Car tax comes back - but only for some

PROVIDENCE, R.I. (WPRI) - RIPTA General Manager Alfred Moscola may not be getting a car tax bill this year thanks to his Delaware plates, but lots of other Rhode Islanders haven't been so lucky – and they blame state lawmakers for it.

Our new WPRI 12 poll shows 68 percent of Rhode Islanders blame the General Assembly for the unhappy return of the car tax, compared with just 12 percent who blame local officials. Another 20 percent are unsure who's to blame, the Oct. 21-25 survey finds.

In all, 26 of the state's 39 cities and towns opted to make drivers fork over at least some of the car tax money that used to be covered by the state, according to a survey by the R.I. Division of Municipal Finance. Only 13 kept the full $6,000 exemption in place.

The result: Rhode Islanders who own the same car and live just a few miles apart in neighboring towns face very different tax burdens for their vehicles.

"We now have a wide disparity around the state," said Dan Beardsley, the longtime executive director of the Rhode Island League of Cities and Towns, which lobbies on behalf of municipalities.

Take Warwick and next-door Cranston. Officials in Warwick kept the full $6,000 exemption, while Cranston's leaders dropped it to the $500 minimum allowed. On top of that, Cranston's car tax rate is $42.44 per $1,000 of value – higher than Warwick's $34.60 – resulting in an even bigger bill for motorists in the first city.

Or take West Greenwich, where Moscola keeps the three vehicles that Target 12 found out are registered in Delaware. Like Cranston, West Greenwich dropped its exemption to $500.

"Those residents took it on the chin, and West Greenwich is not alone unfortunately," Beardsley said.

Revaluations, rates boost bills, too

The car tax is a local property tax, similar to those cities and towns levy on homes, offices and other types of real estate. It's one of a relatively small number of ways local governments can raise revenue under Rhode Island law.

Until recently, drivers hadn't been paying the tax bill for their vehicles’ first $6,000 in value – the state picked up the tab and paid the municipalities instead. That had been the case since lawmakers voted in 1998 to phase out the car tax.

But faced with another sizable state budget deficit last June, the General Assembly slashed how much of a driver's tax bill it would cover from $6,000 in value all the way down to $500.

That decision kept $107 million in the state's coffers, but it also forced cities and towns to either balance their budgets without the car tax money or stick drivers with the tab.

And that's not the only reason car tax bills rose in many places this year. Revaluations led to higher rates in some cases, Beardsley said, and some drivers have complained that their vehicles' values increased, too. (Drivers can see what their communities did by checking this state survey.)

The value of a car is determined using dealer data by the Rhode Island Vehicle Value Commission, a committee of five local assessors and two state officials set up by the General Assembly. Under state law, a vehicle’s condition or mileage cannot be taken into account when deciding how much it's worth for tax purposes.

Tough choices on local level

Rhode Island and other Northeastern states have historically relied more on property tax revenue to fund local government than those in other parts of the country, partly because state legislators have given them fewer alternatives like allowing local income or sales taxes, Beardsley said.

He estimates the state has cut a cumulative $1 billion in local aid over the past 20 years. "There's not a city or town in the state that hasn't been dramatically affected by the state's transfer of its deficit problem to the local governments," he said.

But John Simmons, who leads the Rhode Island Public Expenditure Council, said local leaders share the blame for the car tax's return, since they would not have needed the money from it if they'd done more to reduce their budgets. He pointed to the 13 places that kept the full $6,000 exemption as exceptions.

Simmons also said that with Rhode Island's state government experiencing its own budget shortfalls, lawmakers faced the choice of either cutting services at the state level to send money to cities and towns or keeping that money for state services and letting municipalities figure out how to deal with it locally.

"That's forcing municipal governments to look harder than they might have in the past at the spending side" of their budgets, he said. "The problem is that when you look at the 39 communities, some have been much better at it than others."

Caprio most cautious on car tax

Three of the four main candidates for governor – independent Lincoln Chafee, Republican John Robitaille and Moderate Party founder Ken Block – pledged at an Oct. 6 WPRI/Providence Journal debate that they would push lawmakers to restore car tax reimbursement funding at the level that existed until June.

Democrat Frank Caprio was the one candidate who sounded a more cautious note. "The reality is, money's really tight," he said. "We need to look at the car tax in a much wider spectrum." Caprio served in the General Assembly from 1991 to 2007 before his election as general treasurer.

Despite the candidates' rhetoric and the outcry among drivers, both Beardsley and Simmons said it's unlikely state lawmakers will reverse their decision on the car tax money when they return to Smith Hill next year – particularly since the state is expected to still face budget deficits of its own in the coming years.

"Not only do I think it's permanent – I think it's going to get worse," Beardsley said.

tnesi@wpri.com