Yehyun Kim :: ctmirror.org
The state Capitol in Hartford.
The legislature’s Finance Committee raised separate payments Wednesday that might cap municipal property tax hikes and doubtlessly launch a second battle with Gov. Ned Lamont over management of Connecticut’s bank card.
Each measures have been launched solely as “ideas,” that means the precise invoice language hasn’t been drafted but.
However every idea has the backing of a minimum of one of many finance panel’s two co-chairmen, making it seemingly they a minimum of will probably be despatched to a public listening to, as soon as the main points of the respective measures have been fleshed out.
Connecticut’s model of Propositon 2 1/2?
Rep. Sean Scanlon, D-Guilford, the brand new Home chair of finance, is spearheading the property tax cap, which he says was impressed partly by Massachusetts’ Proposition 2 1/2, a statute that has drawn nationwide consideration since Bay State voters enacted it by poll in 1980.
Scanlon hasn’t settled on the entire particulars — together with whether or not Connecticut municipalities additionally would face a 2.5% ceiling on annual property tax hikes.
However given longstanding considerations over the regressive nature of this tax — it expenses the identical fee on low, center and excessive revenue taxpayers alike — Scanlon mentioned he believes some type of cap is important.
“I believe it’s most likely essentially the most vital public coverage subject going through Connecticut,” Scanlon mentioned, including that the state’s per capita property tax burden, one of many nation’s highest, is a recipe for financial catastrophe.
mark pazniokas :: ctmirror.org
Rep. Sean Scanlon, proper, needs to cap municipal property taxes.
That system each exacerbates already excessive revenue and wealth inequality whereas stifling native financial improvement efforts, notably in city facilities which usually have the best property tax charges.
Municipal property taxes generate about double the annual income than does Connecticut’s revenue tax — the single-largest income engine of state authorities.
And a December 2014 tax incidence analysis by the state Division of Income Companies discovered discovered that Connecticut’s state-and-local tax system hammers low and center revenue folks.
The poorest folks in Connecticut by way of adjusted gross revenue — about 725,000 filers incomes as much as $48,000 per 12 months — successfully spent 23.6% of their pay on state and native taxes in 2011. By comparability, the middle-class paid about 13%, whereas the highest 10% of earners paid 10% and the highest 1% paid about 7.5%.
A tax incidence evaluation research which teams pay taxes and the way these burdens are distributed. For instance, the evaluation discovered renters successfully pay some or all of their landlords’ property taxes.
[After one alarming tax fairness study, CT is wary of launching a second]
And although many particulars of the cap measure nonetheless are pending, Scanlon mentioned a couple of ideas are fastened in his thoughts.
First, the aim is to not remove or destroy the idea of native management in Connecticut’s 169 cities and cities. Fairly, it’s to offer stronger incentives for municipalities to consolidate and regionalize companies, and thereby management spending.
“We’ve got to grasp the significance of saving Connecticut,” he mentioned. “If we proceed down the trail of sustaining 169 small kingdoms, we’re going to expire of cash.”
Equally necessary, Scanlon mentioned, is that the laws can not put municipalities on a hunger food regimen. In different phrases, if the flexibility of cities to boost taxes is restricted, however the state doesn’t provide them different income choices to associate with cost-cutting methods, then the brand new system additionally will fail.
Elizabeth Gara, govt director of the Connecticut Council of Small Cities, warned that communities could be cautious of this proposal given the state’s fiscal historical past.
“It’s untimely to speak about property tax caps till we have now adopted — and adhered — to an applicable revenue-sharing mechanism for cities,” Gara mentioned. “Sadly, the state doesn’t have an excellent monitor document of abiding by proposals to diversify native income sources.”
One legislative proposal to share gross sales tax receipts with cities and cities was suspended in 2012, one 12 months after it was enacted — and earlier than any {dollars} really have been shared.
A extra expansive plan was adopted in 2015 and trumpeted by state legislators as they sought re-election in 2016. However the Municipal Income Sharing Account, or MRSA, by no means got here near delivering the $300 million-plus in annual gross sales tax receipts it was imagined to share by 2018.
Legislators successfully suspended many of the program 4 years in the past after failing to seek out sources within the state funds to help it.
Most Republicans additionally backed Scanlon’s property tax cap idea, which handed overwhelmingly Wednesday by voice vote.
Rep. Holly Cheeseman of East Lyme, rating Home Republican on the finance panel, mentioned “I’m at all times prepared, as is my caucus, to take a look at proposals that might relieve tax burdens on our residents.”
However Cheeseman additionally predicted the idea wouldn’t go far except state officers discover a option to ship the sources they promise to cities and cities.
Battle resumes over state bonding
One other measured raised Wednesday by the Finance Committee targets how the state manages its annual borrowing.
Extra particularly, Sen. John Fonfara, D-Hartford, the committee’s different co-chairman, has argued for years that the legislature ought to play a a lot bigger position on this course of.
The state borrows billions of {dollars} yearly, by issuing bonds on Wall Avenue, to pay for varsity development, capital tasks at state universities, freeway, bridge and rail upgrades, state constructing upkeep, open house and farmland preservation, and numerous smaller group tasks.
Lawmakers largely management step one within the borrowing course of, adopting a two-year bond package deal, however after that the Government Department is generally in cost.
The State Bond Fee has sole authority to resolve when — and if — the federal government really borrows cash to finance any of the tasks throughout the bond package deal.
The governor is chairman of the 10-member bond fee and legislators solely get 4 seats on the panel — two from every social gathering. As well as, the governor’s funds workplace has sole authority to set the panel’s agenda.
Although the main points of Fonfara’s invoice nonetheless aren’t set, he provided a measure in 2019 that largely put the bond fee beneath legislative management, and in addition reassigned some bonding and finance specialists from the governor’s funds workplace to the legislature’s nonpartisan Workplace of Fiscal Evaluation.
The finance committee overwhelmingly handed the 2019 invoice, however Lamont and legislative leaders finally determined to kill the measure two years in the past.
Since Lamont took workplace in January 2019, he has pressed lawmakers to simply accept a “debt food regimen,” and there’s proof to help the governor’s concern.
[Lawmakers make bipartisan push to wrest control of CT’s credit card from governor ]
Connecticut has one of many largest per capita bonded debt burdens of any state, and its pension debt is in even worse form. All totaled, Connecticut has greater than $90 billion in long-term, unfunded obligations.
However Fonfara says that bonding is a useful instrument for financial improvement, notably in poor cities that may’t afford to speculate native {dollars} to create jobs and foster new development industries.
And rates of interest usually have been extraordinarily low all through the coronavirus pandemic, making it doable for Connecticut to borrow cash cheaply.
However Fonfara mentioned his main concern is that your entire borrowing dialog isn’t balanced between the governor and the legislature.
“We’re utterly out of the loop,” he mentioned. “This isn’t about saying, unilaterally, that we need to take what he has. That is about making certain the legislature has a task to play.”
The administration is anticipated to battle any proposal the committee would possibly provide this 12 months.
“Whereas we should not have specifics, we usually don’t help efforts to vary the construction and group of the State Bond Fee at the moment,” Melissa McCaw, Lamont’s funds director, mentioned Wednesday.
In its first two years, she mentioned, the Lamont administration has made key investments in reasonably priced housing, college development, the atmosphere, municipalities, and modernization of state companies, all whereas lowering Connecticut’s general reliance on its bank card.
This, in flip, has prompted Wall Avenue credit standing companies to enhance their rating for the state, additional controlling the state’s borrowing prices, McCaw added.
Nonetheless, Fonfara obtained sturdy bipartisan help for his proposal two years in the past and mentioned he’s assured Republicans on the finance committee will be a part of Democrats in supporting it once more.
Cheeseman mentioned she’s open to extra legislative management over borrowing, offered each events have an equal voice — and offered it’s not used as an excuse to borrow recklessly.
“I don’t need the bond course of for use as a slush fund for pet tasks,” she mentioned. “There are wants and there are needs. … We shouldn’t be the limitless bank card.”
