2013 -- S 0268

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LC01155

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TAXATION - MOTOR VEHICLE EXCISE TAX

     Introduced By: Senator Ryan W. Pearson

     Date Introduced: February 12, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-34.1-2 of the General Laws in Chapter 44-34.1 entitled "Motor

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Vehicle and Trailer Excise Tax Elimination Act of 1998" is hereby amended to read as follows:

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     44-34.1-2. City and town and fire district reimbursement. -- City and town

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reimbursement. -- (a) In fiscal years 2000 and thereafter, cities and towns and fire districts shall

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receive reimbursements, as set forth in this section, from state general revenues equal to the

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amount of lost tax revenue due to the phase out or reduction of the excise tax. Cities and towns

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and fire districts shall receive advance reimbursements through state fiscal year 2002. In the event

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the tax is phased out, cities and towns and fire districts shall receive a permanent distribution of

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sales tax revenue pursuant to section 44-18-18 in an amount equal to any lost revenue resulting

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from the excise tax elimination. Lost revenues must be determined using a base tax rate fixed at

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fiscal year 1998 levels for each city, town, and fire district, except that the Town of Johnston's

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base tax rate must be fixed at a fiscal year 1999 level. Provided, however, for fiscal year 2011 and

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thereafter, the base tax rate may be less than but not more than the rates described in this

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subsection (a).

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     (b) (1) The director of administration shall determine the amount of general revenues to

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be distributed to each city and town and fire district for the fiscal years 1999 and thereafter so that

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every city and town and fire district is held harmless from tax loss resulting from this chapter,

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assuming that tax rates are indexed to inflation through fiscal year 2003.

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     (2) The director of administration shall index the tax rates for inflation by applying the

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annual change in the December Consumer Price Index -- All Urban Consumers (CPI-U),

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published by the Bureau of Labor Statistics of the United States Department of Labor, to the

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indexed tax rate used for the prior fiscal year calculation; provided, that for state reimbursements

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in fiscal years 2004 and thereafter, the indexed tax rate shall not be subject to further CPI-U

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adjustments. The director shall apply the following principles in determining reimbursements:

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     (i) Exemptions granted by cities and towns and fire districts in the fiscal year 1998 must

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be applied to assessed values prior to applying the exemptions in section 44-34.1-1(c)(1). Cities

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and towns and fire districts will not be reimbursed for these exemptions.

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     (ii) City, town, and fire districts shall be reimbursed by the state for revenue losses

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attributable to the exemptions provided for in section 44-34.1-1 and the inflation indexing of tax

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rates through fiscal 2003. Reimbursement for revenue losses shall be calculated based upon the

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difference between the maximum taxable value less personal exemptions and the net assessed

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value.

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     (iii) Inflation reimbursements shall be the difference between:

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     (A) The levy calculated at the tax rate used by each city and town and fire district for

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fiscal year 1998 after adjustments for personal exemptions but prior to adjustments for

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exemptions contained in section 44-34.1-1(c)(1); provided, that for the town of Johnston the tax

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rate used for fiscal year 1999 must be used for the calculation; and

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     (B) The levy calculated by applying the appropriate cumulative inflation adjustment

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through state fiscal 2003 to the tax rate used by each city and town and fire district for fiscal year

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1998; provided, that for the town of Johnston the tax rate used for fiscal year 1999 shall be used

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for the calculation after adjustments for personal exemptions but prior to adjustments for

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exemptions contained in section 44-34.1-1.

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     (c) (1) Funds shall be distributed to the cities and towns and fire districts as follows:

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     (i) On October 20, 1998, and each October 20 thereafter through October 20, 2001,

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twenty-five percent (25%) of the amount calculated by the director of administration to be the

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difference for the upcoming fiscal year.

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     (ii) On February 20, 1999, and each February 20 thereafter through February 20, 2002,

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twenty-five percent (25%) of the amount calculated by the director of administration to be the

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difference for the upcoming fiscal year.

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     (iii) On June 20, 1999, and each June 20 thereafter through June 20, 2002, fifty percent

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(50%) of the amount calculated by the director of administration to be the difference for the

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upcoming fiscal year.

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     (iv) On August 1, 2002, and each August 1 thereafter, twenty-five percent (25%) of the

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amount calculated by the director of administration to be the difference for the current fiscal year.

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     (v) On November 1, 2002, and each November 1 thereafter, twenty-five percent (25%) of

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the amount calculated by the director of administration to be the difference for the current fiscal

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year.

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     (vi) On February 1, 2003, and each February 1 thereafter, twenty-five percent (25%) of

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the amount calculated by the director of administration to be the difference for the current fiscal

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year.

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     (vii) On May 1, 2003, and each May 1 thereafter, except May 1, 2010, twenty-five

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percent (25%) of the amount calculated by the director of administration to be the difference for

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the current fiscal year.

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     (viii) On June 15, 2010, twenty-five percent (25%) of the amount calculated by the

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director of administration to be the difference for the current fiscal year.

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     Provided, however, the February and May payments, and June payment in 2010, shall be

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subject to submission of final certified and reconciled motor vehicle levy information.

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     (2) Each city, town, or fire district shall submit final certified and reconciled motor

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vehicle levy information by August 30 of each year. Any adjustment to the estimated amounts

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paid in the previous fiscal year shall be included or deducted from the payment due November 1.

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     (3) On any of the payment dates specified in paragraphs (1)(i) through (vii) of this

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subsection, the director is authorized to deduct previously made over-payments or add

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supplemental payments as may be required to bring the reimbursements into full compliance with

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the requirements of this chapter.

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     (4) For the city of East Providence, the payment schedule is twenty-five percent (25%) on

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February 20, 1999, and each February 20 thereafter through February 20, 2002, twenty-five

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percent (25%) on June 20, 1999, and each June 20 thereafter through June 20, 2002, which

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includes final reconciliation of the previous year's payment, and fifty percent (50%) on October

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20, 1999, and each October 20 thereafter through October 20, 2002. For local fiscal years 2003

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and thereafter, the payment schedule is twenty-five percent (25%) on each November 1, twenty-

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five percent (25%) on each February 1, twenty-five percent (25%) on each May 1, which includes

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final reconciliation of the previous year's payment, and twenty-five percent (25%) on each

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August 1; provided, the May and August payments shall be subject to submission of final

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certified and reconciled motor vehicle levy information.

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     (5) When the tax is phased out, funds distributed to the cities, towns, and fire districts for

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the following fiscal year shall be calculated as the funds distributed in the fiscal year of the phase-

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out. Twenty-five percent (25%) of the amounts calculated shall be distributed to the cities and

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towns and fire districts on August 1, in the fiscal year of the phase-out, twenty-five percent (25%)

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on the following November 1, twenty-five percent (25%) on the following February 1, and

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twenty-five percent (25%) on the following May 1. The funds shall be distributed to each city and

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town and fire district in the same proportion as distributed in the fiscal year of the phase-out.

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     (6) When the tax is phased out to August 1, of the following fiscal year the director of

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administration shall calculate to the nearest tenth of one cent ($.001) the number of cents of sales

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tax received for the fiscal year ending June 30, of the year following the phase-out equal to the

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amount of funds distributed to the cities, towns, and fire districts under this chapter during the

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fiscal year following the phase-out and the percent of the total funds distributed in the fiscal year

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following the phase-out received by each city, town, and fire district, calculated to the nearest

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one-hundredth of one percent (0.01%). The director of the department of administration shall

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transmit those calculations to the governor, the speaker of the house, the president of the senate,

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the chairperson of the house finance committee, the chairperson of the senate finance committee,

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the house fiscal advisor, and the senate fiscal advisor. The number of cents, applied to the sales

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taxes received for the prior fiscal year, shall be the basis for determining the amount of sales tax

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to be distributed to the cities and towns and fire districts under this chapter for second fiscal year

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following the phase-out and each year thereafter. The cities and towns and fire districts shall

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receive that amount of sales tax in the proportions calculated by the director of administration as

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that received in the fiscal year following the phase-out.

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     (7) When the tax is phased out, twenty-five percent (25%) of the funds shall be

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distributed to the cities, towns, and fire districts on August 1, of the following fiscal year and

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every August 1 thereafter; twenty-five percent (25%) shall be distributed on the following

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November 1, and every November 1 thereafter; twenty-five percent (25%) shall be distributed on

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the following February 1, and every February 1 thereafter; and twenty-five percent (25%) shall be

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distributed on the following May 1, and every May 1 thereafter.

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     (8) For the city of East Providence, in the event the tax is phased out, twenty-five percent

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(25%) shall be distributed on November 1, of the following fiscal year and every November 1

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thereafter, twenty-five percent (25%) shall be distributed on the following February 1, and every

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February 1 thereafter; twenty-five percent (25%) shall be distributed on the following May 1, and

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every May 1 thereafter; and twenty-five percent (25%) of the funds shall be distributed on the

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following August 1, and every August 1 thereafter.

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     (9) As provided for in section 44-34-6, the authority of fire districts to tax motor vehicles

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is eliminated effective with the year 2000 tax roll and the state reimbursement for fire districts

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shall be based on the provisions of section 44-34-6. All references to fire districts in this chapter

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do not apply to the year 2001 tax roll and thereafter.

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     (10) For reimbursements payable in the year ending June 30, 2008 and thereafter, the

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director of administration shall discount the calculated value of the exemption to ninety-eight

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percent (98%) in order to establish a collection rate that is comparable to the collection rate

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achieved by municipalities in the levy of the motor vehicle excise tax.

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     (11) For reimbursements payable in the year ending June 30, 2010, the director of

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administration shall reimburse cities and towns eighty-eight percent (88%) of the reimbursements

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payable pursuant to subdivision (c)(10) above.

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     (12) For fiscal year 2011 and thereafter, the state shall reimburse cities and towns for the

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exemption pursuant to subdivision (c)(10) above, ratably reduced to the appropriation.

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     (a) In fiscal year 2012 and thereafter, cities and towns shall receive reimbursements, as

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set forth in this section, from state general revenues.

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     (b) The director of administration shall determine the amount of general revenues to be

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distributed to each city and town. The amount reimbursed and distributed shall be calculated as

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follows:

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     (1) The total value of the motor vehicles located in the state shall be established pursuant

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to section 44-34-9;

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     (2) The total value of the motor vehicles located in each city or town shall be established

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pursuant to section 44-34-9;

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     (3) Each city or town shall be reimbursed based on the percentage of total value in each

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city or town of the amount of the total value in the state, ratably reduced to the annual

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appropriation for reimbursement.

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     SECTION 2. This act shall take effect upon passage.

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LC01155

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - MOTOR VEHICLE EXCISE TAX

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     This act would provide reimbursement to the cities and towns for the motor vehicle

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excise tax based on the percentage of respective values in each city and town, rather than the tax

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rates.

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     This act would take effect upon passage.

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LC01155

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