Connecticut's Small-town And Big-town Mayors Agree Gov. Rell's Proposal To Cap Property Tax Increases At 3 Percent Is A Bad Idea.
April 12, 2007
By DANIEL D'AMBROSIO, Hartford Advocate Staff Writer
West Hartford Mayor Scott Slifka would feel better about Gov. M. Jodi Rell’s recent proposal to cap property tax increases at 3 percent annually if he had the $50 million the state already owes him for educational costs.
Educational cost sharing, or ECS, grants are doled out by the state to each of Connecticut’s 169 towns to help cover the expense of their school systems, but in many cases, those grants have fallen short of what was promised. A comparatively rich town like West Hartford only gets about 65 percent of what the state is supposed to give it. Poorer towns and cities typically get all the money they have coming.
Slifka, a Democrat, said West Hartford’s $50 million shortfall has been building yearly since about 1996. “If we’d had that money we may not have had to raise property taxes,” Slifka observed.
Slifka’s concern about the governor’s plan to keep poperty taxes under control is echoed by other first selectmen and mayors around the state. And so ironically, as the Governor tries to find a way to give property tax relief to residents, she’s stirring up opposition among officials from Newtown to New Haven, who say the tax cap won’t work because the state is taking away too much with one hand while it gives too little with the other.
Here’s what the Governor wants to do. Over the next five years she is proposing to spend $3.4 billion on education — by far the biggest part of any town or city budget. This will be paid for by a 10 percent increase in the state’s income tax. Income taxes would rise from a a maximum of 5 percent of income, to 5.5 percent.
Since the state would be giving more education dollars to towns, the logic goes, it should be possible for the towns to cap their property tax increases at 3 percent. That, Rell argues, would be a great thing for taxpayers who have seen their local taxes go up by an average of 6 percent a year over the last six years.
Under certain circumstances, a town could be given exceptions to the cap — due to natural disasters or emergencies for example — but in general that’s how it would work.
It all sounds good, but the numbers just don’t add up, say town officials the Advocate has spoken with.
Newtown First Selectman Herb Rosenthal, for instance, says his town would become a “net donor” under Rell’s plan. He said that while Newtown is scheduled to receive an additional $300,000 in education aid, the town is also projected to lose $500,000 in non-education-related state aid under Rell’s plan, leaving it $200,000 in the hole.
“To turn around and say we also have to cap property tax, how are we going to pay for town services?” Rosenthal asked.
Rosenthal also noted Newtown residents would be paying an additional $6 million in income taxes under the governor’s proposal. All of which means we have an incomplete picture of the impact of Rell’s budget on small towns, according to Slifka.
“The governor and the Legislature don’t seem ready yet to have an honest discussion about all the variables,” Slifka said.
As it turns out, big city mayors are no happier than Slifka and Rosenthal are with Rell’s proposal.
At a press conference last week in the Legislative Office Building, Hartford Mayor Eddie Perez said because more than 40 percent of the city’s buildings are non-taxable, Rell’s proposal to cap property tax increases at 3 percent would “drastically limit our only source of revenue.” Hartford’s state and federal buildings are not subject to property tax. Mayor John DeStefano Jr. of New Haven said Rell’s plan would leave his city with a $14 million budget shortfall next year. New Haven’s $421 million budget is increasing by 5.9 percent, requiring an additional $24 million in revenue or reduced expenses.
Rell is proposing to increase the New Haven’s ECS grant by $10 million, from $160 million to $170 million. But DeStefano said only $5 million of that $10 million can be used against the budget shortfall. That brings the gap to $19 million. The governor’s 3 percent cap on property tax would limit New Haven to increased revenues of $5 million, according to DeStefano, leaving the shortfall at $14 million, which would have to come from reduced expenses.
And that wouldn’t be pretty. To save that kind of money DeStefano said the city would have to let go of half of its 500 police officers, or eliminate entire departments such as parks and recreation or elderly services.“It’s OK to talk about a cap (on property taxes), but it’s not OK to create impossible choices,” DeStefano said.
After the press conference, Michael J. Cicchetti, deputy undersecretary of the governor’s Office of Policy and Management, defended Rell’s initiative to take on property taxes.
“After 20-plus years of talking (about property taxes) it’s time to get something done,” Cicchetti said. “We can’t continue to burden taxpayers with a 6 percent annual increase.”
If legislators and local officials have problems with the governor’s proposals, Cicchetti said they should make counterproposals.“Take it, change it, make it your own,” said Cicchetti.
Slifka said he’s ready to do just that, but perhaps not in the way the governor would expect. He thinks the state should back off, and let towns manage their own affairs.
“Instead of increasing the income tax and holding us to a cap (on property taxes), stop doing harm to towns and let towns solve their own problems,” Slifka said. “That’s one option they never consider because they don’t trust us.”