TAX NEWS - June 2010

Added car tax will help to save school sports program

The 400 students, parents, coaches, and residents who packed City Hall and protested potential cuts to sports programs on Monday night got what they wanted; and they also got something they didn't want.

Mayor Scott Avedisian told the raucous crowd he had a plan to implement that would guarantee the preservation of sports programs in the city. Avedisian recommended that the council "sequester" $875,000 on the city side of the budget, as opposed to the schools, in order to ensure sports programs "actually are funded in a meaningful way."

He received a thunderous applause.

The plan would also give the school department an additional $2.4 million more in funding than his previous proposal to ensure that "there could be no question" that his budget proposal equaled the 95-percent maintenance of effort clause outlined in this year's state budget, which sailed through both houses of the legislature with veto-proof majorities.

Then came the bad news.

To pay for the preservation of the sports programs and the additional funds to the school department, Avedisian said he would implement the re-instatement of the motor vehicle excise tax. The state legislature began a program almost 10 years ago to completely phase out the program, but this year's state budget virtually eliminates the program and allows cities and towns to re-implement the taxes – a move back to the future.

The city initially budgeted $13 million in motor vehicle tax revenues next year with the expectation of receiving an additional $10 million in state reimbursements. When those reimbursements were cut from the state budget, Avedisian said the cut would have to be proportionally shared by the city and schools.

Now that most of the motor vehicle exemption is being lifted from city taxes, the city projects $21.7 million in revenues.

That proposal means that almost everybody who owns a registered car in the city of Warwick will be forced to pay more in motor vehicle excise taxes next year. The state legislature has frozen the city's motor vehicle excise tax rate at $34.60 per $1,000 of value.

A person who owns a car worth exactly $6,000 would have paid nothing last year. This year, the owner of the vehicle will be on the hook for $190.30. Anyone who owns a vehicle worth more than $6,000 will be on the hook for $190.30, plus whatever they paid last year.

The first $500 of a vehicle's value remains exempt from taxation.

To put the number in perspective, $190.30 would buy roughly 19 movie tickets at a Showcase Cinema. If the average value meal at a fast food restaurant costs roughly $6, that $190.30, would have bought about 31 value meals.

By implementing the car tax for the first $6,000 in the value of a vehicle, the mayor said the city would be able to re-instate its contributive support to local non-profits and youth sports programs at a total of almost $400,000.

To stay within the tax cap levy mandated by state law, Avedisian said he would actually need to lower the property tax rate in his most recent proposal. The residential property tax rate would be $16.90 per $1,000 of value. The commercial rate would be $25.35. And the tangible property rate would move to $33.80.

After the mayor outlined his proposal, a divided City Council voted 5-4 to suspend council rules and open up the floodgates to public comment. Council members Helen Taylor (Ward-3), Joseph Solomon (Ward-4), John DelGiudice (Ward-5), Charles J. "CJ" Donovan (Ward-7) and Steve Merolla (Ward-9) all voted to hear public comment. Council President Bruce Place (Ward-2), and council members Steve Colantuono (Ward-1), Donna Travis (Ward-6) and Ray Gallucci (Ward-8) all voted to keep the council rules in place.

The public comment session lasted almost three hours, and largely featured two types of speakers: those who defended sports programs and those who criticized city leaders for spending too much money on employee salaries and benefits, therefore jeopardizing city services like sports.

Students from all three of Warwick's high schools spoke passionately about the importance that sports plays in their lives.

"Sports is my whole life," said Melissa Sullivan, a sophomore at Vets.

"I know a lot of kids who keep their grades up just so they can play sports. What's going to happen if they don't have sports?"

Others said that the city needed to re-prioritize its tax and spending priorities. Warwick resident Jay Brotman said the state must regionalize its services, and begin bringing public employee benefit costs into line with what's offered in the private sector.

"The…cause is the power of the unions. The other gentleman who spoke a few minutes ago, I know he was longwinded, but if half of what he said was correct – you're all evil," said Brotman.

Brotman was referring to a presentation by former School Committee Chairman and City Councilman Robert Cushman, who gave a presentation, which detailed the rising cost of employee benefits to city taxpayers, which he believes threatens public services.

Another one of the protesters at the meeting on Monday was Jacob Marrocco, the current statistician for the Pilgrim soccer team. The magnanimous Pilgrim sophomore, who is the current class president, is unable to partake in sports because he's been afflicted with hemophilia since birth, but still made it a point to stick with his friends.

"I'm here to support all of my friends because I know this is really important to them," said Marrocco.

Warwick resident Eugene Nadeau, who received some of the biggest applause from the audience that evening, said that the school department spends way too much money on salaries and benefits for employees.

"How would any company operate if their budget was made up of 87 percent salaries and benefits? They would go bankrupt over-night," said Nadeau.

Later on, school superintendent Peter Horoschak argued that the process of the city holding the sports funding in abeyance wasn't legal, and that the audience should be more worried about education funding, not sports funding.

In an interview after the meeting, School Committee Chairman Christopher Friel argued that the proposal doesn't meet legal muster.

"It's not legal," said Friel.

"The city cannot dictate or pick and choose how the school department money can be spent. They can only make one lump sum allocation."

Friel left the door open to a potential Carruolo action lawsuit, which allows the school department to sue the city for more funding.

"The city still has an obligation to meet the Department of Education's basic education plan and other contractual obligations," said Friel.

School department officials will convene a meeting with city officials tonight at City Hall beginning at 6. The two sides will discuss potential budget scenarios and their ramifications.

The City Council is expected to ratify its budget on Monday evening at City Hall.