The Connecticut Conference of Municipalities (CCM) today (Monday, April 14, 2008) called on the Governor and General Assembly to act now to fully-fund state payments in lieu of taxes for colleges, hospitals and state property to help combat big property tax increases in communities across the state with tax-exempt properties.  

"Hometowns across Connecticut are facing stiff property tax hikes, deep service cuts, and painful employee layoffs," said Finley. "CCM is asking our state leaders doing to help. The Finance Committee's proposal to fully fund state payments-in-lieu-of taxes programs deserves bipartisan support from the legislature and the Governor. It's the right thing to do. If the State doesn't fully fund the reimbursement programs, property taxpayers pay the price."

 (See attachments below for the town-by-town impact of the Finance Committee's proposal.) 

CCM applauds the actions of the General Assembly's Finance, Revenue and Bonding Committee for passing a major piece of property-tax-relief legislation (HB 5844), which would:

• Establish a dedicated source of funding for state payments-in-lieu-of-taxes (PILOT) for tax-exempt private colleges and hospitals as well as PILOT payments for tax-exempt state property. The PILOT grants would be funded at the "full" statutory levels of 77 percent of the lost property tax revenue for private colleges and hospitals and 45 percent of the lost property tax revenue for state property.  This collective hike in aid would mean an additional $60 million in aid for municipalities.

These funding levels for both PILOT payments have been a long sought, but elusive goal of CCM and its member municipal leaders. "The increase in PILOT payments for FY 2008-09, accompanied by state funding mechanism to ensure sustaining these increased payments over time, will serve as a major infusion of state aid for property tax relief in towns and cities across the state," said Jim Finley, Executive Director and CEO of CCM. "We applaud the Finance Committee for their sensitivity to the needs of municipal governments during a challenging State and local budget season - and ensuring that the PILOTs remain full-funded in the future."

CCM further emphasized that (1) municipalities are burdened with a wide variety of state-mandated property-tax exemptions -- the General Assembly's Program Review and Investigations (PRI) Committee estimated in 2006 that the cost of all state mandates on towns and cities is equal to about 16 percent ($42 billion) of the total statewide grand list; (2) some municipalities have from 40 to 50 percent of their grand list tax exempt; and (3) if the State mandates a property tax exemption that it should reimburse towns for the tax loss.

CCM is calling on legislators and Governor Rell to endorse full statutory funding and a permanent  funding mechanism as proposed in HB 5844. "We know that many municipalities are facing tax increases and service cuts - and in some cases layoffs," Finley said.  "We urge the people who represent our communities at the capitol to fight to make sure that towns and cities are fully reimbursed for property the State has taken off our tax rolls."

To pay for the PILOT increases, the bill would establish a new "PILOT Payment Reserve Account" into which would be deposited revenue from (a) the state's abandoned property account (as much as $50 million is available) and (b) broadening the sales tax on delivery services such as the delivery of parcels, letters, documents, or groceries.

Even if the General Assembly were to turn down the 'delivery tax', with the $50 million in funding available from the abandoned property account, it would take only an additional $10 million in funding to provide the $60 million in aid needed to fully fund the PILOT programs. And remember, the budget proposed by the Appropriations Committee is $110 million less than the spending level proposed by the Governor in February.

CCM called the delivery tax "innovative", but said "the particular source of revenue is not as important as the fact that there are specified funding streams and a segregated PILOT account to reach full statutory funding levels next year, and help maintain the level of reimbursements in the future."

Attachments:

PILOT: Colleges & Hospitals and PILOT: State Owned Property Town-by-Town Estimates Combined Top 20
No.   MUNICIPALITY COMBINED TOTAL FY 07-08 1 New Haven 43,536,062 2 Hartford 32,368,688 3 Bridgeport 14,486,720 4 Waterbury 12,738,746 5 Middletown 9,398,866 6 New Britain 8,021,823 7 Mansfield 8,020,784 8 New London 6,555,989 9 Stamford 5,228,156 10 Windsor Locks 3,682,362 11 Windham 3,599,952 12 Farmington 3,116,619 13 Danbury 3,036,801 14 Fairfield 2,907,895 15 Suffield 2,805,987 16 Cheshire 2,651,577 17 Hamden 2,487,629 18 Meriden 1,992,853 19 Manchester 1,897,832 20 West Hartford 1,810,038	No.   MUNICIPALITY COMBINED FINANCE COMMITTEE TOTAL FY 08-09 1 New Haven 55,929,865 2 Hartford 46,234,935 3 Bridgeport 18,509,255 4 Waterbury 16,709,227 5 Middletown 12,238,735 6 Mansfield 11,310,327 7 New Britain 10,469,089 8 New London 8,604,313 9 Stamford 5,942,690 10 Windham 5,457,359 11 Windsor Locks 5,001,472 12 Danbury 4,384,343 13 Farmington 4,306,431 14 Suffield 3,931,441 15 Fairfield 3,930,321 16 Hamden 3,765,410 17 Cheshire 3,612,135 18 West Haven 3,135,405 19 West Hartford 2,945,455 20 Groton 2,828,703
Sources: FY 07-08: CT OPM Estimates Book. FY 08-09: CT OFA Finance Committee Estimates and CCM Estimates. Subject to change.