A Hard Fought Victory in Rhode Island

Member Benefit

A Hard Fought Victory in Rhode Island
by Joan Milas, Government Affairs Analyst

On June 15, 2012, Rhode Island Governor Lincoln Chafee signed into law H 7323 A, the 2013 $8.1 billion dollar State Budget. Facing a projected $125 to $150 million dollar deficit, the Governor proposed numerous additions to the state sales tax, including but not limited to a 7% tax on car washes.

The final Budget included an increase on the cigarette tax from $3.46 to $3.50 per pack. It also included, for the first time, a sales tax on clothing costing $250 or more. It also imposed a tax on taxi and limousine rides and pet services other than veterinary. The budget did however eliminate a proposal to raise the tax on restaurant meals from 8 to 10 %. Also rejected was the expansion of the hotel tax to include vacation rentals. Additionally, it repealed a tax enacted last year on scenic tours and transportation services. Most notable for NECA members was the amendment of the 2013 Budget to eliminate a provision to add car washes to the sales tax, a projected revenue generator of $1.3 million dollars, a major victory for the industry.

A brief overview of what led to this accomplishment reveals that it was directly to the strong efforts and immediate action taken by the NECA Rhode Island Sales Tax Response Committee, under the leadership of NECA Vice President, John Tapis. The Committee formally began their advocacy in March 2012 upon identifying that the tax was in the proposed State Budget H 7323 as presented by the Governor. Lobbying efforts and strategy were coordinated by the Association and local long-time lobbyists Joan Panichas Milas (myself) and Andrew Annaldo. The strategy had to be immediate, as the RI legislature which is part time, was scheduled to adjourn by mid-June, leaving a very short window to accomplish a very difficult task, removing something from the proposed Budget. It was noted that when there is the prospect of eliminating a budget article, in order to maintain a balanced budget, that number needs to be replaced with something else … a difficult task to request of the House Finance committee and the legislature.

The Tax Response Committee immediately prepared testimony and testified before the House and Senate Finance committees stating their case as struggling businesses in Rhode Island, who currently pay high taxes on property, products and employee benefits, etc. Letters were distributed to members of the House and Senate, and written testimony entered into the House and Senate records. Each Committee member did their diligence with members of the General Assembly they were familiar with: making calls, attending functions, getting their voices heard. After a Herculean effort on the day the Budget was getting voted on, thanks to Freeway Carwash, numerous employees stood in the State House halls with signs stating” Save Our Jobs.” They stayed until the late hours of the night. Members of the Committee worked the Chambers until the final vote was taken well past midnight. Because of their diligence and that of their employees, the House Finance Chairman Rep. Helio Melo offered the amendment that ultimately won passage. Numerous other Representatives also offered floor amendments as well in support of repealing the proposed tax.

One of the most effective tools used by the Committee was to educate legislators who have car washes in their districts by meeting with them one on one, to explain the ramifications of the tax proposal. Press releases stating the facts were sent out to all media outlets as well as a registered letter to all legislators and elected officials. The efforts obviously were thought out, cohesive and impactful. A job well-done by NECA’s Rhode Island Sales Tax Response Committee. Kudos to everyone for pulling this off!!

Going forward, Rhode Island’s financial future is still very uncertain. With one of the highest unemployment rates in the country, unless things dramatically change between now and January 2013, everything will be on the table again next Session. (Please link to Providence Journal article below.)

Again, congratulations to all of the members of the NECA and its Rhode Island Sales Tax Response Committee for accomplishing what many say was the impossible.

Debate over water used during car wash ALL WET on Page A4 of Sunday, July 01, 2012 issue of The Providence Journal

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