OP-ED | Governor’s Budget Forces Change on Cities and Towns
by Susan Bigelow | Feb 8, 2013 9:40am
(10) Comments | Commenting has expired
Posted to: Town News, Opinion, State Budget, Taxes
Gov. Dannel P. Malloy unveiled his budget this week, and in so doing he pulled the rug out from under Connecticut’s 169 cities and towns. That may not be a bad thing in the long run.
By shaking up the way towns and cities can raise funds and shifting a lot of that power to the state, the governor has made it clear that municipalities must start to change not only how they raise money, but how they see themselves and how they govern in the future.
Seismic change starts with the best of intentions. The proposed repeal of property taxes on cars for Blue Book values under $20,000 is arguably the most progressive piece of the budget, but that leaves cities and towns in a terrible bind as they scramble to replace the income. Malloy’s budget also gradually gets rid of PILOT (Payment In Lieu of Taxes), which reimbursed towns for taxes lost on state-owned property. The administration claims increased ECS and other grants will make up the difference, but right now local governments aren’t sure how that’s going to shake out. Many cities and towns will end up with sudden, large budget gaps, and be forced to make some painful decisions.
The upshot — if towns and cities can’t make their budgets balance — will likely be higher property taxes and even more service cuts. Not even the prospect of ridding the state of an unpopular and regressive tax dulls the pain of those potential cuts.
“To me it was a good attempt, like a high-five — and then a punch in the gut,” said Torrington Mayor Ryan Bingham.
In fact, when the governor claims the budget doesn’t raise taxes, he’s not factoring in the likely effect of the passing of the buck down to the town level. Unfortunately, towns can’t pass down the gaps in their budgets to another level of government. They have to make decisions themselves.
Ironically, all of this means that cities and towns will be even more dependenton the state. State aid will make up a larger portion of the budget, and towns will find it ever more difficult to craft budgets before the state finalizes its own. Larger towns will now have many residents who pay no tax to the town at all, except indirectly through state taxes. Education policies already largely come from the state, and education makes up the largest share of town government. Tighter ties to the state aren’t a huge surprise, municipal governments have been growing ever more dependent on the state for decades. But this increased dependence will serve to make towns vulnerable, and less in control of their own destiny.
There are a few solutions. First, towns could lobby the state to allow them to raise what are called local option taxes. This is basically a small additional tax on things like entertainment, hotels, and retail collected by the town instead of the state. There’s now a bill in the legislature proposing just this, and officials from the state’s larger cities have pushed for this power for years. There are several towns in neighboring Massachusetts, like West Springfield, that do this to help raise money. Local sales and hotel taxes wouldn’t be onerous, but could prove to be a boon for towns with large retail bases. The downside is that sales taxes, like car taxes, are regressive. This means that poorer residents bear a proportionally heavier burden relative to their income than those with more wealth.
Another possible solution is regionalization of services, something that has been discussed a lot in the past but hasn’t found a lot of traction. Connecticut towns don’t relish the idea of sharing services and personnel, and so the idea has been slow to take root. Still, there are some potential savings to be found, and the new Speaker, Brendan J. Sharkey, is supposedly a regionalization advocate.
No matter what cities and towns decide to do, they’re going to have to take a long look in the mirror. If the governor’s budget proposals pass through the legislature intact, which is by no means guaranteed, towns will be forced to take a hard look at the services they provide, at potential new cost-saving or revenue-raising measures, and at their true purpose and place in a changing, more interconnected world. The individual incorporated town or city has served New England’s communities well for centuries, but maybe it’s time for this most change-resistant of institutions to evolve.
Susan Bigelow is an award-winning columnist and the founder of CTLocalPolitics. She lives in Enfield with her wife and their cats.
Tags: cities, towns, municipal aid, Municipalities, local government, taxes, regionalism, Susan Bigelow, dh
(10) Comments
posted by: Noteworthy | February 10, 2013 8:56am
So we can look forward to a bed tax vs. the car tax. Ok. At least the people likely to pay it are tourists or those having an affair. Ending the car tax is a good thing. Being dependent on the shifting winds of Hartford is not and frankly speaking, these ever whining towns and cities could provide basic government services much more efficiently. They all don’t need a dog catcher, a superintendent, a police chief and department or seperate public works departments for routine maintenance. They’ve been talking about regionalization for decades and have yet to accomplish it to any meaningful level. Rather than turn to property taxes and whining - every town with less than 75K residents should partner with one or more sister cities to provide mutual services. This could cut the cost of muni-government expense by 30% or more.
posted by: Terry D. Cowgill | February 10, 2013 1:42pm
Well said, Susan. By your last sentence (maybe it’s time for this most change-resistant of institutions to evolve), are you suggesting we return to county government?
posted by: Reasonable | February 10, 2013 5:39pm
This is a desperate “pass the buck plan” on the part of Gov. Malloy to get the state out of the fiscal crisis he created—“by a flim-flam effort to sock it to the towns and cities.” The losers are the state’s taxpayers who also pay town and city taxes.
posted by: Fisherman | February 10, 2013 7:02pm
Destruction of municipalities is never a good idea. This article serves as further evidence that, no matter how bad a concept may be, Ms. Bigelow will be a proponet, IF the concept was put forth by Danny Malloy.
posted by: justsayin | February 11, 2013 7:44am
Susan once again you are completely on the wrong side of the discussion. These proposals are nothing more the state shifting the burden and extending class warfare. The car tax is fair and balanced. Progressive, please…it is as progressive as cutting off your nose to spite your face. Sales tax is not regressive it is fair I buy a shirt for $20 you buy one for $80 we each pay an equal percentage, what is more fair? The state is playing a shell game with PILOT why change if you are getting the same funds anyway? Malloy the bully at it again.
posted by: Chien DeBerger | February 11, 2013 10:54am
Eliminate all state mandates imposed on the municipalities. Let the towns govern themselves….oops sorry, we have a progressive legislature and governor. Never mind.
posted by: ALD | February 11, 2013 12:18pm
“There are a few solutions. First, towns could lobby the state to allow them to raise what are called local option taxes.”
Why is it that the FIRST solutions are always to look for ways to raise taxes??? Wouldn’t a far better example of a FIRST solution be for the cities and towns to lobby for the end of binding arbitration, and as many unfunded state mandates as possible? Why not help our Governor stay honest?? After all he did say he wasn’t going to use new taxes to close his budget gap? New city and town taxes needed to pay for his inability to do his job are still NEW taxes!!
All Malloy is trying to do here is force the cities and towns to do what he has not done…... Cut spending. So why not do his best to help them out????
posted by: Reasonable | February 11, 2013 12:50pm
hustsayin: Malloy may or may not be a BULLY, but for sure—“Dannel is not a Governor.”
He got elected under false pretenses—“self-praising his acting job in the City of Stamford.” Now, he’s the biggest acting Governor the State of Connecticut ever had. He is not only a brutal politician, but he excels in theatrics, as well. State voters elected “a real package.”
posted by: bgenerous | February 11, 2013 2:47pm
Even if the motor vehicle tax proposal were to be implemented, I don’t think it would lead to dramatic changes to town budgeting, such as towns sharing a large block of expenses. When revaluation shifted taxes to homes on the 2003 to 2007 Grand Lists, the net result is that spending in revaluation towns was about 1% less than non-revaluation towns. So town spending increases might be a little less than they would have been otherwise but as you stated towns would have “higher property taxes” on the remaining properties (homes, business real estate and personal property). With relatively flat funding to the towns in the aggregate, it seems the towns are becoming less reliant (as a percent of their town budget)on the state with this budget and the last few state budgets.
posted by: ASTANVET | February 11, 2013 3:24pm
If the State would not bind the towns through arbitration, let towns and municipalities actually RUN their respective territories, they would have the flexibility to put forward a decent budget. The first think should not be more creative ways to collect more taxes, it would be to find more creative ways to live within our budgets! I for one am Taxed out!! 10K property taxes, another 3K in vehicle taxes, something has to give.