Creation of a statewide motor vehicle tax that would eventually be phased out was a key piece of House Speaker Brendan Sharkey’s approach to regionalism, but it won’t be implemented as part of the state budget.
Sharkey, a legislator who prides himself on his attempt to get cities and towns to work more efficiently, was successful in getting the bulk of his proposals included in the budget. But at the last-minute the motor vehicle tax changes were removed.
“I’m not sure why we would not be looking to eliminate the most regressive and unpopular tax in the state of Connecticut,” Sharkey said Wednesday.
Sen. President Donald Williams delivered the news to Sharkey Tuesday evening after finding there was no support for it in his caucus.
The idea for the phase out of the current system where cities and towns charge different mill rates was conceived by Sharkey’s Municipal Opportunities and Regional Efficiencies Commission. But there was no support for it among Democratic Senators.
Williams said he had not discussed the issue with his caucus before the implementer bill was drafted Tuesday night.
“There was strong opposition to rolling that [car tax] phase-out out at this time,” he said. “All of the other proposals that made up the speaker’s M.O.R.E. bill were acceptable to our caucus.”
Sharkey said he was “disappointed” about the elimination to the car tax changes.
Sen. Gary LeBeau, D-East Hartford, said it’s not that they didn’t want to get rid of the tax.
“It’s that it’s more than a half billion [dollars] and there’s no substantive proposal to help municipalities make up the lost revenue,” he said. “It was too much all by itself.”
The state’s largest municipal lobby worked hard to get the changes to the car tax removed from the budget, but said it’s willing to continue working on a solution.
“We look forward to working with the speaker and the M.O.R.E. commission to look at reforms to the property tax system in Connecticut,” Jim Finley, CEO of the Connecticut Conference of Municipalities, said Wednesday. “He has our cooperation and support to finding a solution to the inequity of the motor vehicle tax.”
Finley said municipal officials opposed the changes to the car tax phase-out because cities and towns would lose nearly $700 million in revenue.
Under Sharkey’s proposal in October 2014 a statewide cap on the mill rate would go into effect. The cap would start at 80 mills. The only city with a mill rate that would be near cap is Hartford.
The equalized mill rate in Connecticut at the moment is about 28.9 mills.
However, Sharkey explained that Hartford wouldn’t begin to lose revenue until the second year of the proposal. In the second year the cap would drop by 8 mills and the following year by 12 mills until eventually it’s eliminated by 2020.
The proposal was different than what Gov. Dannel P. Malloy had proposed when he released his budget in February. Malloy tried to eliminate the car tax and all the revenue municipalities receive as a result.
Malloy has pushed back, calling the car tax one of the most regressive taxes collected in the state.
“It is one of the most egregious taxes on the books in the state of Connecticut,” Malloy said earlier this month. “You own a car in Greenwich you’re charged less than 11 mills. You own a car in Hartford you’re charged 75 mills. It makes no sense.”
The elimination of the tax was part of Malloy’s “middle-class tax relief” package.
Hugh McQuaid contributed to this report.