It doesn’t matter how much money you make or if your company turned a profit, cities and towns will still be looking to levy property taxes on your home or business, Connecticut Conference of Municipalities Executive Director Jim Finley said Monday.
“It’s the most regressive tax in our state and local tax system,” Finley told reporters at a Capitol press conference.
Finley, who is in charge of the largest municipal lobby in the state, said they put out a position statement and will be launching a media campaign in order to make sure state and federal officials are aware of the issues facing cities and towns.
In case you didn’t know, 72 percent of municipal revenue comes from property taxes, while just 24 percent comes from state government, according to Finley.
“From our biggest cities to our smallest towns are really facing a property tax choke right now,” Finley said. “We’re looking for the state to meet its financial responsibilities to towns and cities, not only on the education side, but the non-education side.”
But he’s not proposing tweaking property taxes in a radical way. Instead, he’s proposing the state better fund municipal grant programs, such as public education so municipalities don’t have to rely as much on the property tax to balance their budgets.
“There’s no question that education finance reform is the key to property tax reform,” Finley said.
He said financing public education in the state costs more than $7 billion a year.
“The Education Cost Sharing grant alone is underfunded by over $700 million,” the position paper says. “Special education costs are now approaching $2 billion per year and impose a staggering per-pupil cost burdens on host communities.”
The state is currently in the midst of a lawsuit which alleged that it has a constitutional responsibility to adequately fund PreK-12 education in the state and there’s a task force created by Gov. Dannel P. Malloy looking at a fair funding formula for public education. The task force is expected to make its recommendations this October. At the moment it’s unclear how drastically they may recommend tweaking the funding formula.
“We’re hopeful, but we’re pessimistic about whether they’re willing to really embrace the fact that the state needs to really put a lot more funding into the education finance system in Connecticut,” Finley said.
He acknowledged that the state’s budget is not in great shape even though Gov. Dannel P. Malloy’s administration has made small improvements to municipal grants.
Three months into the fiscal year and the 2013 budget is already facing a nearly $27 million deficit, while there are a lot of “what ifs” with federal funding and tax revenue projections.
But whether Connecticut’s tax rates are competitive with other surrounding states is still an issue for the Malloy administration, which is focused on job creation, clawing its way back from a $3.6 billion budget deficit, and fixing public education funding.
Ben Barnes, Malloy’s budget director, said they have made improvements to the public school system but still have “a long way to go.”
Finley said he would like the Education Cost Sharing Task Force to embrace a phase-in so that when the state’s finances turn around state government commits to putting a lot more money into the system.
“The state property tax system can no longer bear the lion’s share of funding of education,” Finley said.
The property tax raises $8.7 billion a year now, and education costs about $7.2 billion at the local level, so if you decrease funding responsibility of the property tax and replace it with state revenues that could go a long way toward “stopping the bleeding,” Finley said.
Last year’s most $50 million increase in public education funding wasn’t enough according to Finley because it requires the state’s struggling school districts to do more with less and doesn’t provide the property relief cities and towns need.
If the state pays its fair share of education funds that will do a lot to relieve to over reliance on property taxes, Finley argued.
Barnes, who also sits on the Education Cost Sharing Task Force, said they won’t have a set of recommendations until November, but are certainly considering significant changes to the formula.
CCM’s position paper also asks the state to consider expanding its revenue sharing ventures with municipalities like it did two years ago when it decided to increase the sales tax and give municipalities a portion. Finley said they will also push for state lawmakers to fully fund the revenue lost due to state-mandated property tax exemptions, and encourage more regional collaboration like the new Regional Performance Incentive Grant, funded through a share of the state hotel tax and car rental tax.
In the meantime, Barnes suggested cities and towns take advantage of the regional competitive grants.
“Ultimately it’s up to local governments to work together to make regionalism more successful,” Barnes said.