Bill seeks to make car tax more equitable [CT Post]

March 30, 2015

Article as it appeared in the Connecticut Post

HARTFORD — A car owner in Greenwich pays a fraction of the car taxes that someone from Bridgeport who owns an identical auto pays.

Lawmakers have tried to address that disparity many times, and failed.

Now, a bill before the General Assembly would allow the state, not the municipality, to collect the car tax and then distribute more revenue to poorer communities.

“It makes the most significant change in the tax system in a generation,” said Francis Pickering, executive director of the Western Connecticut Council of Governments, which represents towns from Greenwich to New Milford. “There is a lot of redistribution, and there could be winners and losers in this bill.”

The bill, proposed by Senate President Martin Looney, D-New Haven, would establish a statewide 29 mill rate for auto taxes, exempt the first $3,000 in assessed value from taxation and allow the state to collect the taxes and distribute more revenue to poorer communities. It would also seek to divert some of the state’s annual payments in lieu of taxes for tax-exempt property to needy communities and force towns and cities to share commercial and industrial tax revenue to “level the playing field” for economic development.

State Sen. L. Scott Frantz, R-Greenwich, however, was blunt in his opposition to Looney’s bill, calling the legislation “close to socialism.”

“It smacks of redistribution of wealth,” Frantz said. “It sends a horrific message to the marketplace that the state is using radical means to balance its budget.”

Car taxes have long been unequal across the state, and the desire to change the system is not new. An effort backed by Gov. Dannel P. Malloy in 2013 to reform car taxes stalled as municipalities complained about losing vital revenue.

Republican gubernatorial candidate Tom Foley, who lost to Malloy last year, proposed a statewide uniform car tax rate of 30 mills, but did not detail how the municipalities would be reimbursed.

A Hearst Connecticut Media analysis at the time used Foley’s 1967 Ferrari GTC, valued at $281,000, as an example to illustrate the great disparity in car taxes from town to town.

In Foley’s hometown of Greenwich, where the mill rate for motor vehicles is far and away the lowest in Connecticut, taxes on the car were $2,157 for 2014. In Bridgeport, the same Ferrari would be taxed at $8,300; in Hartford, $14,612.

Looney’s bill seeks to make the car tax more equitable. Under the proposal, the state would collect and distribute car tax revenue and give the state’s 169 towns and cities funding levels equal to what they received in 2014.

As the pool of car tax revenue increased over time, additional funds would be distributed based on population, the level of tax-exempt property and poverty rates.

The bill would also send more PILOT money to the 10 communities with the most tax-exempt property and would direct the state’s nine regional government councils to collect 40 percent of a region’s commercial and industrial taxes and redistribute the money based on each town’s ability to raise revenue.

“For some time now a discussion has been building to move the state in the direction of greater regionalization,” Looney recently told the Planning and Development Committee.

“Senate Bill 1 will provide meaningful incentives for towns to cooperate on economic development initiatives, while removing artificial barriers to shared planning and growth,” Looney said.

“Members of both parties have long recognized the unfair nature of the car tax and the urgent need for change,” Looney added.

State Rep. Gail Lavielle, R-Wilton, told the planning committee the revenue sharing components of the bill amount to a mini form of county government and could force local tax increases.

“This bill would create a new level of government that would absorb a portion of these local taxes and then allocate these funds to other cities and towns,” Lavielle said. “Certain municipalities would gain revenue and others would lose. Those that lose would likely face shortfalls in their local budgets.”

Weston First Selectman Gayle Weinstein told the committee the car-tax proposal is simply wrong.

“It is not fair to take that growth from the small towns and redistribute it to the cities.”

Betsy Gara, executive director of the Connecticut Council of Small Towns, said the car-tax proposal would cost towns money.

“This will erode an important source of revenue for our towns,” Gara said.