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Monday, January 16, 2017

Interesting perspective on the car tax debate

By James Kennedy, transportprovidence

Image result for Tom Gentz & porsche
Poster child for the unfairness of car tax valuations: Charletown
Town Council ex-Boss Tom Gentz behind the wheel of one of THREE vintage
Porsche convertibles. 
Assessed tax value: ZERO. Tax paid by Gentz: ZERO.
I don’t agree with eliminating the car tax, but if it’s going to be done, are there ways for progressive legislators to use the process to better advantage?

I’ve come up with some bargaining chips that I think should be in the progressive line-up while dealing with the car tax.

Just briefly. . .

Some poor people and lower middle class people struggle mightily with the car tax, my own household being one of those. However, the car tax is paid on a per vehicle basis and according to vehicle value.

That means that a household with three new Mercedes has a lot more to gain from eliminating the car tax than a household with a junker.

A household that doesn’t drive has nothing to gain from eliminating the car tax at all, and we know that non-driving households are disproportionately poor.

A better alternative to target low- and middle-income households would be an expansion of the Earned Income Tax Credit.

But it’s unlikely that many legislators will abandon their promises to get rid of the car tax easily.
I’ve lobbied my own representative, Aaron Regunberg, who I think is one of the most honorable and thoughtful people in the State House. He disagrees with me.

So, if we can’t win on the core issue, what are the ways that progressive legislators could use the car tax fight to get a better deal for all Rhode Islanders? Here are some of my thoughts.

Reform of Municipal Rates

The current discussion of the car tax seems to gather around the focal point of eliminating it entirely, but this will be hard to do.

The state faces a $110 million budget deficit, and the car tax brings in $215 million in revenue (to put that in perspective, the operating budget of RIPTA for 2017, which includes money from the state and federal government, as well as fare revenue, is just over $100 million). Eliminating the car tax would create a giant hole in the budget.

When state lawmakers eventually wake up to the fiscal impossibility of eliminating the car tax, they’ll have to think about whether there are other options on the table.

One attractive option for progressive legislators to push would be reorganization of the car tax such that the rates are the same from municipality to municipality.

Block Island has the lowest car tax in the state, at a rate of $9.75 per $1,000 of Blue Book value, while Providence has the highest rate, at $60.00 per $1,000.

Rather than eliminate the car tax, legislators could adjust taxes so that the lowest-paying communities like Block Island pay more, while the highest-paying communities pay less.

This is closer to the way the car tax used to function, before changes by Gov. Donald Carcieri.

Demand Immigrant Licenses as a Prerequisite

In addition to eliminating the car tax, the other legislative priority that Speaker Mattiello has laid out is prevention of undocumented immigrants from getting drivers’ licenses.

When one scratches one’s head and thinks about it, immigrants being unable to legally drive in the state is a major blow to the idea that repealing the car tax will lower the tax burden on the most needy families.

In theory, support for one issue is not tied to the other: one can believe in both eliminating the car tax, and in immigrant license access.

But when the Speaker’s agenda involves supporting one and blocking the other, progressive legislators could help gain power for immigrant communities by demanding concessions around immigrant rights as a prerequisite for their support on the car tax.

In Providence, 25% of households do not own a car, but immigrant-heavy neighborhoods like Olneyville are close to 50% car-free. Progressive legislators have a responsibility to use this bargaining chip to fight for those families who don’t or can’t drive.

Demand reorganization of RIPTA

Nearly 80% of Rhode Islanders live within a ten minute walk of a bus stop, according to Grow Smart RI. This might sound like a good thing– and indeed, that’s how Grow Smart frames it– but in fact it’s a big part of why only 2.7% of Rhode Islanders use transit regularly, according to the same information pamphlet.

The only RIPTA service in the state that is on a remotely frequent schedule is the R-Line, while quote-unquote “frequent” buses like the 1 bus through the Thayer tunnel come only every 18 minutes at peak. That is a result of a system stretched to its geographic limits.

Transit doesn’t run off of geographic scope, it runs off of riders.

The far-flung nature of some bus stops means that many core routes with high ridership potential and even some inner-suburban routes with moderate ridership potential are being sacrificed to infrequent service in order to provide coverage service in rural parts of the state.

The Rhode Island GOP has, in fact, sought to increase this trend, arguing that everyone in the state pays the gas tax, and therefore somehow that stretching the funding of RIPTA across an even broader coverage area is justified.

EDITOR’S NOTE: Though I believe in the concept of the greatest good for the greatest number, I also believe that as a practical matter, people in rural areas should have access to RIPTA and other public transportation. 

Before returning home to Rhode Island, I worked in Washington, DC for 25 years. DC has transport problems similar to RI but on a larger scale. To allow suburban residents to use public transportation, the suburban communities set up their own feeder system of busses and vans to bring people to the major subway and bus centers. Towns like Charlestown, with NO link to public transportation, could do a scaled down, affordable version of this system.

- W. Collette

Simply standing up for a reorganization of RIPTA that puts greater emphasis on ridership than coverage would be a revolutionary change for working class families in Rhode Island, because higher frequency in core areas of the state would mean that taking the bus would be more comparable to driving in terms of the time it takes to get somewhere.

This would build the reputation of RIPTA as something time-poor people use, rather than leaving it as a last resort service for time-rich poor people without other options.

It’s hard for people to think of it this way, but if you eliminate someone’s need for a car, you’ve freed them from the car tax. Reorganizing RIPTA doesn’t have to cost more money, but there have to be champions in the legislature that demand that it’s a priority, or else legislation like Mike Chippendale’s H-5144 will continue to rule the day.

More RIPTA funding

Of course, while reorganization of RIPTA along lines similar to Houston’s reorganization could increase ridership without added cost, legislators could also demand more funding for RIPTA.

In Providence, where the car tax is highest in the state, a year’s worth of RIPTA fares costs as much as the tax on a $16,000 car (use the 16 from 16,000, subtract 2 to get to 14 for the $2,000 deductible, and then multiply by 60 to get to $840, which is exactly the same as twelve months of $70 monthly RIPTA passes).

The “RIPTA tax” of $840 a year is even starker if viewed through the lens of the town with the lowest car tax: in New Shoreham (the other name for Block Island), one’s car would have to be worth more than $86,000 before one paid the same tax rate as RIPTA riders pay in yearly fares. That’s truly outrageous.

Of the $108 million RIPTA budget, only about $47 million comes from the Rhode Island budget (the rest is fare revenue and federal funding). To open up a $215 million hole in a state budget that already has a $110 million one is irresponsible if we don’t have an equal answer to people paying “RIPTA tax”.

Legislators need to start powerfully advocating for RIPTA as a service for middle class people. It’s not merely about the very poor, though that is something RIPTA can help with.

Creating a RIPTA system that offers competitive travel times, good frequency and span of service means that someone struggling to pay for two cars can go down to one car, or a one-car household can go car-free. And that means significant road savings and congestion improvements, which are ultimately the thing we’re tasked with improving for drivers.

Seeing the car tax as the best way to improve the lives of working people in my view is short-sighted. 

I hope we can convince progressive legislators to see it that way, and fight instead for a greater increase of the Earned Income Tax Credit. But short of that, I hope that legislators at least use their power to fight for a better bargaining position through this legislation. It would be a waste to roll over so easily to Mattiello when legislators have agency to fight for more.

The either/or quandary

None of these issues is inherently either/or. A legislator can support all of them at once, in theory. But in reality, the budget is a representation of priorities, and we don’t have the money to do everything equally.

Speaker Nicolas Mattiello also narrowly won reelection against his Republican rival, so he needs to keep his promises on the issues he’s outlined as his top priorities. Progressive legislators have the ability to use that bargaining weakness on Mattiello’s part to push harder. Make Mattiello come to the table and give up more, as part of car tax negotiations.