This is not a misprint: Mayor Scott Avedisian proposes raising property taxes, but many Warwick taxpayers would actually end up paying less, if the City Council approves his $279.7 million budget.
The council was set to act on the budget last night and, as of press time, sources were saying it would be approved pretty much as submitted.
The possibility that many people may actually end up paying less in taxes this year arises from the mayor’s plan to increase the motor vehicle exemption that he and the council virtually eliminated last year to raise about $8 million in revenue. The exemption was cut from $6,000 to $500, prompting an outcry for citizens and spawning the Car Tax Revolt headed by resident Rob Cote.
Entering the budget process this year, the mayor proposed restoring $1,000 of the exemption, meaning a $34.60 savings to those people owning a vehicle worth $1,500 or more. During Thursday’s budget hearing, Avedisian realized the line item on police holiday pay was an error and that the amount budgeted was actually twice what was needed, which amounted to $220,500.
In an interview yesterday, Avedisian said he thought it possible that the exemption could be increased to $2,000, provided another $150,000 in savings could be found.
That money will come from cuts in postage amounting to $10,000 and funds budgeted for arbitration with unions representing fire, police and municipal employees. Those all added up to the $346,467 needed to increase the exemption from $1,500 to $2,000.
How might that add up to a homeowner paying less in taxes when the mayor’s budget also proposes increasing property taxes? The resident rate would increase by 45 cents to 18.14 per $1,000 of valuation.
Based on an average home value of $208,000, the residential rate equates to $93.60 increase in taxes. If the motor vehicle exemption is increased by $1,500, taxpayers will see a $51.90 drop in taxes for every car valued at $2,000 or more. Therefore, if a homeowner owns two cars worth at least $2,000 each, their motor vehicle tax bill would be cut by $103.80. Overall, therefore, they would be paying $10.20 less in taxes.
Why not apply the budget reductions to the property tax rate, rather than the motor vehicle exemption?
“There’s a bigger impact on the car tax … it seems to me a better way of doing it rather than a couple of cents on the tax rate,” Avedisian answered.
Every 10 cents on the residential rate, which triggers 15 cents on the commercial rate, generates about $1 million in revenue. Therefore, cutting $346,467 from the budget would reduce the residential rate by about 3 cents per $1,000.