|
Dear Neighbors:
As we head towards the holidays, this week’s letter provides updates on the transition of the Providence Public Schools to local control, and the State’s implementation of the gasoline tax.
1. The Providence Public Schools
Now that the City and the Providence Public Schools have resolved their financial dispute, our attention can return to the transition from a State takeover to local control. That return will occur in the next couple of years, and I believe it is critical for the City to have a clear plan for that event. With that in mind, I joined Susan Lusi and Steve Smith this past Monday night at a City Council committee hearing to present the findings of the Senate Study Commission, as contained in this Slide Deck. The City Council will consider a resolution to support the legislation recommended by the Study Commission, which can provide a foundation for sustainable progress following the conclusion of the takeover.
2. The Motor Fuel Tax (Part 2)
In my December 8 letter, I noted that the gasoline tax performs double duty as a user fee to pay for maintenance of our roads and as a carbon tax to advance our response to climate change. I stated that current law adjusts the tax every two years based on an inflation measurement called CPI-U. I assumed the biennial adjustment would be for the previous two years of inflation, but the Senate Fiscal Office informed me I was mistaken. Instead, according to this Advisory, the State adjusts for only one year of inflation every two years. I believe this practice (which makes no sense to me) is based on an incorrect interpretation of Rhode Island General Laws Section 31-36-7, which has deprived the State of needed revenue to maintain its roads and to address climate change.
More specifically, the State began its version of an inflation adjustment in 2015, during which time the gasoline tax has increased from 32 cents to 38 cents. During that time, the CPI-U has increased by 32.5%, which should have produced a gasoline tax increase from 32 cents to 42 cents. (To provide context, this Chart shows that other states charge gasoline taxes of up to 58 cents per gallon, while this Table shows that other countries charge gasoline taxes as high as $5/gallon.) Because each penny increase in the gasoline tax generates approximately $4.3 million in annual revenue (as described in my December 8 letter), the State’s current interpretation of the inflation adjustment has deprived the State of more than $17 million in annual revenues, which could, for example, fully fund RIPTA. I plan to introduce legislation to clarify the language of the inflation adjustment to ensure its proper application going forward.
| 
