Putting car tax relief into first gear
The longest day of the year is here – June 21 to be precise. High school graduations are winding down and the Fourth of July is around the corner. Summer is with us.
It doesn’t quite seem possible for summer to have arrived so quickly. Cool wet weather, with the exception of a couple of scorchers, is to blame.
But before setting into the gentler rhythm there’s work to be done at the State House. Early last Friday morning, the House Finance Committee passed a $9.3 billion budget that held broad-based taxes and miraculously addressed a projected $134 million shortfall in revenue while introducing additional expenditures including the funds for scaled back versions of Speaker Nicholas Mattiello’s car tax relief plan and Gov. Gina Raimondo’s free college tuition plan.
This Thursday the budget comes to the floor of the House and the debate, or what some view as the bargaining, ensues. There will be amendments to the spending plan and debate on what is being gained at the expense of other programs.
Being one of the larger expenditures and because it affects so many, car tax relief will carry the spotlight. With the Speaker’s commitment to bring tax relief this year, although it will be six years before its complete elimination, the issue is the details of the plan not whether it is going to happen. That is the Speaker’s power. It was recognized when even before release of the budget, mayors started announcing delays in the issuance of motor vehicle bills. Car tax relief was coming – Speaker Mattiello said so.
If approved in its current form, the expansion of vehicle value exemptions will mean $26 million in reimbursement of lost car tax revenues to cities and towns. That amount will grow in following years as exemptions are increased until the state is annually paying $220 million to municipalities and the scourge of the car tax is wiped from municipal tax rolls.
As Rhode Islanders know all too well, this has been tried in the past. The state started down the road of eliminating the tax through increased exemptions offset by state aid to cities and towns. The plan hit the skids when the economy soured and former governor Donald Carcieri wiped out all but $500 of the exemption along with the aid to the municipalities. With the full value of motor vehicles virtually restored, car tax shot up to the outrage of owners who questioned how the “clunkers” they kept on the road could possibly be worth so much.
Under Mattiello’s plan, many lower value vehicles will come straight off the municipal tax rolls. It, indeed, makes good sense to delay local tax bills until we know all the details of the plan. We’re going to get car tax relief – Mattiello will make it happen.
It will be up to future legislators – and that could be Speaker Mattiello depending how things play out – on whether car tax relief gets into second gear, or worse, put back into park.