(Updated 8 p.m.) No blue ribbon commissions or task forces have been able to inspire state lawmakers to change Connecticut’s tax system, but it doesn’t mean Connecticut’s largest municipal lobby won’t keep trying.
In a report issued Monday the Connecticut Conference of Municipalities highlights Connecticut’s overreliance on the property tax.
“The property tax is the single largest tax on residents and businesses in our state,” the report reads. “The levy in Connecticut was $9.7 billion in 2014.”
That means the per capita property tax burden in Connecticut is $2,522, which is almost twice the national average of $1,434. That means Connecticut has the third highest property taxes in the nation.
The property tax accounts for about 39 percent of all state and local general fund taxes, according to the report.
But Connecticut lawmakers have been unable to implement many bold solutions, according to the municipal lobby.
House Speaker Brendan Sharkey, D-Hamden, said he doesn’t believe cities and towns are able to view the amount of money they receive from the state objectively.
“Municipal aid has increase over the last 10 years dramatically, despite the recession,” Sharkey said. “Cities and towns were held harmless while every other aspect of state government was cut dramatically.”
Sharkey said Connecticut lawmakers reformed how municipal aid is distributed for non-taxable property and gave several towns the ability to reduce their motor vehicle tax levy.
“Any objective viewer would have to acknowledge based on dollars as well as percentage, that cities and towns are getting significantly more money than they were 5 or 10 years ago,” Sharkey said.
Senate President Martin Looney, D-New Haven, said only the Connecticut Conference of Municipalities believes lawmakers haven’t done anything to improve the municipal tax system. He said lawmakers made substantial changes to how it distributes state aid for non-taxable property with the help of municipal leaders.
“Given the budget challenges most municipalities saw some level of increase in spending,” Looney said.
The CCM report found that Connecticut is one of only 15 states that limit municipalities ability to raise revenue. At least 29 states allow municipalities to levy some income or sales taxes along with property taxes and six states allow at least some municipalities to level all three taxes.
Many other states have county governments that levy taxes and provide services. Connecticut doesn’t have any county government.
State lawmakers have been critical the ability of municipal governments to regionalize services and work together to create cost-efficiencies. Local officials argue they need the state’s help in doing that since some state policies seem for towns looking to save money.
The biggest chunk of most municipal budgets goes to pay for pre-kindergarten through 12th-grade education spending. The report found it costs municipalities $8.1 billion to fund education—making it the single most expensive municipal service in Connecticut. The state contributes about $2 billion.
“It is clear that a key to property tax reform in Connecticut is education,” the report reads.
A lengthy court ruling issued last week orders the state to come up with new formulas for the distribution of school funding. The state has 180 days to deliver its recommendation to the court. However, some lawmakers are skeptical of that time frame.
The state has yet to determine if it will appeal the decision and six months seems like a short amount of time for a lawsuit to come up with a solution to a problem that’s been litigated for the past 11 years.
“In light of the fact that elections are in November and the makeup of legislature can change, assigning such a huge task with such a short time frame in which to come up with solutions may not yield the best results possible,” Senate Minority Leader Len Fasano, R-North Haven, said last week.
House Minority Leader Themis Klarides, R-Derby, agreed.
She also urged patience in waiting to find out whether the state decides to appeal.
Meanwhile, the Connecticut Conference of Municipalities is asking lawmakers to reduce Connecticut’s dependence on the property tax by allowing regional councils of government to levy taxes, allowing municipalities the ability to levy more than property taxes, reforming education financing, fully funding the reimbursement to municipalities for non-taxable property, and committing to maintaining the Municipal Revenue Sharing Account.
In order to balance the 2017 fiscal year budget lawmakers and Gov. Dannel P. Malloy used about $50 million of the sales tax revenue that was supposed to go to the Municipal Revenue Sharing Account. Municipal leaders are looking for a commitment that raids on that money won’t continue.
Looney said the goal is to maintain the Municipal Revenue Sharing Account to help municipalities.