Although your much-reviled motor vehicle tax bill hasn’t arrived yet in Narragansett and South Kingstown, officials say don’t fret. It’s still coming and is still on the books.
A delayed state budget has pushed back the issuing of these bills, a much-despised tax that state officials have promised to eliminate. Residents are also still waiting on that promise to be fulfilled, but it won’t be this year, say state officials.
This tax bill varies widely from town to town as well as the state reimbursements to municipalities. This year, officials in these two towns say, delayed state budget calculations made it too difficult to figure out as usually done with property tax bills.
“Taxpayers are confused because they are accustomed to getting their tax bills at the same time every year,” said Narragansett Town Manager James Tierney, echoing sentiments of other town officials statewide who have also put a hold on mailing that annual assessment.
“From a town management perspective, we have decided to hold off on mailing the motor vehicle tax bills until the state budget is adopted. This will avoid costly supplemental billing that would result in further confusion,” he said, noting the same hesitancy as other officials.
This tax of up to $35 on each $1,000 of a motor-vehicle’s assessed value can be hefty for new and expensive car owners. At issue is the amount that state legislators will award to municipalities in the delayed state budget under state contributions for car taxes.
In addition, there’s some breath-holding by officials while waiting to see if a promised multiyear phaseout will continue as planned.
Patty Moreau, president of the Rhode Island Association of Assessing Officers, said,
“It’s the phone calls from people who don’t know the General Assembly is not meeting right now. It’s the taxpayers questioning us. We get the blame for it.”
Local town officials agreed.
In South Kingstown, Town Manager Robert Zarnetske said that his town this year will issue about 10,000 motor vehicle tax bills, which can produce about $3 million in revenue for the town’s $100 million budget. The state reimbursement wasn’t immediately available.
He said that calls come weekly from residents asking what has happened to the tax bill that failed to accompany the one for real estate tax.
“They seem to think, ‘If they missed me, good for me. If they want, they’ll send a tax bill sometime,’” Zarnetske said about why more people are not calling.
Narragansett this year is ready to send about 7,000 vehicle tax bills, which have the potential to capture about $1.26 million in revenue and $377,688 in state reimbursements for that tax, officials said.
Officials in both towns said that concerned residents are worried that they may be unable to renew their vehicle registrations without the tax bill being paid and that the bill has become lost in the mail.
Trying to calm those fears, officials said that only people with delinquent payments based on bills already issued should have concerns about a “tax block” letter from the state Department of Motor Vehicles.
Both Zarnetske and Tierney said that holding off on issuing the bill is better than issuing a “supplemental bill” – the difference if more tax is assessed – or issuing refunds if the tax owed is lower.
Cities and towns rely on property taxes to fund the very services that are heavily strained because of the coronavirus, said Christiana McFarland, research director for the National League of Cities. “It’s a huge hit on their budgets,” she said.
However, South Kingstown and Narragansett officials said that for the moment advanced planning has eased the need for the money right now.
“This is not an issue at this time but may become an issue if the state budget is not adopted in November,” said Christine Spagnoli, Narragansett finance director. Zarnetske said he agreed with that assessment as well for his town.
North Kingstown, however, decided to issue bills so that a town revenue stream continued and residents maintained their expectation for receiving — and paying — the bill in July when it usually comes, said Ralph Mollis, town manager.
“We decided that by waiting for a state budget to be addressed in mid-November would have an adverse effect on taxpayers by limiting the months they would be able to pay their bills,” he said.
His town issues about 13,000 vehicle tax bills, which bring in about $3.75 million in revenue along with over $1 million in state subsidy. The town budget is about $107 million this year.
“Passing a town budget without the adopted expectations of a state budget along with the unknown relative to motor vehicle taxes during what already is a challenging time has been difficult and frustrating at times,” said Mollis, echoing the sentiments of officials in Narragansett and South Kingstown.
He and other officials said they understand the fiscal challenges the state faces, but expect that cities’ and towns’ needs will be addressed in November, hopefully continuing the planned phaseout of the motor vehicle tax.
Under state law, the state would reimburse cities and towns for lost revenues over the life of the phase-out.
The tax is based on the value of the vehicle, the amount each city and town is exempted from taxation and the municipal tax rate. The state’s cities and towns each have different exemption amounts and tax rates.
The state Vehicle Value Commission was established in 1984 to establish presumptive values of vehicles and trailers and provides a list of values to each city and town for their use in levying the tax.
House Speaker Nicholas Mattiello, referring to the car tax, has said, “We are maintaining our commitment on the car tax (elimination), he said. “People expect it. People deserve it.”
Even though the pandemic has placed additional strains on the state budget, he said that he believes expected federal funds will help the legislature keep its commitment to phaseout the tax.
According to published reports, In January, Gov. Gina M. Raimondo proposed tweaks that would have reduced the exemption to $3,800, instead of $4,000 — and pushed the final year from FY 2024 to FY 2028 — to save close to $12 million this year.
But the governor’s entire FY2021 proposal — submitted before the pandemic — is on hold, with no legislative action expected on the budget until sometime after the general election.