PROVIDENCE, R.I. (WPRI) — Senate President Dominick Ruggerio said Monday he thinks Rhode Island should eliminate the municipal car tax this year to help offset rising prices at the pump, while also delivering a warning to business leaders about the growing power of the left in state politics.
In prepared remarks delivered to the Northern Rhode Island Chamber of Commerce as part of its “Eggs & Issues” series, the veteran North Providence Democrat said state leaders “need to recognize that Rhode Islanders are feeling the pinch of higher costs.”
“While by many measures the economy is thriving, and Rhode Island is a national leader in economic recovery, inflationary concerns are very real, and they are being felt by Rhode Islanders,” Ruggerio said. “One step that I think we are equipped to take – and that I believe we should take – is to accelerate the car tax phaseout. This will provide lasting relief for everyday Rhode Islanders.”
The timing of Ruggerio’s comments won’t be lost on State House observers, coming a week before legislators take their April break — after which attention will turn toward final budget negotiations between Ruggerio, House Speaker Joe Shekarchi and Gov. Dan McKee.
The three leaders, all Democrats, already know they will have an unprecedented amount of money available when they write the budget.
The state finished the last fiscal year with a massive budget surplus due to generous federal reimbursement for costs tied to COVID as well as an uptick in revenue due to the economic recovery. In addition, there is over $1 billion in federal American Rescue Plan Act funding waiting to be handed out.
McKee released a budget plan in January which laid out his vision for spending the money, but lawmakers are likely to have some of their own ideas.
“There are many proposals that we are considering” for use of the “unprecedented federal funds,” Ruggerio said in his speech.
On top of all that, the state’s official number-crunchers are slated to issue their updated revenue projections in May, and they are expected to report that there is even more state revenue available for use in the budget.
The car tax phaseout was enacted in 2017 at the urging of then-House Speaker Nicholas Mattiello, who had won a tight re-election campaign the prior year in part on a promise to get rid of the widely disliked municipal levy. (Technically, the tax is staying on the books, except the state is now paying the bill instead of local taxpayers.)
The state is currently in year four of a six-year phaseout schedule, and McKee’s budget proposes an additional $26.9 million to fund the fifth year, bringing the total annual cost of the program to $166.6 million, according to the Senate Fiscal Office.
The office estimates it would cost $63 million more than that to fully eliminate the car tax now, as Ruggerio is suggesting, rather than waiting another year to do so. But Senate spokesperson Greg Pare noted that the policy would not increase future deficits, because current forecasts already assume the tax will be fully phased out after 2023.
Ruggerio’s proposal would benefit the owners of higher-valued cars. Under the current six-year phaseout schedule, at least $5,000 of a car’s value is presently exempt from the municipal tax, which would rise to $6,000 in year five of the phaseout; a full phaseout means the entire value of a car would be exempt this year.
Ruggerio also floated his idea as Republicans and some Democrats are urging the state to temporarily suspend its 35-cent gas tax — a move that other states including Connecticut have taken recently — and as incumbent state legislators look ahead to their re-election races this fall.
Elsewhere in the speech, Ruggerio reiterated a number of policy priorities that Senate leaders have emphasized this session, including expanded support for child care and universal pre-K within five years.
But he saved his most eyebrow-raising remarks to the Chamber audience for his conclusion. He took direct aim at the Rhode Island Political Cooperative, the leftist campaign group co-founded by gubernatorial candidate Matt Brown, which successfully unseated multiple incumbent Senate Democrats in the 2020 primary.
Calling the Co-op’s members “downright hostile to business,” Ruggerio noted that Brown is running as part of a ticket alongside lieutenant governor hopeful Cynthia Mendes, an East Providence state senator, as well as candidates for legislative and local offices. (One of them is Lenny Cioe, who lost a bid to unseat Ruggerio in 2020 and is now making a second attempt to win the seat, which straddles North Providence and Providence.)
“They are vocal, and their radical ideas get a lot of media attention,” Ruggerio said. “So it is absolutely vital that we also hear from you. We need you to participate in the electoral process. And we need you to participate in elections – including primaries.”
Ruggerio listed off a series of Co-op policies he opposes — including a $19 minimum wage, higher taxes, and calls to “defund the police” — before ending with a warning to the assembled business leaders.
“If you choose to sit out primaries – especially the Democratic primary – then you could be left with only the most extreme candidates in the general election … candidates who don’t reflect the values of most Rhode Islanders,” he said.
A spokesperson for the Co-op was preparing a response early Monday evening, but in the past the group’s leaders have often accused Ruggerio and other top State House Democrats of being part of a “corrupt machine” that controls the state party and stymies progressive legislation.
Ted Nesi (firstname.lastname@example.org) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter and Facebook