Malloy Defends Motor Vehicle Tax Proposal
by Christine Stuart | Mar 4, 2013 3:54pm
(4) Comments | Commenting has expired
Posted to: Town News, State Budget, Taxes, Transportation
“A car is a car is a car,” Gov. Dannel P. Malloy said Monday in defense of his proposal to eliminate 90 percent of municipal motor vehicle taxes.
Malloy proposed eliminating the tax on motor vehicles valued at $28,500 and under as part of his two-year budget proposal.
But big city mayors and small town first selectmen say the loss of $632.8 million in revenue will be devastating and will force them to shift the tax burden onto homeowners and businesses.
At a Capitol press conference Monday, Coventry Town Manager John Elsesser said his town is one of the top 10 most rural in the state and motor vehicle taxes make up 9.2 percent of its Grand List.
“It’s estimated if the governor’s proposal goes forward we’d lose $2.2 million in property tax revenue,” Elsesser said. “The revenue loss would be equal to a 25 percent reduction in the local government budget . . . that equates to eliminating the entire police and public works department.”
He said the argument is that municipalities need to be more efficient with the resources they have, but Elsesser has been in town for 25 years and over that time Coventry has 7.5 percent fewer employees, 10 more miles of road, and 3,000 additional citizens.
“I think we’re doing pretty well in efficiency,” Elsesser said.
But Malloy, the former mayor of Stamford for 14 years, has little sympathy for a tax that’s as regressive as the motor vehicle tax.
“It is one of the most egregious taxes on the books in the state of Connecticut,” Malloy said Monday after an unrelated event. “You own a car in Greenwich you’re charged less than 11 mills. you own a car in Hartford you’re charged 75 mills. It makes no sense.”
The Finance, Revenue, and Bonding Committee was holding a public hearing Monday on Malloy’s proposal to eliminate motor vehicle taxes on vehicles valued at under $28,500.
“It’s the most hated tax. It’s the most unfair tax. It’s the most middle class unfriendly tax we have,” Malloy said. “It’s time to do something about it. At least we’re having a discussion and I’m hopeful we’re going to do something about it.”
“Is there some shifting? The answer is yes,” Malloy admitted. But he believes middle-class families will come out ahead. He also believes his way of doing it is the best way.
“I think my reform is the best one and essentially does away with the tax for 90 percent of homeowners,” Malloy said.
However, James Finley, executive director and CEO of the Connecticut Conference of Municipalities, said he’s open to discussing the creation of a statewide motor vehicle tax rate.
He said to take away the municipal motor vehicle tax revenue all at once is a “cliff proposal” that will force municipalities to come up in two years with a way to close a $633 million revenue hole.
He said the big cities and suburbs his organization represents are willing to work with House Speaker Brendan Sharkey in coming up with a uniform mill rate for motor vehicle taxes that can be phased in over time.
According to the Office of Legislative Research, at least 18 states impose statewide motor vehicle taxes or fees based on a vehicle’s value, but only Kansas and Mississippi refer to the tax as a property tax.
However, not all municipalities agree that a statewide motor vehicle tax rate would solve the problem.
The Council of Small Towns panned the idea of a statewide tax rate, as did Lyme First Selectman Ralph Eno.
Eno citied the Planning and Development Committee’s bill to create a statewide motor vehicle tax rate and said “the fix is property tax abuse at its worst as far as I’m concerned.”
Eno said the legislation would create an average mill rate for motor vehicles statewide. Local tax collectors would collect the average as part of their levies, but towns with lower mill rates would send the extra money to the state, which would then redistribute it to the towns that have higher than average mill rates.
He said the towns paying into the state fund will have no say regarding its distribution, so when the state runs out of money in the future it just becomes another pot of money to raid to balance the budget.
The next time the state “gets a case of the ‘I can’t balance my budget blues,’ guess what’s going to happen to that dedicated pot of money?” Eno said. “It will be swept just like all the others.”
Lawmakers are looking to find the middle ground and offer their own solutions.
Rep. Patricia Widlitz, co-chairwoman of the Finance Committee, said Monday that she suspects the governor’s tax package “will look a little bit different after we’re done deliberating.”
Tags: Ralph Eno, Council of Small Towns, Connecticut Conference of Municipalities, James Finley, Betsy Gara, motor vehicle tax, John Elsesser, coventry, lyme, dh
(4) Comments
posted by: dano860 | March 5, 2013 10:15am
Property tax will be increased and it will cost the HOMEOWNER more than the auto tax right now.
When Rell proposed the same legislation she told you about the increase in taxes in other areas.
The tax to eliminate is the tax at the DMV.
When a new car is sold you pay the sales tax, when you but that same car as a used vehicle you pay the sales tax again. That is double taxing at that point. Sell it and register it any number of time again and it’s taxed every time, at book value not actual sale price.
Your only break comes if you sell it to a family member and that is limited too.
posted by: Dianne deVries | March 5, 2013 11:32am
“A car is a car is a car” and “It’s [the car tax] the most hated tax. It’s the most unfair tax. It’s the most middle class unfriendly tax we have….It’s time to do something about it”?
How about “a child is a child is a child“? As the 2010 CT Supreme Court decision in CCJEF v. Rell made clear, all public school children are constitutionally entitled to an adequate and equitable education and the state must pay for it. Yet, that is far from reality, in no small part owing to the state’s over-reliance on inequitable property taxes to fund the lion’s share of schooling costs, resulting in geography and mill rates being destiny for vast numbers of our school children.
Fair funding for children ought to trump fair funding for cars. Seems that the Governor’s priorities are seriously askew. Time to get serious about tax restructuring and revenue rebalancing in Connecticut!
posted by: ASTANVET | March 5, 2013 1:38pm
HAHAHAAH “municipalities need to be more efficient with the resources they have” - ok, so maybe the former Mayor and current Governor can explain why the mil rate in Hartford is higher than Greenwich. Hmmm… I wonder… Maybe some towns had to raise their mil rate to support huge burdensome programs and that led to a decline in tax revenue and drove property owners and businesses out of that town… He may want to take a lesson in that. Further, I would say that what this proposal does is drum up votes for the “d’s” by sticking the bill for all things municipal onto real estate property owners. As I have said before, when you have voters that can enact programs and put the cost to someone else, they will be more inclined to spend someone else’s money. What about that old arguement that we ALL use the roads, we ALL use the bridges - maybe we should ALL pay taxes. Just a thought.
posted by: avenge69 | March 5, 2013 8:10pm
I believe this is step one of Malloy’s bigger plan. With revenue dropping from the gas tax, due to higher mileage vehicles, the state must find a way to garner a larger amount of revenue. Some states are already looking into a “mileage tax”, by using GPS devices to record how many miles a person drives and charge them a tax based on miles rather than gallons consumed. With new regulations on vehicle miles per gallon passed in Washington, and more and more people trading in cars that got 20mpg for cars that get 30-40mpg or more the states coffers from the gas tax are getting thin. Malloy knows that cities and towns garner the vehicle taxes independent of the state, so for him to suggest that the vehicle tax be eliminated is absurd. I believe that if he can get the cities and towns to go along with his plan to eliminate the car tax then he can implement his “usage” tax, which he will sell as being more “fair”, and gather more money for the state to spend on pet projects like the busway.