Mattiello promises to release car tax plan early enough to hold hearing

PROVIDENCE, R.I. (WPRI) – Democratic House Speaker Nicholas Mattiello is promising to unveil his formal proposal for eliminating the car tax early enough that a hearing can be held on the plan, rather than keeping it under wraps until the night the House Finance Committee approves a budget deal.

During his hard-fought 2016 re-election campaign Mattiello pledged to eliminate the tax, which costs Rhode Island motorists about $220 million annually, within five years. He has repeatedly doubled down on the pledge in recent months, despite hesitation expressed by Democratic Gov. Gina Raimondo and Senate leaders.

“Speaker Mattiello is committed to giving taxpayers immediate relief in next year’s budget from the oppressive and regressive car tax,” Mattiello spokesman Larry Berman reiterated Tuesday. “Next year’s budget” refers to the budget for the fiscal year that starts July 1, which lawmakers will likely approve by late June.

With the legislative session entering its crucial final weeks, though, Mattiello has not yet released a formal plan laying out how he will structure the elimination of the tax, which is administered and collected by the 39 cities and towns, or how he will pay to reimburse them for the lost proceeds. State revenue has fallen below forecasts so far this year, and annual deficits are already projected to total nearly $200 million in future years even before his plan is included.

“His plan is coming together as the fiscal staff is working with the Department of Revenue and getting input from the League of Cities and Towns,” Berman said. “It is a very technical issue and we have found that certain practices differ widely among communities.”

In years past Assembly leaders have sprung major policy changes on the public for the first time in the final budget bill, which is usually approved by House Finance the same night it’s released, often while its pages are still warm from the printer.

However, Berman pledged that Mattiello won’t do that with the car tax. “When the plans are finalized, specifics will be released and the House Finance Committee will hold a hearing,” he said.

The speaker is likely to hold off on unveiling any proposal until after May 10, when the state’s official number-crunchers will release their estimates of state revenue for next year. Lawmakers are required to use those figures when they put together the final budget.

In her State of the State speech, Raimondo countered Mattiello with a more modest proposal to reduce the car tax by about 30%, at a cost of roughly $60 million. Her plan, however, would not take effect until July 2018, a year later than Mattiello wants, and the speaker has said such a delay is a nonstarter for him.

A poll released last month by Bryant University indicated a majority of Rhode Island voters support cutting the car tax, with 72% favoring Raimondo’s partial repeal and 52% backing Mattiello’s full repeal.

Rhode Island lawmakers previously approved a plan to scale back the car tax in 1998, and by 2008-09 the state was sending cities and towns $135 million annually to make up for the revenue they lost due to the tax being lowered. Within two years, however, that funding had been slashed more than 90% as the recession hammered state finances, and the car tax returned in many communities.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook