 8 towns still have a $6000 exemption which complicates her entire formula.

    Summary - Both Mattiello and Raimondo used this issue for political purposes. Unfortunately for them, it will become their political death. Currently , to save face, there is only one thing that can be done immediately to make the issue go away for 99% of the people, including the loudest mouth on the issue, me. The only simple option which can be done with the stroke of a pen, does not require a bill, and does not have cause to depart from the existing NADA values, is simply to re-institute the mandatory $6000 exemption state wide to all city's. Now there is an even playing field, Mattiello and Raimondo get a pass, the issue goes away quietly, and they can get on to the business of being useless once again. The bonus is that this is the only thing that can be done this year. All they have to do is figure out what the reimbursement is to the cities and towns and find it in the budget. They only need to look at the budget of DOT and cut it out of that department which is filled with waste.

    Just remember who you heard the facts and the fix from first.

    Just once I would enjoy reading a quantitative analysis from "THE NON-TAXPYERS MAYOR

    Tuesday, February 21, 2017 Report this

  • Scal1024

    "I suggest that we just reduce spending by the same amount". Seriously? The problem is Rick, you can never identify what spending you're going to cut. If you don't believe me, watch your debate where you were specifically asked what budgetary spending you would cut. You couldn't answer the question and rambled as you did for the entire hour. As Bob asked would those cuts you suggest be on the school side or the city side?

    Also Rick, your plan called for paying 50% of the car taxes for seniors and veterans which would leave you even less revenue to reduce car taxes. I asked you how much that program would cost, you told me you didn't know because you weren't sure how many would actually use the program. There is no math to anything you propose Rick, no total costs, no estimates. Saying "cut taxes, cut spending" or "we just reduce spending by the same amount" doesnt make it so.

    You've had over 2 years to come up with an answer and the fact you can't speaks volumes about how you think. You blame PAC checks rather than your lack of understanding on schools, budgets and taxes. Spin it however you want the voters didn't buy it for 2 years, and they aren't buying it now.

    Tuesday, February 21, 2017 Report this

  • Reality

    I know it's time to eliminate the car tax. The Mayor has to step up and stop his profligate spending. Lifetime healthcare for retirees', sick day buybacks for firemen etc all have to be stopped.

    PS. This discussion should ONLY take place with taxpayers who actually pay taxes on time and in full. Anyone who doesn't has no seat at the table. I think it's time a petition be started asking the city council to pass an ordinance that wouldn't permit anyone who doesn't pay their taxes on time the right to run for office. It easy to advocate for new teacher contracts, increase pay for firemen as long as everyone other then the tax deadbeats are paying the bills.

    Tuesday, February 21, 2017 Report this

  • richardcorrente

    Dear Bob Cushman and my favorite critic Scal1024,

    Please read my web site. My economic plan is there under "Corrente's Plan". Unlike Mayor Avedisian, who never posted ANY plan because he doesn't have one. It's basic economics guys. If we attract more taxpayers by lowering taxes in general (you know, like the car tax) we will receive more taxpayers and a greater total tax revenue. I have said this dozens of times and Scal, you keep lying to the readers by stating that I "never have". I know that trying to discredit me helps you with your relationship with the Mayor but don't lie about me Scal. I have re-stated my plan dozens of times and I have even offered to meet you to explain it in person, but you haven't accepted. It's time to give up on trying to discredit me Scal. My plan is sound. "Cut taxes - Cut spending" is working in Cranston where the population is increasing. Raising taxes every year for 16 years in a row (Avedisians plan) here in Warwick has caused 5,800 taxpayers to leave according to the U.S. Census Bureau. That, Scal, is the big picture. Open your eyes to it my friend.

    Bob Cushman,

    I agree that the School Committee is level funded, BUT in that "level funding" there is a hell-of-a-lotta waste. The School Committee has a cash reserve fund of over three million dollars in their health benefits fund. Anthony Ferrucci told me that they have been depositing funds there for over 17 years and never withdrew a dime! Does that tell you there isn't a need to have that fund? "Level funded" doesn't mean "honestly spent". An unbiased third party audit will show where the "honestly spent" money went. Can you find one City Council Person that feels the School Committee spends our tax dollars fairly? I can't.

    Happy 58 degrees everyone.

    Rick Corrente

    The Taxpayers Mayor

    Wednesday, February 22, 2017 Report this

  • Thecaptain

    Once again, the Non-Taxpayer Mayor fails to be able to articulate one line item that he could reduce spending from. Keep us all guessing Rick. What a joke.

    Wednesday, February 22, 2017 Report this

  • Scal1024

    Rick, you again fail to answer any questions regarding specific spending cuts you would make. If the answer was on your website, why couldn't you answer the question here? More importantly why were you unable to answer the question in your debate? The reason is because you haven't named one line item you would cut. You've had 2+ years and you've failed to name one. For the record, I gave up on discrediting you. Between your late tax payments, lack of understanding of budgetary issues, finances and taxes you've done an incredible job discrediting yourself.

    Wednesday, February 22, 2017 Report this

  • Thecaptain

    For your entertainment.

    https://youtu.be/dYN-ZcF1w70

    Thursday, February 23, 2017 Report this

  • Hemi_Royed

    Cote why do drive through the parking lot and then post your videos on you tube?

    Brazenly stupid on your part as I see it.?

    You have no idea what goes on at that firehouse and you are too BALL LESS to go in

    and find out. Further, comments are disabled on you tube. Why?

    Aren't you moving soon you gutless turd on the lawn of life

    Friday, March 10, 2017 Report this