2012 -- S 2050

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LC00032

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TAXATION - EXCISE ON MOTOR VEHICLES

     Introduced By: Senators Tassoni, Lynch, Cote, Jabour, and Doyle

     Date Introduced: January 11, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-5-2 of the General Laws in Chapter 44-5 entitled "Levy and

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Assessment of Local Taxes" is hereby amended to read as follows:

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     44-5-2. Maximum levy. -- (a) Through and including its fiscal year 2007, a city or town

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may levy a tax in an amount not more than five and one-half percent (5.5%) in excess of the

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amount levied and certified by that city or town for the prior year. Through and including its

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fiscal year 2007, but in no fiscal year thereafter, the amount levied by a city or town is deemed to

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be consistent with the five and one-half percent (5.5%) levy growth cap if the tax rate is not more

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than one hundred and five and one-half percent (105.5%) of the prior year's tax rate and the

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budget resolution or ordinance, as applicable, specifies that the tax rate is not increasing by more

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than five and one-half percent (5.5%) except as specified in subsection (c) of this section. In all

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years when a revaluation or update is not being implemented, a tax rate is deemed to be one

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hundred five and one-half percent (105.5%) or less of the prior year's tax rate if the tax on a

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parcel of real property, the value of which is unchanged for purpose of taxation, is no more than

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one hundred five and one-half percent (105.5%) of the prior year's tax on the same parcel of real

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property. In any year through and including fiscal year 2007 when a revaluation or update is

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being implemented, the tax rate is deemed to be one hundred five and one-half percent (105.5%)

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of the prior year's tax rate as certified by the division of property valuation and municipal finance

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in the department of revenue.

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      (b) In its fiscal year 2008, a city or town may levy a tax in an amount not more than five

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and one-quarter percent (5.25%) in excess of the total amount levied and certified by that city or

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town for its fiscal year 2007. In its fiscal year 2009, a city or town may levy a tax in an amount

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not more than five percent (5%) in excess of the total amount levied and certified by that city or

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town for its fiscal year 2008. In its fiscal year 2010, a city or town may levy a tax in an amount

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not more than four and three-quarters percent (4.75%) in excess of the total amount levied and

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certified by that city or town in its fiscal year 2009. In its fiscal year 2011, a city or town may

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levy a tax in an amount not more than four and one-half percent (4.5%) in excess of the total

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amount levied and certified by that city or town in its fiscal year 2010. In its fiscal year 2012, a

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city or town may levy a tax in an amount not more than four and one-quarter percent (4.25%) in

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excess of the total amount levied and certified by that city or town in its fiscal year 2011. In its

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fiscal year 2013 and in each fiscal year thereafter, a city or town may levy a tax in an amount not

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more than four percent (4%) in excess of the total amount levied and certified by that city or town

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for its previous fiscal year; provided, however, that the total amount levied and certified by that

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city or town for fiscal years 2012 and 2013 may be exceeded to account for changes to motor

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vehicle values.

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      (c) The division of property valuation in the department of revenue shall monitor city

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and town compliance with this levy cap, issue periodic reports to the general assembly on

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compliance, and make recommendations on the continuation or modification of the levy cap on or

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before December 31, 1987, December 31, 1990, and December 31, every third year thereafter.

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The chief elected official in each city and town shall provide to the division of property and

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municipal finance within thirty (30) days of final action, in the form required, the adopted tax

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levy and rate and other pertinent information.

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      (d) The amount levied by a city or town may exceed the percentage increase as specified

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in subsection (a) or (b) of this section if the city or town qualifies under one or more of the

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following provisions:

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      (1) The city or town forecasts or experiences a loss in total non-property tax revenues

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and the loss is certified by the department of revenue.

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      (2) The city or town experiences or anticipates an emergency situation, which causes or

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will cause the levy to exceed the percentage increase as specified in subsection (a) or (b) of this

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section. In the event of an emergency or an anticipated emergency, the city or town shall notify

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the auditor general who shall certify the existence or anticipated existence of the emergency.

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Without limiting the generality of the foregoing, an emergency shall be deemed to exist when the

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city or town experiences or anticipates health insurance costs, retirement contributions or utility

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expenditures which exceed the prior fiscal year's health insurance costs, retirement contributions

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or utility expenditures by a percentage greater than three (3) times the percentage increase as

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specified in subsection (a) or (b) of this section.

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      (3) A city or town forecasts or experiences debt services expenditures which exceed the

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prior year's debt service expenditures by an amount greater than the percentage increase as

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specified in subsection (a) or (b) of this section and which are the result of bonded debt issued in

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a manner consistent with general law or a special act. In the event of the debt service increase, the

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city or town shall notify the department of revenue which shall certify the debt service increase

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above the percentage increase as specified in subsection (a) or (b) of this section the prior year's

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debt service. No action approving or disapproving exceeding a levy cap under the provisions of

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this section affects the requirement to pay obligations as described in subsection (d) of this

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section.

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      (4) The city or town experiences substantial growth in its tax base as the result of major

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new construction which necessitates either significant infrastructure or school housing

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expenditures by the city or town or a significant increase in the need for essential municipal

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services and such increase in expenditures or demand for services is certified by the department

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of revenue.

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      (e) Any levy pursuant to subsection (d) of this section in excess of the percentage

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increase specified in subsection (a) or (b) of this section shall be approved by the affirmative vote

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of at least four-fifths (4/5) of the full membership of the governing body of the city or town or in

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the case of a city or town having a financial town meeting, the majority of the electors present

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and voting at the town financial meeting shall also approve the excess levy.

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      (f) Nothing contained in this section constrains the payment of present or future

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obligations as prescribed by section 45-12-1, and all taxable property in each city or town is

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subject to taxation without limitation as to rate or amount to pay general obligation bonds or notes

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of the city or town except as otherwise specifically provided by law or charter.

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     SECTION 2. Section 44-34.1-1 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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     44-34.1-1. Excise tax phase-out. -- (a) (1) Notwithstanding the provisions of chapter 34

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of this title or any other provisions to the contrary, the motor vehicle and trailer excise tax

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established by section 44-34-1 may be phased out. The phase-out shall apply to all motor vehicles

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and trailers, including leased vehicles.

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     (2) Lessors of vehicles that pay excise taxes directly to municipalities shall provide

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lessees, at the time of entering into the lease agreement, an estimate of annual excise taxes

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payable throughout the term of the lease. In the event the actual excise tax is less than the

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estimated excise tax, the lessor shall annually rebate to the lessee the difference between the

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actual excise tax and the estimated excise tax.

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     (b) Pursuant to the provisions of this section, all motor vehicles shall be assessed a value

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by the vehicle value commission. That value shall be assessed according to the provisions of

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section 44-34-11(c)(1) and in accordance with the terms as defined in subsection (d) of this

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section; provided, however, that the maximum taxable value percentage applicable to model year

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values as of December 31, 1997, shall continue to be applicable in future year valuations aged by

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one year in each succeeding year.

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     (c) (1) The motor vehicle excise tax phase-out shall commence with the excise tax bills

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mailed to taxpayers for the fiscal year 2000. The phase-out, beyond fiscal year 2003, shall be

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subject to annual review and appropriation by the general assembly. The tax assessors of the

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various cities and towns and fire districts shall reduce the average retail value of each vehicle

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assessed by using the prorated exemptions from the following table:

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     Local Fiscal Year State fiscal year

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     Exempt from value Local Exemption Reimbursement

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     fiscal year 1999 0 $1,500

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     fiscal year 2000 $1,500 $2,500

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     fiscal year 2001 $2,500 $3,500

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     fiscal year 2002 $3,500 $4,500

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     fiscal years 2003, 2004 and 2005 $4,500 $4,500

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     for fiscal year 2006 and $5,000 $5,000

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     for fiscal year 2007 $6,000 $6,000

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     for fiscal years 2008, 2009 and 2010 the exemption and the state fiscal year reimbursement shall

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be increased, at a minimum, to the maximum amount to the nearest two hundred and fifty dollar

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($250) increment within the allocation of one and twenty-two hundredths percent (l.22%) of net

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terminal income derived from video lottery games pursuant to the provisions of section 42-61-15,

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and in no event shall the exemption in any fiscal year be less than the prior fiscal year. For fiscal

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year 2011 and thereafter, the exemption shall be five hundred dollars ($500). Cities and towns

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may provide an additional exemption; provided, however, any such additional exemption shall

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not be subject to reimbursement.

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     (2) The excise tax phase-out shall provide levels of assessed value reductions until the tax

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is eliminated or reduced as provided in this chapter.

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     (3) Current exemptions shall remain in effect as provided in this chapter.

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     (4) The excise tax rates and ratios of assessment shall be maintained at a level identical to

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the level in effect for fiscal year 1998 for each city, town, and fire district; provided, in the town

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of Johnston the excise tax rate and ratios of assessment shall be maintained at a level identical to

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the level in effect for fiscal year 1999 levels and the levy of a city, town, or fire district shall be

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limited to the lesser of the maximum taxable value or net assessed value for purposes of

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collecting the tax in any given year. Provided, however, for For fiscal year 2011 and thereafter,

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the rates and ratios of assessment may be less than but not more than the rates described in this

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subsection (4); provided, however, that for fiscal years 2012 and 2013, the rates and ratios of

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assessment may be increased.

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     (d) Definitions.

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     (1) "Maximum taxable value" means the value of vehicles as prescribed by section 44-34-

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11 reduced by the percentage of assessed value applicable to model year values as determined by

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the Rhode Island vehicle value commission as of December 31, 1997, for the vehicles valued by

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the commission as of December 31, 1997. For all vehicle value types not valued by the Rhode

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Island vehicle value commission as of December 31, 1997, the maximum taxable value shall be

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the latest value determined by a local assessor from an appropriate pricing guide, multiplied by

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the ratio of assessment used by that city, town, or fire district for a particular model year as of

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December 31, 1997.

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     (2) "Net assessed value" means the motor vehicle values as determined in accordance

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with section 44-34-11 less all personal exemptions allowed by cities, towns, fire districts, and the

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state of Rhode Island exemption value as provided for in section 44-34.1-1(c)(1).

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     (e) If any provision of this chapter shall be held invalid by any court of competent

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jurisdiction, the remainder of this chapter and the applications of the provisions hereof shall not

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be effected thereby.

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     SECTION 3. Sections 44-34-2 and 44-34-9 of the General Laws in Chapter 44-34

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entitled "Excise on Motor Vehicles and Trailers" are hereby amended to read as follows:

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     44-34-2. Assessment -- Valuation -- Proration -- Abatement and cancellation --

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Exemptions from tax. -- (a) Except as provided in this section, the tax assessors of each city and

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town shall assess and levy in each calendar year on every vehicle and trailer registered under

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chapter 3 of title 31, for the privilege of the registration, an excise measured by its value, as

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subsequently defined and determined. For the purpose of this excise, the uniform value of each

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vehicle shall be determined in accordance with the regulations of the vehicle value commission.

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Any vehicle which is more than twenty-five (25) twenty (20) years old, whether or not the vehicle

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is an antique motor car as defined in section 31-1-3(a), shall be deemed to possess an average

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retail value of five hundred one thousand dollars ($500) ($1,000). Any vehicle more than twenty-

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five (25) years old on June 16, 1987, whether or not the vehicle is an antique motor car as defined

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in section 31-1-3(a), shall be deemed to have an average retail value of five hundred dollars

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($500) or its actual retail value whichever is less. The minimum excise tax on any vehicle, if

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registered to the same owner for a full year or portion of the year, shall not be less than five

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dollars ($5.00) unless the registration is transferred to one or more additional vehicles or trailers,

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in which case the minimum or combined excise taxes shall not be less than five dollars ($5.00).

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Beginning in fiscal year 2001, the assessor may, but is not required to, issue minimum tax bills as

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authorized by this section or any general or public law. Beginning in fiscal year 2002 and

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thereafter, the assessor shall not issue minimum tax bills, notwithstanding any general or public

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law to the contrary. The assessor may waive the excise tax on any vehicle where the annual levy

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would be less than five dollars ($5.00). The state shall not provide reimbursement for any waiver.

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      (b) Vehicle and trailer excises shall be prorated over the calendar year prior to the year in

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which the excises are levied and billed, that year being referred to as the calendar year of

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proration.

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      (c) The excise levy on every vehicle and trailer registered under chapter 3 of title 31

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shall be based on the ratio that the number of days the vehicle or trailer is registered is to the

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number of days in the calendar year of proration.

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      (d) If during the calendar year of proration, the owner of a vehicle or trailer subject to the

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excise moves permanently with his or her vehicle to another state and cancels his or her

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registration in this state and returns the registration plates, the vehicle shall be exempt from excise

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for the ensuing year.

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      (e) "Year of manufacture" as used in this section means the year used by the

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manufacturer of the vehicle or trailer in connection with the designation by the manufacturer of

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the model of the vehicle or trailer. Where the presumptive price of a vehicle or trailer is not

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readily obtainable, or special equipment is installed on the vehicle or trailer, the tax assessor shall

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prescribe the retail price to be used or the manner in which the retail price shall be determined.

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      (f) Nothing in this section shall be construed to prevent any city or town council from

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granting an abatement, in whole or in part, when there is an error in the assessment of a tax, and

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the tax assessors have certified to the fact, in writing, to the city or town council to cancel taxes

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stating the nature of the error, the valuation of the vehicle or trailer, the amount of the assessed

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tax and the name of the person to whom the vehicle or trailer was taxed.

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      (g) The city or town council may cancel, in whole or in part, an excise tax assessed to a

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person who has died leaving no estate, or a person who has moved from the state, and the tax

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collector or person acting in the capacity of tax collector certifies to the city or town council the

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facts of the case.

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      (h) The excise imposed by this section shall not apply to vehicles or trailers owned by

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the state of Rhode Island or any of its political subdivisions, or to vehicles or trailers owned by a

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corporation, association or other organization whose tangible personal property is exempt under

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section 44-3-3(1) -- (15), or to vehicles assessed and taxed under section 44-13-13, or those

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owned by the United States government. Farm vehicles shall be exempt to the extent prescribed

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in section 44-5-42.

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     44-34-9. Valuation of motor vehicles. -- For the purpose of the imposition of an excise

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tax upon motor vehicles, the tax assessor shall determine the value of each motor vehicle in

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accordance with the following procedures:

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      (1) Each vehicle and trailer of the same make, type, model, and year of manufacture in

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this state shall be deemed to have one uniform statewide value to be utilized in each city and

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town, except in those instances where no uniform value is established pursuant to the rules of the

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vehicle value commission section 44-34-11 or where a value is established by the assessor

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pursuant to section 44-34-2.

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      (2) The uniform value of each type of vehicle and trailer shall be determined by the

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Rhode Island vehicle value commission or in accordance with the rules of the vehicle value

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commission; provided, however, that said value shall include depreciation at a rate of four percent

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(4%) per year beginning in the second year of the vehicle life.

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      (3) The value of each vehicle or trailer or each type vehicle or trailer not established by

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the Rhode Island vehicle value commission shall be determined by the assessor of the city or

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town in which the vehicle or trailer is registered. In making the determination, a uniform flat

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value for the vehicles in the municipality may be utilized by the assessor.

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     SECTION 4. This act shall take effect upon passage.

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LC00032

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - EXCISE ON MOTOR VEHICLES

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     This act would require that uniform value of motor vehicles include depreciation at a rate

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of four percent (4%) per year. It would also establish a minimum value of one thousand dollars

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($1,000) for any vehicle older than twenty (20) years old and allow cities, towns and fire districts

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to increase their tax rates and exceed the maximum levy for fiscal years 2012 and 2013.

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     This act would take effect upon passage.

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LC00032

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