Gov. Dannel Malloy told a group of 800 real estate agents Wednesday that he wants them to understand Connecticut is in the process of changing the way it does business. The 20-minute pitch was similar to what Malloy has been talking about in the 15 out of 17 town hall meetings he’s held across the state since unveiling his budget Feb. 16.
“We’ve got a pretty big hole right now that we’ve gotta dig our way out of,” Malloy told them.
The real estate agents don’t disagree, however, they believe deeper spending cuts are necessary to avoid large tax increases that could hurt the real estate market.
One of their objections is to Malloy’s proposal to make the real estate conveyance tax permanent and increase the municipal real estate conveyance tax from 0.25 percent to 0.50 percent of a home’s selling price. They say that would add almost $1,000 to the closing costs of a typical home sale.
Malloy, who didn’t address the real estate conveyance tax specifically, admitted Connecticut’s property tax structure needs some work and to that end he crafted a budget which maintains a fair amount of municipal aid and doesn’t force municipalities to increase property taxes.
In the last two years New Jersey shifted $3.6 billion in expenses to its municipalities, while New York proposes in its new budget shifting $4.65 billion in expenses to municipalities, Malloy said.
“I decided that that was not really winning,” Malloy said. “The reason is we are more dependent on property taxes than any other state in the nation.”
He said many of the state’s biggest employers complain the property tax is the highest tax they pay and it’s disproportionate to similar taxes they pay in other states.
Malloy went on to tout his decision to spend $15 million on advertising Connecticut’s culture and tourism industry which seeks to attract visitors to the state. He said by promoting the state it will make Connecticut a more attractive place to live and move a business.
The comments received a round of applause from the realtors.
He said he understands real estate agents may not necessarily like his revenue package, but “I’m trying to broaden the tax base not narrow it.”
He said he also wants to maintain the state’s competitive advantage by bench marking the states income taxes against those of its neighboring states because those in the higher income brackets are very mobile.
Malloy said it’s been a topic of discussion at his town hall meetings, which he described as a “fascinating” experience.
He said about one-third of folks come to lobby him on Sustinet, one-third on labor unions, and one-third that he described as “everybody else.”
“What I’ve learned is everybody wants me to balance the budget and they want me to do it without raising any taxes and without cutting any services,” Malloy said.
The real estate agents didn’t get an opportunity to ask Malloy any questions at the event, but if they had many would have asked him to support SustiNet, the health care proposal which pools together various populations already insured by the state and eventually opens up the pool to small businesses and individuals.
Robert Kennedy, executive vice president of the Connecticut Association of Realtors, said he understands Malloy objects to the proposal, but realtors want access to affordable health care. For too long realtors have had to rely on their spouses for insurance because the marketplace is not user friendly, he said.
Malloy didn’t mention SustiNet or federal health care reform when he spoke to the real estate agents Wednesday morning, but when asked he refused to offer his support to the proposal.
“I think a lot of people are talking about the expense and I’m concerned about the expense but I’m also concerned about the structure of this proposal,“ Malloy said. “Where we would take upward of $7 billion of state budget and take it away from the legislature, take it away from the governor, take it away from elected officials and put it in a quasi-government board that has no elected membership. It just doesn’t make sense to me.”