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Tax Burden Crushing Life Out Of City Businesses


May 07, 2008

Most Hartford residents understand two basic facts about the city: Hartford's responsibilities outweigh its resources and its government has shrunk (some departments are just shells). Nevertheless, Hartford's Republican Party has a responsibility to comment on this year's budget and its potentially dangerous outcomes.

The most startling and underreported statistic is the continuing overtaxation of small businesses the heartbeat of the city. A bakery in the South End will see a property tax hike this year of more than 30 percent on top of a 20 percent increase last year obviously unfair. Such increases are self-defeating.

And the proof is also in the figures, with the assessed value of business personal property dropping again this year. Five million dollars is only a small percentage of the total grand list, but it is the canary in the coal mine. It's a trend, down $7 million last year and $5 million the year before. Fewer desks mean fewer offices, and you can't tax empty offices at the same rate as active ones. Our system gives an advantage tax-wise to unused space.

We lose revenue, forfeit jobs, goods and services and see the life of the city slipping away. Eye doctors moving to Wethersfield pay less than half of the taxes Hartford demands on expensive equipment.

Is there another policy that can be followed? It seems that everyone agrees that taxation should be fairer, and the facts show the problem the lack of growth in the business personal property sector so why not change the structure to encourage growth in that sector?

Could new investment be encouraged through an up-front tax break? We are getting nowhere now actually falling behind so a significant tax break on new, upgraded equipment purchased by Hartford businesses may net additional tax dollars, plus the jobs, goods and services people expect in any city.

Another disappointment in this year's budget is the lack of emphasis on building the grand list. In the mayor's letter, the grand list is only mentioned, hardly highlighted. Without significant growth, the perilous projections: Deficits of $38 million in 2009, $67 million in 2010 and $92 million in 2011 could destroy Hartford's ability to deliver even basic services and its credit. Bankruptcy is one viable option.

Of course, the answer to all this, according to the tax reform task force, the mayor and the council, is more state aid. Well, sorry, folks, the man behind curtain is just that, a false hope. Hartford already gets much more state aid than any other city $38 million more than New Haven. With this year a fiscal train wreck and next year's state budget a potential meltdown, our city has to either reduce expenditures or raise taxes just to keep afloat. And we've seen the effect of overtaxation: shrinking business investment in the tools that create wealth.

As for this year's cash flow, maybe we could try harder to collect the $60 million to $70 million owed to the city in back taxes,check on the thousands of cars with questionable registrations and make some hard decisions on priorities.

But it's very late in the game for the General Assembly, the council or the mayor to do much to affect this year's budget. Basics like hiring a nationally recognized economic development chief, selling unneeded assets (Batterson Park lands) and reducing delays in licensing new businesses (lost revenue) seem to have been deflected by a mayoral aide's trip to Harvard grad school, continuing school cost overruns and putting the best face on constant crime headlines.

Our advice to the mayor: Concentrate on the grand list, become a salesman for the city. Get on the phone, take a few scouting trips, make a deal or two every week. Because without a significant increase in taxable property, your legacy will be that of an overtaxed, under-served, bankrupt capital city.

Mike McGarry is chairman of the Hartford Republican town committee and the Republican state central committee member from the 2nd Senatorial District.

Reprinted with permission of the Hartford Courant. To view other stories on this topic, search the Hartford Courant Archives at http://www.courant.com/archives.
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