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Democrats: Create Statewide Tax Rate For Vehicles

Democrats: Create Statewide Tax Rate For Vehicles

Ct Post, Janaury 25, 2019

By Ken Dixon

Owners of multi-family houses would get tax breaks and there would be a single statewide property-tax rate for motor vehicles under a wide-ranging finance proposal submitted to the General Assembly by Senate President Pro Tempore Martin M. Looney.

Republicans warned that the price tag could be hundreds of millions of dollars in a shift of the statewide burden to more-affluent towns.    

But Looney, D-New Haven, said that the legislation is a move to finally revamp the state’s property-tax system.

“People believe it’s the single-most problematic tax,” Looney said Thursday. “It’s one of the things that Gov. Lamont talked about in his campaign, and I expect he’ll address some of the same issues in his budget next month.”

The legislation has several major parts, including:

A $50,000 tax exemption for one- to four-family owner-occupied residences.

A one-mill statewide tax — $1 on each $1,000 of value — on real estate.

Repeal of the local property tax on vehicles, with a new statewide vehicular tax of between 15 and 19 mills, and revenue going into a fund for reimbursing towns and cities that host tax-free institutions such as colleges, state buildings and hospitals.

An increase in special education and public school grants.

A $25,000 personal property tax exemption for businesses.

Looney said that in the case of an urban house worth $200,000 and currently assessed at $140,000, under this legislation its assessment would drop by $50,000 to a total of $90,000. In a more affluent town, the assessment on a million-dollar house, currently about $700,000, would drop to $650,000.

“It’s the same homestead exemption of $50,000, which seemed to make sense,” said Looney, who in recent years supported a law capping car taxes at 37 mills.

“I think we need to go further with car-tax reform,” he said, noting that the proposed statewide 1 mill tax on real property would generate enough revenue to return to the towns and cities enhanced education funding as well as reimbursement for the loss of local revenue for hosting the tax-exempt properties.

“This is a comprehensive way to address what we all know is the fundamental problem in the state: the property tax,” Looney said. “For years we’ve talked around this problem and we haven’t faced it.”

Senate Minority Leader Len Fasano, R-North Haven, recalled Thursday that a similar break for homeowners in Hartford, back a dozen years or more — exempting a percentage of property taxes — was stopped after associated higher taxes on businesses forced jobs to leave the city.

Fasano said he was concerned that Looney’s proposal might discourage business again.

“The budgets for municipalities is mill rate times assessed value equals how much they can spend,” Fasano said. “If your assessed property goes down, the mill rate must go up in the town to make up for the money they’re losing.”

The car-tax portion of Looney’s proposal is the same, he said.

“I appreciate what Sen. Looney’s trying to do for the folks in his district, but it would have a long-term negative effect on the state and will be exacerbated in our cities,” Fasano said.

State Rep. Chris Davis, R-Ellington, ranking member of the tax-writing Finance, Revenue and Bonding Commission, said Thursday that while Looney’s bill starts the legislative conversation, there’s little he could support and little that would help his constituents.

Davis said that there seems to be no mechanism to keep towns and cities whole on the proposed $50,000 exemption, other than a general goal to provide funding for education and the payment in lieu of taxes for tax-exempt properties.

“The idea of having a statewide mill rate higher that the local mill rate in certain towns, on top of local property taxes, will be hard on many of my constituents, especially those on fixed incomes,” he said. “I don’t see that we need to do something to reduce property taxes on the local level when we could provide them relief from unfunded (state) mandates. I don’t see this accomplishing what Sen. Looney says. Indeed it may lead to more taxes.”  

Praise for starting discussion back to top

Joe DeLong, executive director of the Connecticut Conference of Municipalities, took a wait-and-see approach to the bill, praising Looney for starting a new statewide discussion on the issues of taxation, which are often the focus of many public-policy discussions.

“The more that we can get discussions with different parties at the table, it’s a good thing,” DeLong said in a phone interview Thursday morning. “We need to bring the people impacted together, but also the General Assembly.”

DeLong, whose group represents the state’s towns and cities in the Capitol, said Thursday that the many parts of Looney’s proposal indicates that the bill is likely a way to get all the issues into play for the long, 23-week budget-setting session that ends June 5.

“First off, I’m not going to be critical out of the gates,” DeLong said. “This is an avenue for conversation about things that need to be talked about. If they want to make the car tax fairer, we’d love to have that conversation.”

He said he is concerned that in recent years, while lawmakers initially expressed interest in thorny issues and held initial meetings to gather opinions, elected officials often dropped the ball and gradually stopped meeting.

 “The more that we can get discussions with different parties at the table, it’s a good thing,” DeLong said.

 Proposals to eliminate local car taxes date back at least 10 years, to the administration of Republican Gov. M. Jodi Rell.

 State Rep. Jason Rojas, D-East Hartford, co-chairman of the tax-writing Finance, Revenue and Bonding Committee, said Looney’s proposal is an attempt to accomplish what generations of state lawmakers and governors have tried to do and failed: Reform the state’s local property-tax system.

 “We’ve never really been able to do it,” Rojas said. “The overall spirit of it is to try to find equity in how property taxes are levied. There are huge differences in mill rates. Searching for an overall attempt to create equity is a good way to look at it,” he said.

 The current local taxes on personal vehicles represents as much as $900 million a year in revenue for towns and cities. Mill rates vary throughout the state, with cities such as Bridgeport and Hartford among the highest, while Greenwich is among the lowest.

 A mill rate of 1 would have a $1 tax per $1,000 in property value, or $20 on a car valued at $20,000. Greenwich’s mill rate was 11.2 in 2018, while Bridgeport’s was 54.37 for real estate and 37 for vehicles. Fairfield’s mill rate was 25.45.