Put car taxes in reverse?

Some council members propose refunding car taxes; others call it a political stunt

WOONSOCKET – Members of the City Council turned their focus to budget matters Tuesday night while debating the merits of granting some city taxpayers a midyear rebate on their car tax bills.

An ordinance written by Councilman Albert G. Brien, and outlined by Council Vice President Daniel Gendron during a work session in the second floor conference room at Harris Hall, seeks to refund up to $727,000 in motor vehicle taxes as a way to expand the $1,000 vehicle exemption recommended by Mayor Lisa Baldelli-Hunt’s administration and approved the City Council along with the city’s current budget back in June.

The timing of the move, just weeks before the citywide election on Nov. 8, drew accusations from some members of the council – and Baldelli-Hunt herself – that it was a politically-motivated measure.

Four of the council’s members are among the group of 14 candidates seeking election on Nov. 8, and Councilman Roger Jalette, another proponent of the change, is challenging Baldelli-Hunt for mayor.

The proposed ordinance discussed Tuesday would raise the $1,000 exemption Baldelli-Hunt’s administration recommended (over the previous budget’s $500 figure) to a new exemption of approximately $1,600, depending how it is calculating once enacted.

Gendron maintained that a reduction in motor vehicle taxes had been promised by the administration when this year’s exemption was offered, but noted that not all of the city taxpayers were able to realize its benefit.

The general idea of the proposed ordinance, as explained by Gendron during a discussion with city Tax Assessor Elyse Pare and Finance Director Christine Chamberland, would be to rebate the additional taxes paid by a group of about 10 percent to 15 of city car owners when this year’s exemption was applied, under a formula that also eliminated a past vehicle depreciation system no longer supported by state law.

In order to take such a step, the overall exemption would have to be increased for all of the 40,000 taxed motor vehicles in the city and potentially require a recertification of the city tax levy mid-year, an unusual and labor intensive step, Pare and Chamberland explained.

The tax accounts receiving rebates would have to be entered into the city’s vendor payment system in order for the checks to be issued, and there would also be costs for processing and sending them out, according to Pare.

“I don’t see how it would get done without pushing off all the other work I have to do as assessor,” Pare said.

Even after listening to the potential ramifications of reworking the tax levy midyear, Gendron suggested the proposed revision to the exemption could be enacted with some additional work.

“I still feel we have an obligation, if nothing else we have a moral obligation to help out the taxpayers,” he said. And while a rebate of approximately $27 might not seem like much, Gendron said it could represent a significant refund for some of those eligible.

The motor vehicle depreciation values eliminated under this year’s budget were the result of a state move to grant a schedule of depreciations on older vehicles back in 1998, but never re-authorized after that year. Some communities, such as Woonsocket, continued to use the resulting deductions in their car tax computations regardless of expiration of state authorization for that option, according to Pare. The Finance Department was obligated to correct the improperly applied depreciations once she identified them as problem, she explained.

Pare maintained during Tuesday’s discussion that the administration had informed the council that the past award of depreciations would be ended as the new exemption increases were enacted with the budget, but members of the council in turn suggested that they could have addressed

the resulting impact on 10 to 15 percent of car tax payers had they known of it.

Pare suggested a better of reworking of the car tax deduction would be to conduct it during next year’s preparation of the budget when a higher deduction amount could be enacted. That could address the average $27 in additional taxes paid by those losing the past value depreciations while avoiding the added expenses of applying it mid year.

City Solicitor Michael Marcello also supported such a position while noting the tax rebate initiative could have added complications for the city if not done properly and suggested the supporting councilors could have included the administration in its planning earlier in the process.

“When proposing a policy as far reaching as this, you should come to us first,” he said.

The whole issue of car taxes in the state is expected to get another look by the General Assembly when the new session convenes, added Marcello, who is a state representative.

Council President Robert Moreau, who is not seeking re-election, and Councilman Christopher Beauchamp, who is, both took issue with the language of the ordinance, which included references to Baldelli-Hunt “claiming in her June 29, 2016 press release announcing her re-election bid that the FY 2017 Budget was providing a tax break for motor vehicle owners,” and that “in order to follow through on the promises of a ‘reduced tax burden’ for motor vehicle owners, a new formula for determining the car tax exemption and a related accounting system be enacted.

The measure allows for the refunding of up to $727,000 through a revised motor vehicle exemption provision in the current budget.

“It is clear from some of the wording in this ordinance that it is political and we have never seen that before,” Beauchamp said. Moreau also agreed with that view and proposed that it would be better to take on revisions of the car tax exemption in the council’s work on next year’s budget.

Brien told the council that he had written the ordinance as a response to what occurred with the car tax exemption this year. “I wrote it, I did, because there was an expectation that because of these actions taken we were going to get some relief and there was none,” Brien said.

“That is not political, it’s humanity,” Brien added.

Baldelli-Hunt traded barbs with Brien over the topic while agreeing that the proposed change appeared political and related hearing that Brien had promised to do “everything in your power to destroy this mayor and her administration.”

Brien responded that Baldelli-Hunt’s characterization of him was “so absurd it does not qualify for rebuttal.”

Jalette also entered the fray by asking Baldelli-Hunt why she had not come to the council when she learned the car tax exemption would be eliminated and some residents affected.

While the panel was proposing the change for the 10 to 15 percent receiving the depreciations, Baldelli-Hunt said three-quarters of the city’s tax payers, including herself, received no such deduction and instead benefitted from the budget’s overall attempt to lower taxes, changes Baldelli-Hunt commended Pare and Chamberland for working

out for city taxpayers this year.

Pare had also taken the time, she said, to meet with taxpayers affected by the change in the depreciation schedule showing them their tax changes overall that in some cases ranged from savings of $200 to $600 depending on the taxes paid.

“So in the end, a majority of the people that came in were pleased when they left,” Baldelli-Hunt said.

Jalette argued that since Baldelli-Hunt, a former state representative, had never served on the City Council, “she doesn’t really know what the City Council could have done,” to address the issue before the budget was finalized.

Baldelli-Hunt and Councilmen Moreau and Beauchamp all pointed to the administration’s budget presentations as having aired the issue before the panel before the budget was finalized.

As the topic was put aside until at least the next council session, Paul Luba, the city financial advisor appointed by the state Department of Revenue, pointed out that a mid-year tax revenue rebate could not only represent a significant amount of work for the city’s finance department and require hired outside assistance, but also might require recertification of the city’s tax levy, another significant task to complete.

There are also the potential city bond rating impacts to be considered, he added.

“If you are going to be changing the tax levy midyear, that can signal to bond certification agencies that your tax levy is not stable through the course of the year,” Luba said while pointing out the potential bond rating impacts of the tax refund.