🔒Property taxes a drag on all of CT, not just Hartford

Hartford Business Journal has spent a lot of time, energy and ink this year spotlighting the city of Hartford’s exorbitant and inequitable property tax structure and how to rectify it.

But the truth is, property taxes are a statewide problem, hindering economic growth in many cities and towns.

The Connecticut Conference of Municipalities highlighted that fact in a new research report, which found that the per-capita property tax burden in Connecticut is $2,847, almost twice the national average of $1,518 and third highest in the nation.

CCM also reported that 79 municipalities across the state that didn’t go through a revaluation in fiscal 2019-20 increased their property-tax rate. So, while state government avoided increases to two of its major taxes — income and sales — many cities and towns increased property taxes.

The overall message to businesses and residents is that the cost of operating and living here continues to increase.

CCM says the property tax is the highest tax that Connecticut businesses pay, so reforming the way cities and towns fund local government should be a chief concern. In fact, state lawmakers should forget about having a special session on tolls, casinos or sports betting and focus on comprehensive tax reform.

What reforms to implement is a harder question to answer. CCM, unsurprisingly, has a few ideas. Their research, of course, wasn’t purely an academic exercise. CCM is a lobbying organization that represents municipalities.

CCM Executive Director and CEO Joe DeLong said high property taxes is one of two major issues holding Connecticut back. The other is the state’s unfunded pension liabilities.

“This is a simple yet complex issue,” DeLong said of property-tax reforms. “I don’t think solutions are all that difficult to come up with. It gets complex because the issue goes across the political spectrum.”

The way DeLong views it, reducing Connecticut’s reliance on the property tax requires a two-pronged approach — giving cities and towns more options to raise revenues, while also making it easier for them to control or reduce costs.

“The whole focus can’t be on the funding side or just providing municipalities more revenue,” he said. “You need as many reforms on the service-delivery and cost-control side.”

DeLong has it exactly right. Any property-tax reforms can’t simply include new revenue options. In my view, major strings would need to be attached. For example, any new local revenues raised by municipalities must go toward lowering mill rates, or paying for current services, not new ones.

The risk that new revenues would simply lead to bigger and more expensive town governments is a real and likely one. (Just look at how the income tax has exploded state government spending.)

DeLong has several new local revenue options in mind, including a local option tax (say a sales tax on meals) as well as nonprofit service fees.

Just as important as new revenue options, in my mind, is lowering local spending. One of the third rails is labor and binding arbitration reforms, DeLong said. “It makes people uncomfortable,” he said, particularly in a blue state.

One of the biggest reforms DeLong says is needed is with coalition bargaining. If a town wants to combine services with other municipalities, there are multiple collective-bargaining units involved in the negotiations, which makes it hard to get deals done.

The state should require all parties to bargain as a single unit, DeLong says.

The state should also roll back some of its 1,400 unfunded mandates on municipal governments that add costs, including minimum-budget requirements for education funding and the prevailing wage for public construction projects.

DeLong says major property-tax reform isn’t likely in 2020, which will be a short legislative session and national election year, but he does think it will happen one day.

I’m less bullish because I’ve not seen, in a very long time, the political will or bipartisanship at the Capitol to take on such a big and thorny issue.