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2. Improves School Funding Structure.
On average, 52.7 cents of every dollar raised by the property tax is allocated to support school expenditures. The percent allocated to schools ranges from less than 2.0 percent in Central Falls (a State operated school district) to 81.0 percent in Richmond.

Given this range of distribution, it is assumed that a similar allocation holds true for the local property taxes generated from the motor vehicle tax. Therefore, as shown on Table 6, approximately $74.3 million of the $146.2 million raised by the motor vehicle tax statewide in FY 1999 would have been allocated to schools. In other words, if the State had eliminated the motor vehicle tax as of FY 1999, the State would have replaced $146.2 million in local property taxes, of which $74.3 million were previously supporting school expenditures.

While the phase-out of the motor vehicle tax will affect each community differently given their allocation of the property tax, all communities will experience property tax relief as it pertains to school funding. Therefore, the State’s program to eliminate the motor vehicle tax not only provides overall property tax relief; it also begins to reduce the reliance on the property tax to fund education in all cities and towns.