21,000 cars off tax rolls

Tax bills should be arriving by the end of this week, but don’t be alarmed if you’re missing something.

No, the city isn’t handing out passes on motor vehicle taxes, although for about 21,000 people that is going to happen. They won’t be getting a tax bill, as they own a vehicle that is 15 years old or older. Not this year. Not for years to come if the sate adheres to the six-year plan to fully eliminate the despised municipal car tax, which is part of the state budget.

The legislation introduced by House Speaker Nicholas Mattiello was approved by the House Thursday night and is expected to sail by the Senate today.

Coming in the closing days of the legislative session, Warwick and other municipalities were faced with either issuing tax bills for the fiscal year starting July 1, or holding off for the outcome of Mattiello’s initiative. Warwick chose to wait on the motor vehicle bills, but not those on real estate and tangible property.

“We need to wait until everything is finalized,” City Tax Assessor Christopher Celeste said of car taxes.

In addition to the 21,000 vehicles coming off city tax rolls from a total of 109,000, the measure puts in place a system of depreciating the value of those cars still on the rolls.

Already a combination of a $500 state exemption plus $1,500 from the city reduces the NADA value used as the basis of taxation. Values will be reduced an additional 5 percent this year, followed by larger reductions each year.

The combination of those two aspects of the law, Celeste estimates, will reduce city tax revenues from $24 million to $21 million. The $3 million lost from the tax rolls will be paid by the state, increasing annually as the tax is phased out.

He explained the $24 million serves as the baseline under the program. It is the maximum the city will be refunded regardless of the size or the value of the fleet of motor vehicles registered in the city.

Celeste said additional aspects of the program would kick in over the span of the six years. They are a hold harmless provision that locks the value of a vehicle from increasing and an annual $1,000 increase in the value exemption coupled with a reduction in the tax rate. As Warwick already provides a $2,000 exemption, the added $1,000 would not kick in until the third year of the program.

Celeste explained the law caps the tax rate at $60 per $1,000 and would reduce it from there until it is gone. This would not impact Warwick at least for another three or four years until the rate drops below the city rate of $34.60.

The city would continue applying city exemptions, such as the senior citizen and veterans exemption, until the vehicle comes off the tax rolls. In the case of residents owning property, the city exemption could then be applied there. (Most taxpayers entitled to city exemptions apply them to their motor vehicles because the tax rate on motor vehicles is greater than that for real estate.)

“We make sure people get their exemptions,” Celeste said.

Celeste thought motor vehicle tax bills would be issued within the next couple of weeks. He said because of the city ordinance setting the first quarterly payment for July 15, the bills would reflect that date. However, he added a 30-day grace period would be applied since the bills could actually arrive after the 15th.