While other factors have significance, quality of life issues are the most important factors residents and businesses weigh when determining whether to relocate to or remain in a state.
Factors such as quality schools, an educated workforce, safe neighborhoods, reasonable property taxes, and safe and reliable roads and bridges top the list of residents’ and employers’ “must haves.” In addition, all residents believe that laying the foundation for a world-class education, police and fire services, and safe roads are core government services. No government service is placed above them. These are the services towns and cities provide — which is why the state budget and aid to towns and cities is so critical for the future of our state.
Property taxpayers should be heartened by the fact that Gov. Dannel P. Malloy has stated he would not sign anything that “balances the state budget on the backs of towns and cities and schools,” and that both sides of the aisle have placed property taxpayers foremost in their minds when crafting budgets.
The state budget must maintain municipal aid as a top priority, holding property taxpayers harmless from state aid cuts. Simply put: cuts in aid to towns means cuts in essential local services, employee layoffs, and property tax hikes.
The budget must ensure that each town and city is held harmless, maintain priority school funding, increase education aid, restore the state-local partnership of the resident state trooper program — and reinstitute groundbreaking municipal revenue sharing.
But there is also a “To Do” list left for legislators to truly help property taxpayers. That includes supporting new state revenue sharing as proposed in Senate Bill 1; ensuring no special costly additional workers compensation benefits for select interests; and fighting for other important mandates relief.
Municipal officials say this time and time again, but it’s worth repeating time and time again: towns and cities, because of state statutes, are relegated to the property tax to pay for local services.
Connecticut is the most reliant state in the nation on the property tax to fund essential services like pre-K-12 public education. In just the last 6 months, there have been three entities that have focused on Connecticut’s broken property tax system:
• In December, the State Department of Revenue Services released a tax incidence study that confirmed the property tax is the most burdensome and regressive tax on Connecticut residents and businesses;
• In March, U.S. Secretary of Education Arne Duncan spoke of education disparities in the country — and singled out over-reliance on the property tax for public education as a major culprit, and;
• The Federal Reserve Bank of Boston just released a study of Connecticut’s “fiscal disparities” that highlights how our property tax-only system of raising revenue for necessary local services contributes to fiscal stress.
More sobering news regarding the burdensome property tax is expected to come out of the legislature’s Tax Study commission, through the Finance Committee, in December.
Over-reliance on the property tax coupled with unfunded state mandates, including an ever-increasing list of state-mandated property tax exemptions (77 and growing), place Connecticut towns and cities in a very tenuous position.
If the state wants to ensure its economic competitiveness, it must start with sustaining its towns and cities. Local government is responsible for providing the majority of public services in our state: pre-K-12 education, public safety, roads and other infrastructure, elderly and youth services, other human services, recreation, and wastewater treatment, among others. They must do so while meeting numerous mandates, often underfunded or unfunded, from both the federal and state governments.
Connecticut’s property-tax system only works fairly — urban, suburban, or rural — if two conditions exist: the property and income wealth of a community can generate enough property tax revenue at a reasonable cost to taxpayers to meet the need for services, and/or state aid is sufficient to fill local revenue gaps.
Furthermore, there is another component in the process: several bills remain that would raise property taxes or result in reductions in needed local services — unfunded state mandates. Most notable are the workers’ compensation-related special benefits where presumptions take priority over substantive evidence, and adequate considerations being given to the additional financial burdens being placed on property taxpayers. Approval of these mandates would essentially mean towns and cities taking one step forward, and two backward. They could cost property taxpayers tens of millions of dollars.
With only weeks remaining in the legislative session, municipal officials will work relentlessly for the best deal for their communities — ensuring critical levels of state aid are sustained, meaningful mandates relief is enacted, and that property taxpayers are protected from costly, new unfunded state mandates.
Joe DeLong is the executive director of the Connecticut Conference of Municipalities.
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