HAMDEN, CT – The town of Hamden is taking the first step in trying to stop people who live in town and skip paying car taxes by registering their cars in other states.
The town recently released a request for bids for “Out of State Motor Vehicle Reporting,” asking for qualified vendors to investigate and report motor vehicles used or housed by Hamden residents which are registered in a state other than Connecticut.
Hamden Mayor Curt Leng said: “Historically, Hamden has taken a loss in motor vehicle tax collections due to the large amount of residents living in town who have not yet registered their vehicles in Connecticut.”
“This pushes the burden unfairly onto all compliant taxpayers and is a large untapped source of town revenues,” Leng said. “My hope is to get the majority of these residents to properly report their motor vehicles and file taxes so that we can collect additional revenue and work on a motor vehicle mill rate reduction.”
Hamden and many other Connecticut municipalities lose tax revenue by residents whose main residence is Connecticut but register their cars in lower tax states, such as Florida or Maine.
Hamden’s current tax rate tax is just short of 48 mills.
Kevin Maloney, spokesperson for the Connecticut Conference of Municipalities, who is also a Hamden resident, said he knows that Leng has been concerned about the issue for some time.
Maloney termed the issue “problematic for many in Connecticut.” He said it presented a “barrier to the maximum collection of motor vehicle property taxes that are owed to a town to help pay for services in a community.”
Because each municipality in Connecticut has its own vehicle tax rate they have wide variations, with the bigger cities and larger towns such as Hamden generally having much higher tax rates than more affluent, smaller, suburban towns.
During the recent gubernatorial campaign, Governor-elect Ned Lamont floated the idea of a single statewide rate for motor vehicle taxes as a fairer, more equitable way for all taxpayers.
Municipal officials have fought similar proposals in the past because they’re afraid the state wouldn’t make them whole for the lost revenue stream.
Municipal officials in Connecticut have known about the out-of-state car tax dodge problem for years. Some cities, including Bridgeport, Danbury, New Haven, Stratford and Waterbury, have also tried contracting with companies in the past to track down tax evaders.
A study done by the city of Waterbury in 2016 uncovered more than 4,000 vehicles registered out of the city. The study estimated that the cost of those lost registrations approached nearly $450,000.
Part of the issue is proximity. In Waterbury for instance, most of the violators were found to be registered in New York. In Hartford, the violators were found to be registered in Massachusetts or Maine.
City of New Haven mayoral spokesman Laurence Grotheer said Thursday that New Haven had instituted a similar program to crack down on out-of-state license plates, but discontinued it in 2014. He declined to elaborate on why.
Back in 2015 the General Assembly considered, but did not pass, a bill to create a task force to study the problem of out-of-state car registration and recommend solutions.
Leng said the vendor that will be chosen to go after Hamden tax skippers will report on vehicles that are subject to taxation under Connecticut general statutes but to date have are not included on Hamden’s tax rolls.
Leng said the selected vendor will be tasked with: managing the process used to screen suspected tax violators; collect, investigate, and develop sufficient evidence to support violations and ensure statutory compliance; prepare correspondences and receive phone inquiries; provide tax collector with address updates for collections purposes; provide investigative support to the town; and develop program details to ensure efficiency and standards of service.
“Hamden can no longer stand to leave this valuable motor vehicle tax revenue uncollected. We are taking concrete action to improve our ability to collect these lost funds,” Leng said.
Municipal aid is one of a handful of “non-fixed” costs in the state budget and there’s a concern that the current budget deficit will force Gov.-elect Ned Lamont to cut municipal aid.
In a letter to Lamont, Office of Policy and Management Secretary Ben Barnes suggested that it’s one of the places the newly elected governor could find savings in order to balance the budget.
Barnes suggested canceling new tax cuts promised in the budget adopted earlier this year by the General Assembly, transferring part of the Teacher’s Retirement System to municipalities, reducing the flow of money under the volatility cap to the Rainy Day Fund, reducing rates paid to certain Medicaid providers, and “reducing Municipal Aid where appropriate.”