Legislators amenable to luxury clothing tax, not 2% more on meals
If what some Democratic state legislators are saying is the case, General Assembly leaders are prepared to tax single items of clothing selling for more than $175 but not to increase the meals and beverage tax by 2 percent as Governor Lincoln Chafee proposes.
After a Democratic caucus Tuesday, it also appears the leadership is prepared to restore some of the $24 million funding cut to agencies serving those with developmental disabilities. And, it seems there’s a prospect that legislators will change the current system of valuing motor vehicles for tax purposes at their highest value in favor of a more realistic trade-in value.
Those issues and much more are expected to be covered in the proposed state budget being released today by the House of Representatives leadership.
“I suggested we consider doing something with the vehicle assessment in the budget,” Warwick Representative Joseph McNamara said of the caucus.
McNamara introduced legislation in the wake of the Warwick Car Tax Revolt, which went statewide, to revise the current system of applying the “clean” and higher value to motor vehicles. The issue produced an outcry last summer after the mayor and City Council eliminated $6,000 in motor vehicle exemptions to raise about $8 million in added taxes. This year, as part of his budget, Mayor Scott Avedisian proposes restoring $1,000 of the exemption for a $34.60 savings in taxes on all vehicles valued at more than $1,500.
“The method has to be addressed,” McNamara said of the existing system. “It’s unrealistic. It uses the ‘clean value’ and a lot of cars are not worth that. Go with the average trade-in value, that was my suggestion.”
McNamara is “optimistic that some of the cuts” to developmentally disabled will be restored. Rep. Frank Ferri shares that opinion.
Ferri said he didn’t get many specifics from the caucus, but that it appears “they’re going to do something with the developmentally disabled.”
Budget cuts that went into effect in October totaled $24 million and slashed budgets for agencies that work with the developmentally disabled. Chafee’s proposed fiscal 2012 budget suggested cuts of $9.5 million, an amount the General Assembly more than doubled. The first round of cuts took place in May 2011, when funds were cut by 12 percent per patient. Further cuts, this time 11 percent, took place in October. Agencies and associations serving the developmentally disabled held numerous rallies in an effort to increase funding in the current fiscal year without success.
Ferri said he is especially interested in seeing that the workforce development fund is not reduced, pointing out that there aren’t sufficient funds in the current $11 million appropriation to meet demands.
“I would like to keep it there,” Ferri said of $1.2 million that flows into the fund from business taxes.
He also expects the leadership will strive to maintain the level of school funding Chafee proposed in his budget – Warwick schools based their budget on receiving an increase in state funds – as well as provide more funds for higher education.
How might that be done without increasing taxes, other than a tax on higher priced clothing?
Ferri said tax revenue projections are up and that is expected to help.
“They’re trying to hold the line on taxes,” said McNamara who doubted the clothing tax would impact him as he said he finds suits under $175. “It sounds to me like the Joseph A. Banks tax,” he said with a laugh.
As for gaming revenues from Twin River and Newport Grand, McNamara said the state is “in a box” with casinos in Connecticut and the prospect of four more in Massachusetts.
“This is our third highest source of revenue; we have to do it,” he said of allowing table games at Twin River and Newport.
If there’s a silver lining to bringing casinos to Rhode Island, McNamara said that the existing slots-only venues are “the worst form of gambling … it caters to addictive gambling. At least with table games you have to think, relate with other people and, if there is such a thing, it’s less addictive gambling.”
As for legislation supported by Rhode Islanders for Tax Equity, a union-backed group that would increase taxes for the wealthy, McNamara gave the impression the bill would not pass. He said legislators eliminated many deductions and he would like to see the data of those changes first. Whether that is also the feeling of the leadership was not clear, although he said the feeling is that the more someone makes, the more they should pay in taxes.
McNamara also offered little hope for Gov. Chafee’s legislative package to aid cities and towns in financial distress. Ferri thought there was support for some of the package, but McNamara said measures approved in the pension reform package in November require municipalities to report on their plans and develop a program to see that they are viable. He said those provisions are working.
He pointed to the city of Providence, saying they meet with union representatives and negotiated concessions.
“If you want to make changes,” he said of pension plans, “call them [the unions] in and do it.”
Of the seven bills making up the governor’s relief package for municipalities, McNamara said, “I don’t see any being approved.”