Pros and Cons of Tax Cap
by Christine Stuart | May 4, 2007 3:09 PM
Posted to State Capitol
As promised Gov. M. Jodi Rell defended her proposal to impose a 3 percent property tax cap on municipalities Friday at a Finance, Revenue, and Bonding Committee informational hearing on the matter.
Before the hearing she talked about how young couples are town shopping when they look for homes in Connecticut because they don’t want to live in a town where the property taxes are high. Listen to the audio of Rell’s comments to the committee.
While Rell’s budget chief, Office of Policy and Management Secretary Robert Genuario, defended Rell’s proposal, Shelley Geballe from Connecticut Voices for Children, was quick to point out that there was a time when Genuario didn’t support such a proposal.
In Geballe’s presentation against a local property tax cap, she quoted a Feb. 16, 2006 letter in which Genuario stated, “We are opposed to any mandated limit on the allowable growth in revenues or expenditures of municipalities.”
“As the [Connecticut’s Tax System] report indicates, local property tax growth, which accounts for the vast majority of their revenues, ‘is relatively slow but steady adds stability to Connecticut’s overall revenue structure.’ We would prefer to assist municipalities in controlling spending growth by eliminating unfunded mandates,” Genuario wrote.
So what changed since 2006 seemed to be Geballe’s argument.
She said as state aid has decreased municipal property taxes have increased. She said if the state contributed more to municipalities it would reduce a towns reliance on property taxes.
Rep. Timothy O’Brien, D-New Britain, said the problem is individual homeowners won’t see their taxes decrease in revaluation years. He said it doesn’t mean taxpayers will only pay 3 percent increases in their property taxes. He wanted to know why the state doesn’t want to cap the increase individual property owners will pay, but experts on the panel said doing it that way would only increase the disparity.
O’Brien ended the hearing by asking how serious Rell is about this proposal. “Is she doing it to score political points?” Is it her intention to have some real discourse or put out weekly press releases saying the Democrats aren’t doing anything about property taxes, he asked.
Genuario said Rell believes in this policy and has asked him to make sure to include it in negotiations on the state budget.
Before Rell proposed a local property tax cap she said she wanted to increase the income tax to fund education. The cap was introduced seven weeks after her budget proposal in February to directly tie the increased education aid to property tax relief.
A few weeks ago Republicans unveiled their own budget which boosted the projected revenue estimates and included no income tax increase.
On Friday Republicans said Rell was moving toward their budget projections which included no income tax increase. According to a press release they sent out Friday “Gov. Rell said Thursday that the state now has a 20 percent increase in revenue collections and that has caused her to reconsider her initial tax hike proposal.”
Here’s the Republican press release.
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