As President of the Rhode Island State Senate, I have a responsibility to ensure we pass a balanced and sustainable budget for the state of Rhode Island. The budget adopted by the House of Representatives did not protect the state’s rainy day fund from Speaker Mattiello’s car tax phase-out in the event of a future recession or cuts to federal aid.
Like the Speaker, I support eliminating the car tax, but only if we can afford it. This should not be a new revelation for the Speaker. Since the beginning of this legislative session, I have publicly and privately expressed concerns about the sustainability of phasing out the car tax. I understand the Speaker campaigned on eliminating the car tax, but campaign promises alone cannot serve as the basis for policy formulation.
Last Friday, the Senate unanimously approved amending the budget to include a critical safeguard that suspends the car tax phase-out if state revenues can no longer support the plan. Without the safeguard, the state would have to tap into the rainy day fund, which I will not support. The Senate previously discussed this safeguard during budget negotiations and Senate Finance Committee hearings.
This safeguard was the only amendment to the budget. The Speaker’s car tax plan otherwise remains untouched, and not one dollar was changed in the $9.2 billion budget. I have great respect for the Speaker and his passion for reducing the car tax, but no one individual in the General Assembly has the authority to dictate what will or will not be in the budget. The Senate made this corrective action to protect taxpayers. Tapping into the rainy day fund could harm the state’s bond rating and our overall fiscal health.
The Speaker has not identified a revenue stream to support the car tax phase-out going forward. In fact by 2024, the car tax phase out will cost $221 million. The projected structural deficit for that year is over $300 million. Without proper safeguards or a proven reliable revenue stream, the rainy day fund could be obligated to support the Speaker’s car tax phase-out.
No one, not even the Speaker, wants to see this phase-out succeed more than I. The two communities I serve – Providence and North Providence – pay among the highest rates in the state. However, Rhode Island has a long and tortured history in its efforts to phase out the car tax. At one point, the General Assembly repealed a similar plan because of declining state revenues. I will not repeat that mistake. Taxpayers deserve predicable and sustainable tax relief.
After we amended the budget last Friday, the Senate remained in session and passed legislation to improve the quality of life of all Rhode Islanders. When the Speaker abruptly recessed the House, not only did he leave the budget unfinished – which includes his car tax plan with our safeguards – he also walked away from critical pieces of legislation. These include measures to provide paid sick leave to Rhode Island workers, take guns out of the hands of domestic abusers, and codify important provisions of the Affordable Care Act into state law.
We encourage the Speaker to reconvene the House to take up these matters. In the meantime, the Senate will thoroughly review all legislation that comes before us and pass that which we deem is in the best interest of all Rhode Islanders.
Dominick J. Ruggerio is President of the Rhode Island Senate. He is a Democrat that represents District 4, Providence and North Providence.