6 RI communities will share half of Mattiello car tax money

PROVIDENCE, R.I. (WPRI) – House Speaker Nicholas Mattiello says his plan to eliminate the car tax would freeze how much the state reimburses cities and towns at today’s tax rates, so communities could not seek more money down the road.

Mattiello, D-Cranston, announced his plan to gradually eliminate the car tax during his hard-fought re-election campaign last fall. He has said repeatedly he plans to phase out the tax over five years but have the state reimburse cities and towns for the revenue they lose so their budgets are not strained.

Larry Berman, a Mattiello spokesman, confirmed the speaker plans to “freeze the rate at the current levy amount so the cities and towns cannot increase the rate and look to be made whole at an increased rate.”

Not everyone thinks the plan is fair. Cumberland Mayor William Murray said he fears that Mattiello’s plan will force property owners to bear the burden if communities fall on harder times.

“The homeowner and the business community are going to have to pick up this burden,” Murray, a Democrat, told Target 12. “What happens two years down the road and somebody new comes in and they say, ‘We’re not going to do it anymore’?”

According to figures from the Department of Revenue, Rhode Islanders currently pay $220 million a year in car taxes. Under Mattiello’s proposal, by 2022, the state would cut $220 million in checks to communities so they can take in the same amount of money without sending out car tax bills.

Half the state money in the Mattiello plan would go to six of Rhode Island’s 39 communities: Providence ($32 million), Warwick ($25 million), Cranston ($21 million), Pawtucket ($15 million), East Providence ($10 million) and Johnston ($9.6 million).

For comparison purposes, Target 12 analyzed Department of Revenue data to examine how the same amount of money – $220 million – would be divided if it were handed out based on the actual value of cars in each community. The results were starkly different.

Use Pawtucket and Cumberland as an example. The total assessed value of all cars is roughly the same in each community: $288 million for Pawtucket and $286 million for Cumberland.

Under Mattiello’s plan – reimbursing the communities based on their current tax rate – Pawtucket would get $15 million from the state by 2022, while Cumberland would get just $6 million. If the money were divided evenly based on the value of cars, by comparison, Cumberland would receive about $4 million more and Pawtucket would get about $5.6 million less.

Special Report: Mattiello says RI car tax will be gone in 5 years »
Special Report: Mattiello says RI car tax will be gone in 5 years »

Murray suggested the Mattiello plan rewards cities and towns that have failed to hold down taxes. “Because we did the right thing and we had the right tax rate for cars we’re being penalized,” he said. “Should we subsidize Providence, as an example? I don’t believe so.”

In all, 25 of the 39 communities would receive more money if the $220 million were divided by motor vehicle value rather than their tax rates, while 14 do better under Mattiello’s plan.

During a recent taping of WPRI 12’s Newsmakers, Mattiello acknowledged various criticisms of his proposal, but noted the car tax was “designed poorly from the very beginning.”

“The fact that some communities have different tax rates is an additional reason why you may not want to do it, an additional reason why phasing it out is complicated,” Mattiello said. “It’s hard, it’s complicated, but that’s exactly what we’re there to do: fix and solve complicated problems on behalf of our constituents.”

Murray isn’t the only one raising questions about Mattiello’s approach. Gov. Gina Raimondo and Senate President M. Teresa Paiva Weed have both suggested the price tag for Mattiello’s plan may be too high considering the state faces long-term deficits.

Mattiello hit back at Raimondo in a string of tweets on Friday afternoon.

“I have heard from the citizens of the state and I understand they want the burdensome car tax eliminated,” the speaker wrote. “The Governor is tone deaf on this issue and should start listening to the people of Rhode Island. What is truly unsustainable and fiscally irresponsible is her plan to make us the only state in the nation to give away ‘free’ taxpayer-funded college tuition.”

Raimondo has offered a more modest proposal to reduce the car tax starting next year, which would cost the state roughly $60 million in reimbursement payments annually.

Murray said he is talking to his state lawmakers in Cumberland and plans on pushing back against the proposal. He said he would rather see car tax relief for his constituents by tinkering with how cars are assessed and examining how neighboring Connecticut and Massachusetts handle it.

“We’re going to fight,” Murray said. “I think it’s ridiculous we’re funding other cities that are going to get much more and I don’t think it’s a fair formula.”

Mattiello, however, has signaled his mind is made up, describing the car tax as “regressive” and “one of the highest in the nation.”

“We’re going to give tax relief to our constituents because they deserve it,” he said.

Tim White ( twhite@wpri.com ) is the Target 12 investigative reporter and host of Newsmakers for WPRI 12 and Fox Providence. Follow him on Twitter and on Facebook

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes The Saturday Morning Post. Follow him on Twitter, Facebook and Instagram