Car taxes due, but when?

Posted 11/19/20

By JOHN HOWELL So, you haven't gotten your car tax bill yet. Don't fear - it will be coming, although that's not likely to happen until 2021. Car taxes are on mayor-elect Frank Picozzi's list of questions as his transition team prepares him for the role

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Car taxes due, but when?


So, you haven’t gotten your car tax bill yet.

Don’t fear – it will be coming, although that’s not likely to happen until 2021.

Car taxes are on mayor-elect Frank Picozzi’s list of questions as his transition team prepares him for the role of mayor.

In a recent interview, Picozzi expressed concern of hitting taxpayers with a bill that many surely have forgotten and hadn’t planned for. Yet, from another perspective, Picozzi points out that the city budget is based on receiving those tax revenues and without them the city could be in a financial bind.

Why the motor vehicle taxes weren’t issued when the property tax bills went into the mail early this summer is connected to the General Assembly and the fact that it has yet to approve a budget for fiscal year 2021. By statute, the budget is to include the next step to the phase-out of the motor vehicle tax this year. Under the legislation authored by House Speaker Nicholas Mattiello, municipalities are reimbursed for the taxes they lose as motor vehicle exemptions are increased and the amount paid by the vehicle owner is reduced.

Not knowing if the state would have the resources to implement the next phase of the program, or for that matter continue it at its current level, Mayor Joseph J. Solomon chose to hold off on issuing the bills. Like many other municipal leaders, Solomon didn’t want to cause the confusion or additional expense of issuing a supplement tax bill if the state didn’t increase its aid by implementing the next phase. Conversely, if he gambled the state would forego the next phase and sent bills based last year’s motor vehicle values and, in fact, legislators allocated the additional aid, then the city would be faced with making refunds to taxpayers.

As the year moves on, the lack of car tax revenues represent a big chunk out of the budget. According to Mark Carruolo, leader of the Picozzi transition team, car taxes account for $26 million. Of that amount, $8.5 million is paid by the state as part of the phase-out, with the balance of $17.5 million coming directly from the taxpayers. Of the city’s $323 million, 73 percent of revenues is raised through the combination of real estate and motor vehicle taxes.

The mayor’s office was contracted for this story, but did not return calls or an email.

Nonetheless, Carruolo said the administration and in particular the mayor’s chief of staff, William DePasqualle, has been very responsive to inquiries and to providing documents requested by the transition team.

Carruolo, who served as chief of staff for former Mayor Scott Avedisian, foresees no difficulties in further delaying issuance of car taxes. He estimated the city’s unreserved balance, or rainy day fund, in the range of $28 million to $31 million, giving the city the liquidity to continue operations without short-term borrowing.

Although he hasn’t fully delved into expenditures and revenues for the current year, Carruolo said it is apparent that Mayor Solomon has kept a lid on spending and is “frugal.” He points to the layoffs and job eliminations made by the mayor as well as to the elimination of certain programs in the wake of the pandemic. Overall, he said, Solomon overestimated budget expenses and underestimated revenues, which put the city in a good financial position.

“So, there’s money there,” he said.

Carruolo said he has requested of the administration “not to take any extreme measures” during this period, which would include issuing car tax bills.

But what of Picozzi’s concern of hitting taxpayers when they have forgotten car taxes and aren’t prepared to pay them?

Carruolo said that’s been talked about and he is looking at ways of softening the sticker shock, including extending the payment period or providing for “blended” payments going forward. The blended plan would spread payments over the remainder of the year.

One certainty, however, is that at some point car owners will get taxed for the current year unless they have already been exempted under the phase-out. That happens when the exemption under the phase-out exceeds the vehicle’s value. For all the others, Carruolo said, “we can’t expect [people] not to pay car taxes.”

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