Connecticut's towns and cities could lose more than $40 million if the General Assembly fails to extend a "temporary" increase in the municipal property conveyance tax instituted during of the state budget crisis in 2003.

In a press conference at the state Capitol on Thursday, leaders of the Connecticut Conference of Municipalities asked lawmakers to make permanent the .25 percent tax rate on real estate transactions, which will otherwise return to the .11 percent level of four years ago.

What area towns could lose Revenue loss to area towns if the municipal real estate conveyance tax is reduced. Actual collections Collections if rate lowered in 2006 Loss Danbury $1.931,348 $849,793 $1.081,555 Ridgefield $1.213,550 $533,962 $679,588 Newtown $910,000 $400,589 $509,840 Southbury $638,214 $280,814 $357,400 New Milford $702,261 $308,995 $393,266 Brookfield $564,984 $248,593 $316,391 New Fairfield $366,126 $161,095 $205,031 Bethel $359,187 $158,042 $201,145 Redding $355,537 $156,436 $199,101 Washington $284,803 $125,313 $159,490 Kent $136,946 $60,256 $76,690 Sherman $123,002 $54,121 $68,881 Roxbury $80,932 $35,610 $45,322 Bridgewater $61,524 $27,071 $34,453 Figures from Connecticut Conference of Municipalities

A coalition of realtors, developers and home builders oppose the plan, claiming the higher tax places a burden on first-time home buyers.

They want the tax to "sunset" as was initially planned -- before legislators extended it in 2005 for two more years.

Danbury would lose nearly $1.1 million, Ridgefield would lose $679,000, and Newtown would lose $509,000, according to CCM, if the tax is allowed to expire.

The estimates are based on what the towns received last year, and those figures should be approximately the same in the coming fiscal year, CCM said.

"The issue is this has supplanted state aid. This is just another way we can generate revenue. It would be a real problem for us if it was sunsetted," Mayor Mark Boughton said.

Advocates of the extension claim the tax, traditionally paid by property sellers, provides municipalities with a vital funding source, especially since many of state aid programs that were cut four years ago haven't been restored to pre-2003 levels.

"It's a valuable asset to the towns and it doesn't stress the state budget. All our research is that there is no negative impact on real estate sales," said CCM spokesman Kevin Maloney.

The state's portion of the conveyance tax would remain unchanged.

Bill Ethier, executive vice-president of the Home Builders Association of Connecticut, said there are a number of reasons why lawmakers shouldn't extend the tax.

"When they passed it, they said it was temporary, and they told the municipalities not to count on it," Ethier said. "But more important, it increases the cost of housing, and some people could pay it two, three or four times."

Because the tax is levied on each transaction, it would be collected the first time when a piece of undeveloped property is sold to a developer.

If the developer then sells the property to a builder, who builds a house on it and sells it to a buyer, the same parcel has been taxed three times, adding to the final cost of the house, he said.

Under the current rate, the local share of the conveyance tax on a $100,000 transaction would be $250. If the tax is allowed to expire, it would be $110.