A newly proposed state bill meant to bring reforms to Connecticut’s property tax system includes a regional property tax revenue sharing system between municipalities among its provisions.
Co-sponsored by local senator and Majority Leader Sen. Bob Duff, a Democrat, Senate Bill 1 is intended to reform the process by which the state deals with property taxes. That reform would take place through three measures: a state wide motor vehicle tax, payment on lieu of taxes (PILOT) and a regional property tax revenue sharing system for new developments.
In its current form, the bill requires that municipalities commit a portion of any new commercial or industrial property taxes to their regional Council of Governments. Darien is one of 18 members of the Western Connecticut Council of Governments, which spread from Greenwich to New Milford. A newly appointed administrative auditor would then be responsible for distributing the funds.
“While local property taxes are burdensome for many, residents have at least had the assurance that they would be used to pay for services in their own towns or cities,” Rep. Gail Lavielle, a Republican representing Wilton and Westport, said in her testimony regarding the bill. “This bill, however, would create a new level of government that would absorb a portion of these local taxes and then allocate these funds to other cities or towns.”
Lavielle was one of several politicians that have already spoken out against the bill, likening the regionalization of property taxes to county government.
“If SB 1 passes as written, Connecticut’s regional structure could acquire the same administrative and cost burdens, bureaucratic complexity and loss of local assess to and authority over local revenues that characterize county government – no matter what we call it,” she added in her testimony.
Connecticut and Rhode Island are the only states that do not employ county government. The state abolished county government in 1960 due to its believed ineffectiveness, including its inability to tax directly.
“I don’t think anybody is advocating the return of county government,” Duff said of the bill. “We have been very clear about looking for ways in which towns and cities across the state of Connecticut can work together in order to minimize their costs, and also lower some of the property taxes.”
Concerns surrounding the revenue sharing system stem from the belief that towns with optimal budget management could be punished for the issues of larger cities. Providing revenue to less affluent municipalities could result in a loss of revenue for others if not properly handled.
Others have voiced their support of the bill as is, insisting that the changes would make the state’s property tax system both more efficient and more fair. Roger Senserrich, Policy Director for the Connecticut Association for Human Services, testified that the bill could help reduce competition for development between neighboring towns and promote regional growth, a sentiment that Duff echoed.
“Under S.B. 1 cities and towns would be able to plan on a regional level, placing a stronger focus on smart growth,” Senserrich wrote. “As any new development would benefit the region as a whole, with the town hosting the new development receiving additional revenue to pay for their costs, municipalities can work together to protect open spaces, focus on infill development and placing new projects close to infrastructure hubs.”
He added, “this legislation would give rural communities and suburbs the tools to preserve their character.”
Senserrich characterized the current property tax structure as “regressive,” as households in the top 10% of the income distribution curve pay less than one percent of their income on property taxes, while those in the bottom 10% pay out more than 12%. Wealthier towns are then able to establish lower mill rates, which in turn attract more high-earning individuals than cities like Danbury or Hartford.
“We don’t want to go back to county government, I think the goal is not to do that but to make sure that any municipality is held harmless,” Sen. Carl Leone said. “That’s the bigger picture, its about what kind of mechanism you can put it place to make that happen.”
The bill’s other central caveats are designed to address this cycle of disparity as well. A state-wide motor vehicle tax has been discussed multiple times in Hartford without much progress, and changes to the PILOT program would better reimbursement to municipalities that have greater amounts of tax exempt property, typically larger cities and towns.
SB 1 remains in its early stages, having just left committee, and Duff and Leone highlighted the fact that the bill is still very much a work in progress.
“It’s still a push and pull argument at this point, and I don’t think anything is conclusive,” Leone said. “It still remains to be seen how people feel about it across the state.”
In an email to Darien’s state representatives on behalf of Darien, First Selectman Jayme Stevenson expressed her “anger and frustration regarding SB 1, that among other significant changes to our taxing system, creates a regional tax administration system.”
Stevenson added that “the Town of Darien is adamantly opposed to any such legislation.”
She also requested that Darien’s state representatives “come to Darien and seek constituent feedback on your legislative proposals, including but not limited to SB1 and HB6851, before you vote. Your constituents deserve to hear from you.”
Stevenson said that both Duff and State Rep. Terrie Wood, a Republican who represents Darien and Norwalk have confirmed attendance at Monday’s Board of Selectmen meeting at 7 p.m. at Town Hall. Sen. Carol Leone, a Democrat who also represents Darien and part of Stamford, is also likely to attned.