Pratt & Whitney, holder of the highest tax assessments in town, is demanding tax appeals that could threaten East Hartford’s quality of services, local officials say.
The aerospace manufacturer is simultaneously reaping the benefits of real estate and personal property tax exemptions while making record earnings, town leaders say, essentially crushing the community with their success.
The lawsuit filed by Pratt & Whitney against East Hartford stems from the town’s 2016 and 2017 grand list valuations of properties at 1 Pent Road and 400 Main St.
The complaint states that the town did not correctly assess its property, and that the assessments were “grossly excessive, disproportionate, and contrary to applicable law.” The suit is asking for 70 percent of the actual assessed value.
Overall, Pratt & Whitney is seeking $10.2 million from East Hartford by challenging real estate values, $6.4 million of which the town has already spent, town Finance Director Michael Walsh said. The other $4 million has not yet been spent, he said, but the tax burden would likely be passed on to other taxpayers.
Looking ahead to fiscal years 2020 and 2021, Walsh said the outcome of the lawsuit would significantly impact those future budgets.
A negative outcome “represents the single greatest financial threat to the town’s fiscal health and will upend the level of services we deliver,” he said, adding that the town’s education, police, and fire departments would “face draconian staffing cuts.”
The company has become so successful that they’ve “forgotten the plight of the people that got them started,” Mayor Marcia Leclerc said Friday.
In addition, Pratt & Whitney’s new engineering and technology center was created as an enterprise zone in 2018, granting the company an 80 percent tax abatement for five years.
The project’s market value is $82.2 million, and its assessed value is $57.7 million, Walsh said. Without the abatement, it would have produced about $46 million in taxes for town coffers.
That largely contributed to the town’s 1.73 percent, or $38.9 million, decrease in its grand list for real estate values, from 2017 to 2018.
The center was funded through $400 million in incentives from the state to keep Pratt & Whitney’s manufacturing presence in Connecticut strong, Walsh said.
In previous years, the state reimbursed 50 percent of enterprise zone property tax abatements to affected municipalities, but it no longer has the funding to continue that practice.
In regards to their personal property taxes — which is typically all business equipment — Pratt & Whitney was successful in expanding the definition of what equipment is tax exempt, Walsh said, thus increasing their exemption on personal property over the years.
Pratt & Whitney’s exemption on personal property has increased from $52 million in 1992 to just over $300 million in 2018, he said. The annual $4.4 million in funding the town receives from the state to reimburse those exemptions is now under pressure to be cut from the state budget, Walsh added.
The town uses those funds to balance the budget, he said. The funding was cut once before in 2010, and “we had a heart attack,” Walsh said.
By filing lawsuits, benefiting from enterprise zones, and gaining more personal property exemptions, Pratt & Whitney has significantly reduced its tax bill, town officials said.
As East Hartford’s municipal budget increases to maintain its current services and Pratt & Whitney’s taxes go down, Walsh said, the burden to fund the budget shifts onto the backs of East Hartford homeowners and small businesses.
While the town of East Hartford values Pratt & Whitney’s historically significant presence in the community, Walsh said, “I cannot make ends meet based on what they’re paying today.”
Without backing from the courts to prevent this, “the value used for the next revaluation will immediately be under attack by Pratt if history is any indication,” Walsh said
The case is scheduled to go before a judge on Oct. 31, he said, anticipating that a decision would be made in late fall.
