When the General Assembly adjourned at midnight May 5 without extending the municipal conveyance tax it promised to return and fix it, but as the June 21 special session approaches the simplest of fixes seems to be getting complicated.
There seems to be consensus on extending the conveyance tax for one year, but the state’s largest municipal lobby is pushing lawmakers for a two year extension.
At its annual meeting in Cromwell Thursday, James Finley, executive director the Connecticut Conference of Municipalities, told a roomful of local elected officials that a one-year extension of the tax seemed like a sure bet, but it was pushing for two years.
Finley said with a looming $3.4 billion budget deficit he doesn’t want to have to fight for another extension of the conveyance tax at a time when lawmakers are focused on more pressing budget issues. He said he thinks the best bet for winning a two year extension lies with the House Democratic caucus and Speaker Chris Donovan.
Donovan was unavailable for comment Thursday, but his spokesman said discussions between the House and the Senate regarding the conveyance tax and a number of other bills are still ongoing.
Derek Slap, spokesman for Sen. President Donald Williams, said there seems to be broad consensus for at least one year.
“They’re very sensitive to the fact that municipalities and local taxpayers are relying on the revenue from the tax,” Slap said.
Rep. William Hamzy, R-Bristol, said he would like to see passage of the conveyance tax be tied to municipal mandate relief.
In Bristol the city loses $3.58 for each dog license it renews, Hamzy said. And that’s just one small example of how difficult it is for municipalities to continue to operate in the black, he said.
“I will vote to extend the conveyance tax if it’s accompanied by mandate relief for cities and towns,” Hamzy said Thursday.
To complicate matters even further there was originally amendment attached to the extension of the conveyance tax, which would allow for the exemption of foreclosures and short sales from the conveyance tax.
Hamzy, an attorney who deals with homeowners in foreclosure, said it’s unfair to levy a tax on someone who is losing their home or upside down in a home sale. “It’s like pouring salt on a wound,” Hamzy said.
The Connecticut Association of Realtors agrees.
The organization representing more than 19,000 Realtors in the state said in a press release earlier this week that it won’t oppose the extension of the municipal conveyance tax this year because it understands municipalities are hurting. However, in order to gain its support it must the eliminate the tax on foreclosures or short sales where homeowners are taking a loss on the sale of their home. The position is slightly different than the one they took earlier this year.
“Home sellers who are in foreclosure, or selling at a loss are already struggling, and simply do not have the money at closing to pay the conveyance tax,” Nicholle Dagata, president of the Realtors association, said. “The sale and purchase of homes will be key to economic recovery in Connecticut and across the country, and the legislature can help spur that recovery by offering relief to residents who need it the most.”
The extension of the conveyance tax to foreclosures and short sales was approved in the budget passed in September 2009. It’s still unclear how it even got there according to lawmakers on Banking Committee, but it seems to have been part of that year’s budget negotiations.
It’s unclear if the conveyance tax on foreclosures and short sales will be extended because the Office of Fiscal Analysis is having a hard time creating a fiscal note estimating how much money the tax is expected to bring in for cities and towns.
The extension of the municipal conveyance tax on properties that aren’t in foreclosure brings in about $20 to $25 million a year. The last fiscal note for the revenue from foreclosures and short sales was about $19 million revenue loss for the state and $7.5 million revenue loss for municipalities.
In addition to the conveyance tax lawmakers will look to override at least four of Republican Gov. M. Jodi Rell’s 13 vetoes.
Sources say four bills look ripe for an override including a wide-ranging transportation bill that Rell vetoed because it would delay her plans to expand Stamford’s Train Station parking lot; a bill that would prohibit the state from asking about a person’s criminal background; a bill that allows tenants in a housing authority to form an organization; and a bill that expands off-track betting to facilities in Manchester, New London, and Windham.