Fri June 4, 2010
RI House passes budget in late night session
By Ian Donnis
Providence, R.I. – The House budget reduces the state's car-tax exemption from $6,000 to the first $500 of a car's value. The budget also gives cities and towns the ability to tax the cars of their residents after that initial $500 in value. Rep. Roberto DaSilva of East Providence says it's unfair to target cars worth a few thousand dollars when there's no similar tax on yachts.
"I find it completely hypocritical that we are encouraging our cities and towns to tax those who can least afford it - those people who are driving the jalopies," DaSilva said. "Why do we go after those who least afford it? What about those million dollar luxury yachts?"
The expanded ability to tax cars comes after the house cut $120 million in statewide car tax revenue for the fiscal year starting July first. Finance Committee Chairman Steven Costantino says budget planners were responding to the pleas of city and town officials.
"Please give us the ability -- not that we would, but the ability to tax the difference," Costantino said. "And quite frankly, this was very hard. It was the only tax program that went directly to the taxpayer. And I think the pressure is going to be on cities and towns not to do this."
Some lawmakers still faulted their colleagues for shifting more of the fiscal burden to cities and towns. The car tax measure nonetheless passed on a 50-to-22 vote. The House also made the latest in a series of cuts to pensions for public employees. Rep. Jon Brien of Woonsocket was among those calling for broader changes.
"This is not an election-year issue," Brien said. "This is an economic health issue. We cannot continue this way and until we make real substantive changes, we will continue to drown."
On a 39-to-33 vote, the House ultimately moved to restrict pension cost of living adjustments for newly eligible pension participants.
The House budget closes a $570 million deficit over two years, although it also relies on more than $100 million in federal aid that has yet to be allocated. Lawmakers say they'll deal with the situation later this year if the federal money doesn't materialize.
Representatives also cut state education aid by just under three percent for the current fiscal year, and just under four percent for the next one. Rep. Charlene Lima of Cranston was among those calling these reductions more bad news for local taxpayers.
"These types of cuts to our cities and towns are going to mean a property tax increase," Lima said. "The taxpayer will be carrying the burden. It's the worst type of tax we could be increasing. We will own that responsibility with these type of cuts."
For all the dissatisfaction with the budget, the state Senate is expected to approve it this afternoon.
Meanwhile, Finance Chairman Steven Costantino received a bipartisan salute as the House concluded its work at 2:30 this morning. He won't have to shape state budgets anymore, since he's running for mayor of Providence.