In defending the budget that was just passed by the legislature, just about every Democrat who voted for it claimed that the budget provided “property tax relief.”
But there are many reasons to doubt that claim.
For one — in the past the state has reneged on promises to share dedicated funds with cities and towns. There is little trust left between the state and municipal leaders.
So while we may see a year or two of shared sales taxes, who’s to say the state won’t start to whittle away at those funds in the future?
Connecticut residents are understandably a little jaded when it comes to promises from its state leaders — after negotiating a $2 billion tax increase with legislative leaders this year, how are we supposed to trust Gov. Dannel P. Malloy not to break other promises?
It is deeply troubling that the budget that was just passed that is supposedly “in balance” includes a projection for a $1.2 billion deficit in 2018 and 2019.
If recent history has taught us anything, those numbers likely will grow between now and then, particularly if many of the residents and businesses follow through on their threats to leave.
Given this reality, municipal leaders are rightfully nervous that the state will give this money with one hand, and then take it away with the other the next time they need additional funds.
Another reason to be wary that this budget will lead to property tax relief is that just because the state is sending more money to cities and towns doesn’t mean taxes will go down.
Municipal leaders will decide how to spend that money. Some may use it to provide relief, others will undoubtedly choose to fund projects that had been on the backburner.
The wild card here is that if some of the larger businesses do move out, property tax rolls will be significantly impacted.
Fairfield taxpayers will not get property tax relief if GE follows through on its threat to leave, taking with it $1.8 million in property tax payments. Residents would have to pay more to recover that loss.
There is one area where we can be confident that tax bills will drop — by capping the mill rate for cars at 32 mills, anyone who owns a car and lives in a city or town with a mill rate over that amount will see their car tax bill drop.
Not surprisingly, city residents in Hartford, Bridgeport, Waterbury, New Britain, New Haven, and New London will see the most tax savings. Voters in those cities also tend to vote for the ruling Democrats, which we see comes with its own reward.
In all fairness, capping the car tax rate is not the worst idea. A better idea would have been to get rid of the property tax on cars entirely. Unlike real estate, cars are worth the same no matter what town they’re parked in.
It is also true that our property taxes are way too high in Connecticut. By most measures, we pay the second highest property taxes in the nation.
But there are much, much better ways to accomplish what the Democrats were trying to accomplish — what we needed was an open, transparent, and equitable restructuring of funding to municipalities.
Instead, we are left with another convoluted state formula that determines how much sales tax revenue each municipality will get. Formulas like these just beg to be tampered with for political gain.
In other states, municipalities often receive some sales tax revenue. This is usually done by giving cities and towns the money collected within their borders.
But not here. Lawmakers are too busy trying to socially engineer everything.
The result is an inequitable system that will give a windfall portion of the sales tax to certain cities and towns, while shortchanging others.
The state is also continuing its top-down approach to micromanaging towns by proposing a “property tax base sharing program” in each regional council of government (COG).
This is supposed to give municipalities the option to share property tax revenue from commercial property, as long as each municipality in a region “opts in.”
Where is that going to happen? Nowhere. But one wonders if the state is putting this program in place so that it can take the “opt in” option out in the future.
This budget — with its supposed “property tax relief” and huge corporate tax increases — will hurt this state. But Democratic lawmakers plugged their ears to the avalanche of warnings and voted for it anyway.
Now they get to stick around to watch the fallout happen. We will see how many state residents and businesses choose to watch from other states.
Suzanne Bates is the policy director for the Yankee Institute for Public Policy. She lives in South Windsor with her family. Follow her on Twitter @suzebates.
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