HARTFORD, CT — At least one Wall Street firm is applauding the steps the General Assembly and Gov. Ned Lamont took in February when they agreed to boost payments to municipalities for their non-taxable property.
Moody’s Investors Services says the new law is “credit positive,” even though it won’t change the rating or outlook for municipalities.
The city that will benefit the most from the proposed change is New Haven.
“Nearly 60% of the city’s tax base is tax-exempt because of the presence of Yale and Yale New Haven Hospital along with municipal and state properties,” Moody’s analysts wrote.
Hartford will receive a 42% boost in PILOT funding, increasing the amount it received to $52.2 million or just under 10% of its budget. The new law will benefit other financially challenged municipalities including Bridgeport, Hamden, and New Britain.
Under the new law, Bridgeport will receive approximately $15.6 million in fiscal year 2022, up from $9.8 million in fiscal 2021. But the city will also receive an annual grant of $5 million under the new law. The total amount would represent approximately 3% of the city’s budget.
Hamden, which is home to Quinnipiac University (A3 stable), will receive a 50% increase in PILOT funding, totaling $6 million or approximately 2% of budget. Similarly, New Britain’s funding will nearly double to $9.6 million or 3.2% of budget.
The Wall Street rating agency said that “while Connecticut does not have tax caps, these cities face a practical hurdle in raising taxes and, in turn, revenue because of elevated poverty levels and already high taxes. The law, which takes effect in fiscal year 2022 (begins July 1, 2021), establishes a new method for determining the annual PILOT grant from the state for tax-exempt property.”
Even though the legislature passed the bill and the Gov. Ned Lamont signed it into law, it still has yet to be funded. The state will need to find $100 million to boost payments to municipalities to help alleviate the property tax burden.
“There is the possibility of bonding some of it,” House Speaker Matt Ritter said Thursday. “The governor talked about it in his budget. I think we’d be open to those discussions.”
Ritter said he’s confident that it will get funded. He said that’s why they addressed the legislation so early in the session.
“We want to put a marker down in negotiations with all the parties, Republicans and Democrats and the executive branch, that PILOT is going to be really, really critical to this budget,” Ritter said before the vote.