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CCM Publishes Third Report In Series, Property Tax Dependency and Achieving Property Tax Relief

CCM Publishes Third Report In Series, Property Tax Dependency and Achieving Property Tax Relief

 

For immediate release

Kevin Maloney, 203-710-3486

The Connecticut Conference of Municipalities (CCM) today (Tuesday, October 9) released the third report of CCM’s “Election Campaign 2018” series — Property Tax Dependency and Achieving Property Tax Relief in Connecticut — which concludes, among other key findings, that the property tax remains the single largest tax, by far, in the state; and that CT’s per capita dependency is third highest in the nation and  almost twice the national average – and that state policies must be changed  to find a way out of this property tax chokehold if the state’s economy is going to significantly  strengthen and grow in 2019 and beyond.

CCM’s “Election Campaign 2018” series is designed to educate and influence the candidates for Governor and the General Assembly on the key state-local issues affecting Connecticut local governments. 

“Towns and cities in Connecticut are responsible for providing the majority of public services in our state: elementary and secondary education; public safety; roads and other infrastructure; social services; recreation; and others,” said Joe DeLong. “They must do so while meeting numerous mandates, often underfunded or unfunded, from both the federal and state government.”

“Funding for these critical services can come from various sources, including taxes, user fees and charges, revenue sharing, and state and federal aid,” DeLong explained. “In Connecticut, however, there is one revenue source that provides the majority of local funding – the property tax.  A property-tax dependent system only works if two conditions exist: (1) the property and income wealth of a community can generate enough revenue at a reasonable cost to taxpayers to meet the need for public services; and (2) state aid is sufficient to fill local revenue gaps.  For many communities in our state, neither condition exists.  Relying on the property tax to fund local government services in Connecticut is unsustainable.”

“Overreliance on the property tax coupled with inadequate state aid, particularly education aid, place Connecticut towns and cities in a severe fiscal bind,” concluded Delong.  “Municipalities are forced to raise already onerous property tax rates, reduce non-educations services, and divert scarce resources to pay for escalating regular and special-education costs.  Connecticut is one of the few states locked into such an antiquated, local-revenue system.”

This new CCM report assesses, in detail, the major issues regarding the property tax and towns and cities; as well as discusses the adequacy of state policies now in place ─ and those proposed ─ that are designed to provide adequate fiscal relief support for Connecticut municipalities and their residential and business property taxpayers.  

Here are the basic facts regarding property tax dependency in Connecticut:   

  • The property tax is the single largest tax on residents and businesses in our state.  The levy in Connecticut was $10.3 billion in 2016.  
  • The per capita property tax burden in Connecticut is $2,847, an amount that is almost twice the national average of $1,518 and 3rd highest in the nation.  
  • Statewide, 72 percent of municipal revenue comes from property taxes.  Most of the rest, 23 percent, comes from intergovernmental revenue, mostly in the form of state aid.  Some Connecticut municipalities are almost totally dependent on property taxes to fund local government.   
  • Thirteen towns depend on property taxes for at least 90 percent of all their revenue.  Another 56 municipalities rely on property taxes for at least 80 percent of their revenue.  

 

Reasonable solutions back to top

There are reasonable solutions that the State can and should enact to seek a way out of the property tax chokehold including, but not limited to:  

  • Education Finance Reform: Reforming K-12 public education finance is a key to property tax reform in Connecticut.  Chronic state underfunding of public education is the single largest contributor to the overreliance on the property tax in our state.  The ECS grant alone is underfunded by almost $500 million.  Special-education costs are now over $2 billion per year and impose staggering per-pupil cost burdens on host communities.  Special-education costs should be borne collectively by the State and not individual school districts.  
  • Fully fund PILOT:  The State must fully fund PILOT to provide reimbursement to municipalities for revenue lost due to state-mandated property tax exemptions.  In absence of full funding of PILOT, the State should consider eliminating some property tax exemptions.  
  • Increase the sales tax rate from 6.35% to 6.99% - Funds will be distributed through PILOT and the LoCIP formula defined in 7-536 (7)(c) (not as bonding, but as an appropriation).  We propose that revenue collected from this portion of the sales tax be deposited in a trust, held by the State Treasurer in a separate account that is not commingled with other state funds.  
  • Allow municipalities the option to establish and assess a Community Public Safety and Infrastructure Fee for properties qualifying for a tax exemption under CGS 12-81 and not reimbursed by existing PILOT programs.  
  • Establish a Stormwater Authority to offset costs of implementing the current MS4 General Permit.
  • In assessing the financial capability of the Town or Towns there shall be an irrebuttable presumption that a budget reserve of 15 percent or less is not available for payment of the cost of any item subject to arbitration under the Municipal Employees Relations Act and the Teacher Negotiations Act. 
  • Change state law to ensure that municipalities cannot bargain away, or be required through arbitration to give up their right to assign employees to carry out their normal responsibilities in a new location or provide services to a different municipality. 
  • When service sharing arrangements affect two or more bargaining units, the interests of all employees will be represented by a coalition of bargaining units or a new bargaining unit will be created to represent the collective interests. 
  • Amend the Municipal Employee Retirement System (MERS) to establish an additional retirement plan for new hires.