HARTFORD, CT — Legislative leaders from both parties were still working Monday to erase a deficit in the second year of a two-year budget they have yet to finalize.
Last week, they announced, to the surprise of local elected officials, that they were eliminating local motor vehicle taxes in the second year of the budget. By the weekend, they were working to restore it.
The motor vehicle tax represents more than $700 million in municipal tax revenue. Naturally, organizations representing the state’s 169 cities and towns were surprised by the news.
What would the state gain by eliminating the local motor vehicle property tax? It comes out to about $50 million, all related to the cap placed on motor vehicle taxes in 2015.
In an effort to even out the property taxes people pay on the same vehicles from one town to the next, the state created a cap on motor vehicle taxes. This year taxpayers are paying no more than 37 mills on their vehicles, and the state has been using proceeds from the sales tax to make up the difference to about 30 towns with mill rates above the cap.
Determined to get a budget deal without the help of Democratic Gov. Dannel P. Malloy, legislative leaders had already agreed to increase the cap on the motor vehicle tax in the first year of the budget from 37 mills to 39 mills in order to reduce the state’s obligation to about $50 million annually.
But while adjusting the cap was expected, eliminating it altogether with no suggestion for how municipalities should make up the loss of more than $700 million in revenue was a shock.
Joe DeLong, executive director of the Connecticut Conference of Municipalities, met with legislative leaders Monday morning to explain why they objected to doing something that would have such a big impact on local budgets with little or no public debate.
He said they all share a common goal of looking to make the motor vehicle tax more equitable.
The exact same car or truck will be taxed differently depending on where a person lives. That unfairness is what lawmakers are looking to eliminate.
However, eliminating the tax would reduce a town’s grand list by about six to 10 percent.
“I still remain very much in favor of repealing the car tax,” Senate Majority Leader Bob Duff, D-Norwalk, said. “It’s something that’s a nuisance tax on working families across the state of Connecticut that I’d like to see go away.”
However, he said he’s working with other caucuses and they have to find a solution that works for everyone.
“We’re continuing to have discussions on the issue,” Duff said.
The car tax is one of the last items legislative leaders said they need to reconcile before handing the final document over to staff to draft.
Senate President Martin Looney, D-New Haven, said they want to have a handshake on the two-year budget deal by Monday night so they can start printing all the documents and share them with lawmakers and Gov. Dannel P. Malloy, who has refused to meet with legislative leaders from his own party until he can review a paper document.
Legislative leaders have received from resistance from their members over plans to raid clean energy funds. While it’s unlikely the energy fund sweeps will be eliminated, they may be reduced.
Looney said the amount they plan to take from the funds is still under discussion.
Other than that, Looney and Duff avoided as best they could offering any details on changes they made to the proposal over the weekend.
“Members seemed very pleased of the fact of a bipartisan agreement,” Looney said.
Duff said it’s hard to “announce anything until you have everything.”
He said they want to make sure they don’t put themselves ahead of the final product.
He said the plan is still to vote this week and they plan to give more details to their members as soon as they are available.
Senate Republican President Len Fasano, R-North Haven, said they were hoping to erase the second-year deficit Monday.
“We have the hole in 19 that we have to talk about,” Fasano said.
He said they’re close to a resolution on the car tax.