2017-08-10 / Front Page

State budget won’t impact Jamestown

Last-minute changes don’t affect state aid

Although the spat between House and Senate leaders spawned a month-long budget impasse that loomed over cities and towns, the gridlock that ended last Thursday shouldn’t have an impact on Jamestown’s financial planning.

Despite a continuing resolution that spanned 34 days, state aid to municipalities will remain at the originally proposed level for fiscal year 2017-18.

According to Town Administrator Andy Nota, the only difference is that a portion of the revenue from the so-called car tax will come from the state, not taxpayers.

“It all resolved itself,” Nota said. “By factoring in state revenue, the projections will be made whole.”

The skirmish between House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio surfaced at the 11th hour. Following House approval on the final day of June, the Senate passed an amendment hindering Mattiello’s campaign promise to phase out excise taxes on motor vehicles. According to the failed Senate revision, if state earnings were to drop, increased reimbursements to municipalities for lost car taxes would be blocked. When the amended bill was sent back to the House, Mattiello already had recessed his chamber.

The budget that ultimately was approved, which was signed immediately by Gov. Gina Raimondo, includes Mattiello’s plan. The measure, however, has a stipulation. It mandates annual reports on the plan’s sustainability with recommendations by the Division of Revenue.

“We have come to an agreement that allows us to move forward with the business of the state, allowing the excise tax phase-out while still providing protections that will monitor its economic feasibility for the state,” said East Providence Sen. William J. Conley Jr., chairman of the Senate Finance Committee.

In 2018, Rhode Island car owners will be taxed on 95 percent of their vehicles’ value, opposed to the full assessment. The new law also stops taxing cars that were manufactured more than 14 years ago. These changes will affect all vehicles registered in Jamestown if they qualify.

The plan also increases the minimum exemption from $500 to $1,000, although this does not affect Jamestown because there already is a $6,000 exemption on the books.

In subsequent years, the phase-out continues reducing the taxable value and maximum rates, while raising the minimum exemptions. If the director of revenue determines the plan remains sustainable for six consecutive years, the tax will be completely eliminated in 2024.

The budget fully reimburses cities and towns for the lost revenue, a cost of $26 million in 2018.

“The average taxpayer will see a savings,” Nota said. “This is true tax relief. Our revenue goes down, but the state gives that back to us. The taxpayer pays less and the town stays revenue neutral.”

In the 2017-18 budget that was passed by Jamestown taxpayers in June, the town anticipated $530,000 from car taxes. It also projected a $22,042 reimbursement from the state stemming from the $500 deductible. With the new guidelines providing a break for car owners, the town expects a $51,061 drop in revenue. The state, however, has promised to reimburse every cent. According to Nota, the town should receive $72,103 from Providence.

“That’s how it is supposed to work,” he said. “Let’s wait and see.”

Finally, because Jamestown doesn’t send out tax bills until late July or early August, the town does not need to correct any premature invoices, unlike other communities that already had sent out bills.

“The bills you get will be the correct version,” he said. “We don’t have to do any double mailings. We won’t have to give credits. We won’t have to reimburse the taxpayer. We were very fortunate.”

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