Legislators rev up car tax relief

The word is out that there will be some form of car tax relief this year just as Speaker of the House Nicholas Mattiello promised in the closing weeks of his campaign for re-election last fall.

Both Johnston Mayor Joseph Polisena and Warwick Mayor Scott Avedisian said Wednesday they would delay issuing motor vehicle tax bills in expectation that the General Assembly will pass car tax legislation in the next few weeks.

Gov. Gina Raimondo hailed those actions as a “smart move,” adding that both her office and that of the Speaker are working on legislation and it’s “highly likely something is going to happen.” Raimondo made the comments while visiting Randall Holden School, where she assisted in a bicycle safety program including the distribution of free helmets to fourth graders sponsored by the Rhode Island Association for Justice. The governor also said she is “not going to back away” from her free college tuition plan that in its initial form was projected to cost $10 million this year and $30 million a year once fully implemented.

Implementing either or both free tuition and car tax relief is problematic given that, according to revenue projections, the state is facing a $134 million shortfall if it simply maintained current programs.

Asked how this could happen, House Majority Leader K. Joseph Shekarchi said Wednesday morning “it’s a matter of priorities.” He said the state budget that will be made public this Thursday is “a work in progress.” He pointed out the public as well as organizations and agencies will have a full week “to vet” the budget before it reaches the House floor a week from Thursday. He noted that components of the budget have already been discussed at 20 to 30 committee hearings.

“This is a very transparent and open process,” he said.

Shekarchi said once the budget is released he expects he will receive emails, cards and calls giving him insight that may result in amendments when legislators take up the budget next week.

What about car tax relief and the governor’s free tuition proposal?

“There will be some form of car tax reform,” he vowed.

As initially suggested, Mattiello would have phased out the tax over five years by increasing vehicle value exemptions. In the first year the projected cost was $45 million with the eventual cost being $215 million that the state would give municipalities annually to make up for lost motor vehicle tax revenues. When revenue projections showed a shortfall, Mattiello scaled back his plan to six years.

Whether five or six years or something longer, a system of exemptions would remove older cars of less value from the rolls first. That could be a problem for municipalities faced with getting out tax bills in the next couple of weeks.

Earlier this month, Mayor Avedisian said he thought issuing tax credits could address the issue. That works in situations where additional taxes are due, but if taxes were eliminated from some vehicles and the taxes had been paid, then the city could be put in the position of issuing refunds.

Waiting for legislators to finalize car tax relief would solve that, but on the other hand put municipalities in the position of delaying tax bills.

“We started thinking about it, and it would be a logistical nightmare to send out car tax bills, which were going out in a couple of weeks,” Polisena said Wednesday.

Polisena believes it could be two or three weeks before the General Assembly finalizes a budget.

“So we’re going to hold off on printing the bills, and we’ll wait and see what the reimbursement is going to be and what the deductions will be. I’m sure that, with 135,000 cars, according to the Speaker, coming right off the tax roll, so there will be some cars from Johnston. So instead of charging people a car tax, and then have to give them their money back and tie up their money, we’d rather wait.”

As for the governor’s free tuition plan, Shekarchi thought a version of Raimondo’s plan was also possible this year.

(With reports from Tim Forsberg)