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Elected Officials From Small Towns Air Grievances On Car Tax Elimination

by Christine Stuart | Mar 4, 2013 6:29am
(8) Comments | Commenting has expired
Posted to: Town News, Somers, Stratford, State Budget, Taxes

Christine Stuart file photo

Somers First Selectwoman Lisa Pelligrini

Elected officials from small towns across Connecticut will travel to the state Capitol on Monday to tell the Finance, Revenue, and Bonding Committee that the elimination of the motor vehicle tax will be detrimental to their communities.

The Office of Fiscal Analysis recently calculated that cities and towns would lose $632.8 million under Gov. Dannel P. Malloy’s proposal, which eliminates the car tax for vehicles valued at less than $28,500.

Click here for a town-by-town breakdown.

Somers First Selectwoman Lisa Pellegrini plans to tell lawmakers that her town will lose $1.8 million, “leaving no other option but to raise property taxes on business and homeowners.”

The plan would exempt 11,481 vehicles in her small community near the Massachusetts border from the tax, but it would also require the town to collect taxes on 619 vehicles that fall outside the exemption.

Woodstock First Selectman Allan Walker Jr. plans to tell lawmakers that 87 percent of the vehicle taxes in his community would be exempt under the governor’s proposal.

“This action would necessitate approximately a 2 mill tax increase, which would be detrimental to the Town of Woodstock,” Walker said in his written testimony. “Motor vehicles represent 8.97 percent of Woodstock’s 2012 Grand List.”

The loss is equivalent to $1.1 million in local revenue and according to Walker “would shift the property tax burden to homeowners and businesses in our community.”

The motor vehicle tax exemption as proposed by Malloy is even more detrimental for the town of Stafford.

Stafford First Selectman Richard Shuck plans to tell lawmakers the car tax exemption means his community will lose $2.3 million in tax revenue, which is equal to about 10 percent of the town’s overall tax collections.

“Municipal leaders are on the front line of making tough decisions when it comes to cutting programs and positions,” Shuck said in his written testimony. “In the past few years Stafford has eliminated one resident trooper, a town administrator, and have not filled other vacant positions but have reassigned the duties to other employees.”

Local elected officials agree that eliminating of the motor vehicle tax, in combination with the other changes to municipal aid included in the governor’s budget, would result in higher property taxes and the elimination of other services or personnel.

The elected officials from small towns joined the chorus of big city mayors, who came to the Capitol last month to complain about the changes to municipal aid, including the elimination of the tax.

In New Haven, the loss of the motor vehicle tax is about $15 million, according to Mayor John DeStefano.

The result of the elimination will be to encourage people to own cars rather than use public transit, DeStefano said, citing an unintended consequence of the governor’s proposal.

On the other hand, it is a difficult tax to collect. DeStefano admitted that eliminating it would save some money, but he said that coupled with all the other changes to municipal funding, now is not the time.

“If we’re serious about this we ought to have a discussion about it,” said DeStefano, who also once panned former Gov. M. Jodi Rell’s proposal to eliminate the tax.

Unlike Malloy, Rell was going to compensate towns for the lost car tax by creating a new state grant. Some lawmakers have been talking about creating a statewide motor vehicle tax so that taxes on a Honda Civic in Hartford would be the same as taxes on Honda Civic in Guilford.

DeStefano has said that in a “perfect world” he would “support a uniform statewide mill rate.”

Office of Policy and Management Secretary Ben Barnes has said he felt that many local officials hadn’t thought the proposal through before criticizing it. He said they may be overestimating the impact car taxes have on their grand lists, given the poor collection rate of most automobile taxes and the high cost of collecting them.

He said he understood that the proposal would create challenges for municipal budgets, but he said state government has had to overcome some challenges recently as well.

Malloy has maintained that he offered it as “middle-class tax relief.”

But local elected officials don’t believe it will offer much relief at all.

Municipal leaders will argue that no such relief will be on its way because the burden will just shift to residential and commercial property tax owners.

And while the elimination of a tax should have the public jumping for joy, a conservative think-tank found that 52 percent of the public opposes the elimination of the motor vehicle tax if it means other taxes will increase. Thirty-four percent of the 500 surveyed in the poll supported the idea and 14 percent were not sure.

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(8) Comments

posted by: Noteworthy | March 4, 2013  9:54am

The whining from towns and cities continues unabated. Why should they be held harmless in the face of fiscal problems? Why should they maintain their levels of government just because they don’t want to cut services and payroll? New Haven for example, is a patronage dump at the schools and on the city general fund payroll. New Haven hasn’t made any significant cuts in spending in more than a decade, has spent more than a billion dollars of the state’s money building, by any standard, luxury schools they can’t maintain. How many more state grant programs do they want us to have? Who do they think pays for those grants?  And still, these same muni leaders refuse to consolidate, refuse to regionalize, refuse to combine school systems. They all want to maintain the status quo and their own little kingdoms. It’s time to get real, get practical and get creative about these problems.

posted by: lkulmann | March 4, 2013  11:35am

Its interesting how CT State has brainwashed middle income taxpayers into an automatic assumption that taxes have to go up when the budget is not balanced. Isn’t it time to expect better?  President Obama made it crystal clear that the wealthy and well connected refuse to close loopholes which allows them to avoid paying their share of taxes. Loopholes loopholes loopholes. What the heck is a loophole? President Obama has asked the low income and middle income population to demand the wealthy close loopholes to help make the economic recovery quicker and less painful for the disadvantaged population. Congress dug their heels in deep and refused to give up some of their luxurious comforts to help us poor folk. The only way to get their attention is a direct hit to their wallets. I found a petition on the presidents website that basically demands cooperation from Congress or suffer the consequences of wage, benefit and job loss if they don’t do their jobs. Imagine? Congressmen and women getting suspended for not doing their job! This petition gives a little bump of reality that they have their jobs because we elected them. They need to hear our disappointment in their job performance to the tune of 100,000 signatures. Expect better. Check it out!
Interestingly, someone from CT started the petition.

posted by: ASTANVET | March 4, 2013  2:59pm

What a joke - all removing the vehicle tax does (can the State actually tell municpalities what they can/can’t tax?  All this effort does is place the tax burden on residential property owners.  Rentors, will then not be obliged to pay any taxes other than income - what is to prevent that voter base voting in any number of initiatives to be paid for by the residential property owners? It sets up a dynamic where if you own property you will be held hostage and forced to pay for the wants of those who do not have to foot the bill.

posted by: ConnVoter | March 4, 2013  3:13pm

Malloy is complaining that the car taxes are painful and regressive.  They are high in Democratic cities and low in Republican towns.

Can someone in the media please connect the dots and realize that Democrats are implementing painful taxes on the low and middle classes?  Isn’t that why CTNewsJunkie and CTMirror were formed in the first place?

posted by: Christine Stuart | March 5, 2013  6:24pm

Christine Stuart

@ConnVoter,
CTNewsjunkie wasn’t started to point out which towns are Democratic and which towns are Republican. That may be an interesting story on property tax equity and the state’s funding, but it’s certainly not why we exist.
Best
Christine Stuart

posted by: avenge69 | March 5, 2013  8:56pm

While I’m normally in favor of eliminating taxes, any taxes, this has me a bit concerned, how will homeowners, many of whom are struggling to pay their mortgage already, afford the rise in property tax that the cities and towns will be forced to implement to cover the loss of revenue? And a basic rule of economics when it comes to housing,the higher the taxes on the property the lower the value. How will renters afford the increase in rent due to the increase in the tax on the property they reside in?  To eliminate one tax knowing it will just be collected another way isn’t the best method of governance.

posted by: lkulmann | March 6, 2013  9:59am

@avenge69…read my post and think outside of the box

posted by: avenge69 | March 6, 2013  1:52pm

@lkulmann, I am of the mindset that the govt should operate as a murmur in the background of people’s lives, not be their source of existence. EVERY person who works has “loopholes” to avoid paying their fair share. It is the left that brainwash people into thinking only the rich have loopholes, there is only one tax code that we all are under. How many people write off enough to pay $0 in federal income tax? Or receive money from the state at tax time without paying anything in? It’s time to stop the nanny state mentality. The govt is not supposed to supply you with food, shelter, medical care, electricity, and money. If you don’t like how you have to live do something about it. I am actively seeking employment in other states, in other words, I’m voting with my feet, and taking the taxes I pay with me, which many others are doing.