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PROVIDENCE, RI -- To cut or not to cut the state budget: the potential for hundreds of millions of federal stimulus dollars is complicating that question for state lawmakers.
But with the clock ticking and each new round of financial news threatening to punch a bigger hole in the state budget, legislators are poised to start voting tomorrow on pieces of Governor Carcieri's $357 million deficit-reduction plan - including a proposed $1 cigarette tax hike.
The House Finance Committee is expected to vote on a series of tax-and-fee hikes that Governor Carcieri proposed last month; House Finance Chairman Steven Costantino, D-Providence, retooled and reintroduced them as a separate bill earlier this week.
The package includes proposed increases in motor vehicle fees, such as the doubling to $50 the cost of obtaining a certificate of title for an automobile. The cost of reinstating a suspended driver's license would leap from $75 to $250, and a suspended registration, from $50 to $250.
The state anticipates an extra $1.3 million this year and $3.8 million next year from the raised fees, which mirror what Carcieri proposed in early-January.
But the lawmakers have only met the governor part-way on his proposal to raise the cigarette tax to generate a projected $17.2 million in new revenue dollars this year and a projected $40.1 million next year, while eliminating a minimum-mark requirement in state law that adds about 54-cents to the current price of a package of cigarettes in Rhode Island.
The state tax currently stands at $2.46 per pack, compared to $2.51 in Massachusetts, which has a lower tax but significantly higher minimum mark-up.
The proposed $1 hike in Rhode Island tax would make it the highest in the nation. But state officials say it would not necessarily make the cost of a pack of cigarettes here any more expensive than it would be in Massachusetts because of the proposed repeal of a minimum markup.
But that initial analysis did not take into account an imminent increase in the federal cigarette excise tax, from 39-cents to $1 per pack, and a recent increase in the average manufacturer's price.
It also failed to take into account the impact on lawmakers of a hearing-room packed with convenience store owners begging them not to choke off a rich vein of business for them. Their warning: fewer people will be able to afford cigarettes and those who can will look to the Internet and low-cost states such as New Hampshire for cheaper deals.
The bill headed for a vote tomorrow represents what lawmakers are calling a compromise. The state gets it extra revenue; the required 8.9 percent markup by the wholesalers and retailers is left untouched, as is the discount given manufacturers who buy tax-stamps - signaling that the taxes owed Rhode Island on their cigarettes have been paid in advance.
Carcieri had aimed for a February 3 kick-in date. The new target date is February 17, with House leaders planning to put the revenue-raising package to a vote by the full House next week, according to House spokesman Larry Berman. To meet the new target date, the Senate would have to approve the package next week as well, before the lawmakers take their first winter-break.
Altogether, the assorted pieces are expected to generate an additional $23.8 million for the state between now and June 30.
