December 19, 2014
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Mayor’s budget offers car tax relief

Whether you are driving an over-valued clunker or an off-the-showroom floor sparkling 2012 model, the mayor is looking to take $34.60 off your motor vehicle tax bill, if the City Council approves his proposed budget.

As he is still working on projected health care costs, Scott Avedisian did not release his budget yesterday, but will do so today in order to meet the deadline to submit it to the City Council.

Nonetheless, he revealed several aspects of the spending package and his intent to increase the motor vehicle exemption from $500 to $1,500. As the rate is fixed at $34.60, and the mayor doesn’t plan to reduce it, which was an option under consideration, the higher exemption translates into an additional $34.60 tax savings on vehicles with a value of $1,500 and more.

As a result of the higher exemption, Avedisian calculates 20,750 fewer vehicles would be taxed than in the current year. Overall, he said, motor vehicle tax revenues would drop from $23,092,000 to $22,570,000.

Avedisian said, in preparing the budget, “there was a lot of discussion about [motor vehicle] valuations and what are [our] competing interests here.”

It’s no wonder that vehicle values are in the limelight.

Last year, after the mayor and City Council approved a budget that reduced the exemption from $6,000 to $500 to raise an additional $8 million in revenues, they faced angry residents who questioned why cars were being valued at far more than they could sell them for, or in many instances, what they had paid for them. The outrage spawned the Car Tax Revolt organized by Rob Cote and reverberated statewide as the group challenged the state’s system of valuing motor vehicles. The system, using the National Automobile Dealers Association clean retail value, hasn’t changed.

In a press release, Avedisian said restoration of $1,000 of the exemption would not only lessen the impact on many car owners, “but will still have the long-term effect of increasing the participation both of those individuals who do not own property and the auto-centric businesses that benefited from the full motor vehicle exemption for many years.”

While the owners of motor vehicles are likely to face some tax relief, Avedisian offered no hint of property taxes. Asked what he would propose, the mayor said “as low as possible.”

He did, however, say he has held multiple meetings with Beth Furtado, chairwoman of the Warwick School Committee, and that they have been in discussions over how to handle reductions in the committee request for $160.5 million, a $4.2 million increase in city funding.

The mayor said he has agreed to go forward with the bonding of at least two years of the department’s three-year plan for school fire code improvements, projected to cost a total of $10 million. Schools had built some of those costs into its operating budget on the premise that Avedisian would adhere to his moratorium on issuing new debt.

The mayor said he has reconsidered his stance, however, and is looking to establish a commission that would establish a debt policy that he would submit for council approval. He said aspects of the policy could include the condition that the city only takes on new debt to the extent that it has paid off prior debt. Also, citing his position as chairman of the Rhode Island Public Transit Authority, Avedisian noted that 20-year bonding is being used to acquire buses that have a “12-year shelf life.”

“It’s a question of what’s appropriate … it has to be a meaningful long-lasting improvement,” he said.

In the case of the fire code improvements, it was not clear whether he expects schools or the city to assume principal and interest costs of the bonds.

Bonding of the fire code improvements is part of the mechanism to reduce overall school expenses. The mayor also talked about reducing textbook costs through technology enabling students to download the most current information. Doing that assumes students would have digital tablets and that raises questions over their acquisition and whether students would be responsible for their loss or should they break them.

“We need a real sustainable plan for us,” Avedisian said.

A third area the mayor is looking to is the $4 million in reserves the department has with West Bay Health Collaborative that manages the department’s health care plan. The mayor suggests the department can safely reduce reserves to $2.8 million, thereby saving another $1.2 million from its budget.

Avedisian was mum on the municipal side of the budget.

Asked whether he would budget salary accounts at the same level they are this year, as he has not finalized contract agreements with police, firefighters and municipal employees, he said in some respects he could say “yes.” Rather than elaborate, he said that would become clear when the budget is released today.


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