What vehicle tax relief? [Rep-Am]

June 16, 2015


HARTFORD — The hubbub about business taxes going up has been drowning out Democratic trumpeting about property tax relief in the newly minted state budget.

The Democrats have been unable to get their message through all the howling from the business community and Republicans over state tax changes in the two-year, nearly $40.3 billion budget that the House and Senate approved on June 3.

Other states, national media and anti-tax groups have added to the chorus over the $2 billion-plus tax package that increased income, sales and business taxes.

It is all quite frustrating to Rep. Jeffrey J. Berger, D-73rd District, the House chairman of the tax-writing Finance, Revenue and Bonding Committee.

“I think there is no question we have been overshadowed,” the Waterbury lawmaker said.

He has been laboring for years to end disparities in the local property tax on motor vehicles. Taxes on the same makes and models vary widely among towns and cities.

Berger is excited because he said the budget plan redresses this inequity. It caps local car taxes and provides state subsidies to offset any lost revenue. Taxpayers in 57 of the state’s 169 municipalities are expected to see car taxes drop over 2017 and 2018 fiscal years.

Despite Berger’s excitement, Democrats have been unable to whip up much public enthusiasm about the cap on car taxes.

Democratic lawmakers and Malloy have been describing the budget and its property tax relief as historic and transformational. Yet, they acknowledge their message has been lost in all the din over business taxes.

House Speaker Brendan Sharkey, D-Hamden, blamed fearmongering on the part of Republican lawmakers.

“I think the one thing that frankly that the other side of the aisle does very well is promote fear whenever you’re adopting something that involves change, and so that message always is just inevitable. It is human nature,” he said.

Sharkey said he is confident the Democratic message will break through eventually.

“Let the dust settle a little bit. Let the Republicans finish with their hyperbole, and let’s get down to the facts,” he said.

REPUBLICANS COUNTER THE facts are the Democrats voted for the second biggest round of tax increases in state history four years after they and Malloy imposed record increases, and taxpayers are rightly unhappy.

“Speaker Sharkey may think that Republicans are promoting fear but, in reality, we are simply voicing the distress felt by businesses of all sizes throughout this state and the working families that keep our economy going,” said Rep. Themis Klarides, R-Derby, the Republican leader of the House.

In all, Democrats calculate the budget provides $214 million in new relief for local taxpayers and municipalities, including $59 million for lowering car taxes.

Malloy and Democrats also made changes that rework how the state compensates towns and cities for properties that state law exempts from local property taxes.

The budget plan shares a portion of the state’s sales tax receipts with towns and cities. This is expected to provide $158.6 million for the upcoming 2016 fiscal year and $276.9 million the following year.

The budget also provides $54 million in new state education aid.

The problem for the state’s largest business group and many of its 10,000 members is that Malloy and Democrats are raising business taxes to pay for this property tax relief.

BUSINESS OWNERS AND EXECUTIVES are questioning how much business taxpayers will benefit, said Joseph Brennan, CEO of the Connecticut Business and Industry Association.

“Given events of the past years where certain promises are made and not always kept, I don’t know there is a high level of confidence that they would see property tax reductions,” he said.

Brennan said property taxes are a lower priority for the business community.

“I have been told that this is the biggest issue for businesses. For some it may be, but for the vast majority of business I don’t think because of changes that have been made to local property tax laws over the years that’s the biggest issue,” he said.

A 2011 law exempted manufacturing machinery and equipment from local property taxes, for example. State law also allows towns the option of offering exemptions, abatements and fixed assessments for a wide range of economic development purposes.

Republicans said the Democratic budget also finances its property tax reforms by reducing a credit against the state income tax for property taxes and by raising taxes on consumers.

Sen. Robert J. Kane, R-Watertown, doubts that the car-tax cap is going to benefit the 10 towns of his Senate district.

“I think it will go to the major cities,” said Kane, the ranking Senate member of the Appropriations Committee.

Kane and Sen. Kevin D. Witkos, R-Canton, observed that Malloy and the Democrats had previously provided towns and cities a share of the sales tax revenue, but that lasted only a year.

“We have a propensity to promise, but not deliver,” said Witkos, the second-ranking GOP leader of the Senate.

He said the close budget votes also suggest Democrats are not all that enthusiastic about the budget plan despite the descriptions that Malloy and Democratic leaders are using now.

The budget narrowly passed the House 73-70 after Sharkey kept the House in session overnight until the vote count finally added up as dawn broke on the final day of the 2015 session. After a Republican filibuster, the Senate voted 19-17 in the session’s final hour to grant final approval in the legislature.

“They barely squeaked by, and it took lots of negotiations down in the House,” Witkos said.

Now, Malloy and Democrats are contemplating rolling back some of the business tax changes, but they say they remain committed to the property tax provisions.