If she was forced to choose, New Haven Mayor Toni Harp said she prefers Sen. Martin Looney’s proposal to change how cities and towns receive money from the payment in lieu of taxes program.
Looney’s proposal would combine the state’s PILOT for colleges and hospitals with the reimbursement for taxes lost from state facilities in a town and eliminate the different reimbursement rates.
Harp said she prefers Looney’s method over House Speaker Brendan Sharkey’s method because she doesn’t believe Yale University, Trinity College, Connecticut College, and Wesleyan University would agree to the changes without a constitutional amendment.
Under Sharkey’s proposal, tax exempt private colleges and hospitals would pay taxes to the municipalities and subsequently seek reimbursement from the state. He’s calling it the “reverse PILOT.”
Harp explained that the reverse PILOT may not work well in New Haven because Yale University is listed in the state constitution as a tax exempt entity and state law can’t trump the constitution.
She said she wants to see Yale University grow because it’s an engine for economic development in the city and in the region, but when it grows so does the amount of tax exempt property.
Harp said private colleges with endowments have taken advantage of low interest rates and have been building, often in suburban communities, which means those communities are now sharing in the overall pot of money for PILOT. She said that’s why the funding is thinning out.
“In New Haven more than 50 percent of property is exempt and we have six acres of land that is available for growth. That’s all,” Harp said.
She said most of the property in New Haven is colleges and hospitals. In other cities, like Hartford, there is a heavier reliance on PILOT for state property.
She told the Appropriations Committee that she used to chair that if they held reimbursement constant and funded it at the level it was funded just five years ago, then New Haven would have no tax increase.
“When we flat fund things we really expect our municipalities at the end of a recession . . . to grow and make up that difference,” Harp said. “All we can do if we’re flat funded is basically raise taxes just to do a minimum of city services. It really is awful.”
Democratic Gov. Dannel P. Malloy’s budget increased PILOT funding for private colleges and hospitals by $8 million, but he kept funding for state property flat.
Ron Thomas, director of public policy and advocacy for the Connecticut Conference of Municipalities, said his organization appreciated both proposals. He said cities and towns are only receiving about 33 percent reimbursement for the lost property tax revenue and it’s simply not enough.
The fact that there are two proposals is an acknowledgment that “something needs to be done,” Thomas said.
“Cities are basically hurting,” Harp said.
Bridgeport Mayor Bill Finch agreed. He said there is little discretionary funding in his budget and there’s little that cities like his can do about it.
He said the Building Department, Economic Development Department, and “the guys who clean the streets of sand and snow” are the only places in the budget he can cut.
As the current president of the Connecticut Conference of Municipalities, Finch reminded lawmakers that the three smallest cities in the United States are Hartford, New Haven, and Bridgeport.
Bridgeport is 16 square miles, New Haven is 17 square miles and Hartford is 18 square miles. The average median city is about 120 square miles.
About half of those 18 square miles in Hartford pay no property taxes and in Bridgeport it’s about a third that don’t pay property taxes.
The cities also are home to most of the social service programs for the entire region, which is not a factor in any of the grant or PILOT funding formulas, according to Rep. Toni Walker, D-New Haven.
Finch, a former state senator, told the Appropriations Committee that the view from the other side is much different.
“I have to actually try to put the fires out,” Finch said. “Fix the potholes, grind the stumps, arrest the bad guys, and try to help work with the school board to educate our children by building newer buildings that thankfully you have helped me finance.”
He said the perspective is rewarding, but “the worst part about my job is putting my kids on a bus every morning to a failing school.”
Finch said he didn’t have a preference when it comes to the two PILOT proposals.