Property tax relief and reform is an ambitious, comprehensive undertaking. It has been studied to death, and it has been difficult for state policymakers in the "Land of Steady Habits" to come to a consensus about how to best undertake it.

But residents and businesses of Connecticut cannot wait for long-term solutions. They need help paying their property tax bills now – in 2008:

• Senior citizens, who have retired on fixed incomes after years of work and productivity, find that the value of their homes drives up their property tax bills -- making it impossible for them to stay in the same houses in which they raised their families and in the communities they helped nurture.
• Middle-class working people -- already pinched by high prices for gas and oil, college tuition, health insurance and more – find that their assessments and property taxes are rising faster than their incomes.
• Teachers, firefighters and other local government employees cannot afford to live in the communities in which they work. Housing prices are one factor; high property taxes are another.
• Children entering the workforce cannot afford to live in their hometowns or the state. Again, too high property taxes are an important factor contributing to this diaspora.
• Lower-income families, including thousands who have been victimized by sub-prime mortgage schemes, find themselves in towns and cities with high service demands and sky-high property taxes and a lack of affordable housing.
• Small business owners find that their biggest tax liability, the property tax, rises each year along with the other costs of doing business in Connecticut.

Although the 2008 General Assembly session is a "short" one, there is a need for immediate action to provide property tax relief. The short session should not be an excuse to postpone action for another year.

CCM proposes a seven-point plan that can be enacted in 2008. It would keep pressure off of residential and business property taxpayers while Connecticut debates longer-term state-local tax reform. Our citizens and businesses are crying out for help – the time to act is today, not tomorrow.

CCM's Seven-Point Plan:

1. Direct Aid to Homeowners

   Establish pilot (demonstration) programs in our most-distressed towns and cities that provide direct relief to low- and moderate-income homeowners. This could be done, for example, through a Homestead Exemption or Property Tax Circuit-Breaker.

   Such direct aid could be expanded statewide to eligible homeowners by FY 11.

2. Increase Aid for Pre K-12 Education

   Education costs are responsible, on average, for 67% of municipal budgets statewide.

   Build on the increases made last year to greatly increase the State's share of education costs (through ECS, Special Education, categorical and other grants). The State's share of such costs is scheduled to decline from 43.1% this year to 41% next year unless funding is increased.

   Specifically, implement the remainder of the recommendations of the Governor's Task Force on Education Funding. Provide, and commit to, a clear timetable for fully funding the ECS grant for all municipalities, and reduce the special education excess cost reimbursement threshold from 4 1/2 times to 3 times each district's average per-pupil expenditure.

3. Increase Aid to Municipal General Governments

   Some grants, such as the Pequot-Mohegan grant and Town Aid Roads, have never fully recovered from the massive mid-year cuts in 2003. Funding should be returned to at least pre-2003 levels, adjusted for inflation.

   Several state programs reimburse municipalities for state-mandated property tax exemptions. But funding for these programs for payments-in-lieu-of-taxes (PILOTs) has not kept pace with the need nor the statutory commitment.

   • The PILOT for Private Colleges and Hospitals will, under the biennial budget, reimburse towns for just 52% of lost taxes. That's down from 55% this year, and far off the statutory commitment of 77%.
   • The PILOT for State Property will reimburse affected municipalities for 33% of lost real estate taxes next year under the biennial budget, down from 35% this year, and well below the statutory commitment of 45%.
   • The PILOT and Tax Abatement programs for low-income housing were eliminated in the biennial budget and should be restored.

   Funding for PILOT programs should be restored at least to their statutory levels this legislative session, with the goal of full funding by FY 11.

4. Make Permanent the Present Rates of the Real Estate Conveyance Tax

   Unless legislation is passed, municipalities stand to lose up to $40 million in revenue now being raised by the real estate conveyance tax – the only non-property tax towns and cities can levy.

5. Enact Mandates Reform

   Governor Rell has proposed a strong and much-needed mandates reform package that could help reduce many of the cost drivers at the local level – and only one of them would have any cost to the State. They can all be enacted this year. Her proposals would:

   • Enact a statutory prohibition against new unfunded mandates unless there is a 2/3 vote of the General Assembly.
   • Increase prevailing wage thresholds from $400,000 to $1 million for new construction, and from $100,000 to $500,000 for repairs or alterations, with the amounts indexed to inflation and adjusted annually.
   • Amend the Teacher Negotiation Act so that stipulated agreements (agreements voluntarily reached between school boards and teachers union within the arbitration process) go to local legislative bodies where they can be rejected by a 2/3 vote. In regional school districts it would be by a 2/3 vote of the legislative bodies in each town.
   • Eliminate municipal responsibility to remove and store possessions of evicted tenants – this responsibility would be shifted to state marshals.
   • Allow municipalities and their boards and commissions with websites to post certain notices on-line rather than in newspapers.
6. Increase Financial and Technical Incentives for Regional Cooperation and Coordination

   Long-term efforts at property tax relief and reform must include ways to make government more efficient and harness the strength of regions to solve problems rather than leaving each municipality to their own devices. In 2008 the State could:

   • Increase staffing and other resources to the new state Office of Responsible Growth so that it can fulfill its mission to (a) provide needed technical and financial assistance to towns and cities and regions, and (b) facilitate smarter land use decision-making in our state.
   • Create incentives for the voluntary establishment of newly empowered councils of government (COGs) in each of the 15 planning regions so that municipal CEOs in each region meet, on a regular basis, to discuss and act on issues of mutual concern – including economic development, land-use planning and joint service delivery.
   • Enable such COGs to (a) more easily share the property tax benefits of economic development in order to encourage cooperation and responsible growth, (b) share a portion of state sales tax and other revenues collected within a region, and (c) exercise other powers that encourage intermunicipal cooperation, decision-making and regional success.
   • Create a state incentive program to help pay for one-time capital expenditures for equipment for joint municipal undertakings.
   • Continue and increase funding for the Regional Incentive Performance Grant. Governor Rell has proposed $5 million in new funding for this popular program.
   • Authorize COGs to (a) bond for capital projects that would benefit the entire region, (b) work jointly on planning and zoning issues, and make regional land-use decisions, and (c) negotiate master contracts for the teachers and municipal employees within the regions with local approval.
7. Improve Connecticut's Policy Development Capabilities

   The State this year should (i) work to improve government efficiency by creating a State Data Council to integrate state and municipal information databases for policy development and other purposes, and (ii) implement a Tax Incidence Study so that policymakers can learn the impacts on communities, individuals and businesses of proposed changes to the state-local tax system.