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A bill that would allow private colleges and hospitals to negotiate property taxes with their respective municipalities cleared its first hurdle Tuesday with a 14-5 vote of the Planning and Development Committee.

The bill proposed by House Speaker Brendan Sharkey would change the payment-in-lieu-of-taxes program, also known as PILOT,  by placing the burden on the institutions to seek reimbursement from the state. Currently, the institutions don’t pay any property tax and the state sends a partial payment to the municipalities. Sharkey’s proposal reverses this process.

But even lawmakers who voted in favor of the bill were skeptical that it would actually solve the problems with the state’s tax structure.

Sen. Cathy Osten, the panel’s co-chairwoman, said she was not in favor of the bill because she didn’t think the bill adequately addressed the issues.

“I am planning on voting to move it forward but I disagree with many pieces of this because I think the unintended consequences are that our students will see increased tuition rates and that there will be more layoffs of nurses and janitors that work in our local hospitals because this doesn’t address what needs to be addressed,” she said.

Osten said the legislature needs to take up “real property tax reform,” and the bill was “only moving money around.”

Sen. Steve Cassano, D-Manchester, said, “I don’t think any of us — the way it’s written — want to support the bill now, but I think we’re all excited about the potential for what it could bring.”

He said that when he was mayor and deputy mayor of Manchester the legislature completed five studies of parts of the state tax structure.

“We have to look at the whole system,” Cassano said. “Evaluate the system and come up with a fair and equitable system, instead of try to piece meal it.”

Rep. Bill Aman, R-South Windsor, said he was very concerned about the proposal.

“This would probably the largest change in the general way of taxing property that we’ve done in many, many years and I’m looking, with only six weeks left in the session… and saying ‘I don’t know if there’s time to look at all the unintended consequences,” Aman said.

Rep. Noreen Kokoruda, R-Madison, said Sharkey’s bill only addresses one part of the PILOT system. She said it ignores the PILOT money cities and towns receive for state property.

She said she voted to move the bill forward, but wants to understand how Connecticut has two sets of standards for its PILOT programs.

Rep. Jason Rojas, D-East Hartford, who co-chairs the committee, recused himself from the vote given the nature of the bill and his employer, Trinity College.

“Even though I was given an opinion by the Office of State Ethics that I have no conflict of interest in any way I’m still going to recuse myself from this vote to do away with an appearance of a conflict,” Rojas said prior to the vote.

Rojas is the director of community relations for Trinity College and responsible for maintaining the school’s relationship with the City of Hartford.

The legislation could create an adversarial relationship between colleges and hospitals and their respective municipalities, according to opponents of the bill. If the two sides were unable to come to an agreement regarding a tax bill, Sharkey testified last week that the institution would be on the hook for the full amount of property tax.

“City and town budgets have become increasingly strained by the cost of providing expensive infrastructure and emergency services to large hospitals and private colleges and universities — entities who pay six and seven figure salaries to their executives, increasingly look and act like corporate profit centers, and yet pay no property taxes,” Sharkey said Tuesday. “Instead, the hard-working families in these communities are forced to subsidize those costs. It’s time these major corporations step up and begin to pay their fair share of taxes toward to their host communities’ budgets.”

Sharkey said he looks forward to a debate on the floor.

CTNJ file photo

The Finance, Revenue, and Bonding Committee on Tuesday also approved legislation proposed by Sen. Majority Leader Martin Looney, D-New Haven. The committee voted 32-18 in approving the bill. 

Looney’s proposal would combine the state’s PILOT for colleges and hospitals with the reimbursement for taxes lost from state buildings and property and eliminate the different reimbursement rates.

The bill would create a sliding scale of reimbursement under which the 20 municipalities with the most PILOT-eligible property would be reimbursed at 50 percent, the next 20 would be reimbursed at 45 percent, and all others would be reimbursed at 40 percent.

“Sen. Looney’s proposal is weighted more heavily to benefit New Haven by the way it’s constructed,” Sharkey said last week. “But what he’s getting at by factoring state property PILOT into the conversation is exactly the right way to go . . . In fact, I think that aspect of what he’s proposing makes a lot of sense.”

Sharkey’s bill heads to the House and Looney’s bill heads to the Senate.