Some municipal leaders and state lawmakers are concerned about Connecticut Gov. Ned Lamont’s election-year proposal to lower the state’s cap on local motor vehicle taxes. of the regime.
Senator Cathy Osten, D-Sprague, co-chair of the powerful General Assembly budget drafting committee, said state policymakers have tried to cap car taxes in the past, promising that cities and villages would be reimbursed for loss of income, and this has not been the case. it worked.
“We’ve done this before, and then two years later we come back and say, ‘We really can’t afford to give this money to municipalities,’ and then we raise the cap on cars,” she said. during a public hearing on the bill on Friday. “I’m afraid that’s exactly what’s going to happen here.”
Osten’s concerns were echoed by some city leaders, who expressed skepticism about the bill’s promise to maintain the financial integrity of cities and towns.
“Without a safety mechanism to fully reimburse municipalities for lost property tax revenue, capping car taxes will simply shift an even greater burden onto already overstretched homeowners and small businesses,” said Betsy Gara. , executive director of the Connecticut Council of Small Towns, in written testimony. She said local officials in small towns are concerned that state reimbursement will be “phased out over time or wiped out altogether when the state faces tough budget years.”
The criticisms were filed the same day the Democratic governor hit the road touting his legislative tax-cutting agenda. Lamont jumps into a long-running debate in Connecticut over how best to reduce or even eliminate unpopular local car taxes, a major revenue stream for cities and towns that generates an estimated $1 billion in revenue every year.
Under Lamont’s plan, the existing property tax cap of 45 mills on motor vehicles would be lowered to 29 mills. A mill equals $1 out of every $1,000 of assessed property. Martin Heft, undersecretary of the Office of State Policy and Management, said Lamont’s proposal would reduce car taxes on 1.7 million vehicles in 103 municipalities, including 20 of the 25 municipalities in economic difficulty of the state.
“The most ruthless tax there is is the property tax on your car and on your house. It’s a tax you pay the good times and the bad. The tax you pay when there is COVID and when there is no COVID. It’s a relentless tax,” Lamont said at a news conference in South Windsor. “And it’s one of the highest taxes compared to our peers in Connecticut, so we’re trying to make up for lost time.”
Connecticut AARP state director Nora Duncan praised Lamont’s efforts at Friday’s event, saying it’s a step toward reducing the tax burden on senior residents and make the tax more predictable.
Since local property tax rates vary among the state’s 169 cities and towns, and the value of used motor vehicles has increased dramatically during the pandemic, Lamont proposed a separate companion bill, a said Heft. Under the plan, which is also awaiting legislative action, the value of motor vehicles would be converted from average retail value to manufacturer’s suggested retail price, with a 20-year depreciation schedule.
In written testimony, Heft predicted that the proposed change will create a fairer system in which motor vehicles are rated throughout Connecticut using the same methodology and owners will have predictable value for the life of the vehicle. This, he said, would end the current situation where taxpayers are sometimes surprised to receive bills that include a higher value for their car than the previous year.
Osten, however, said she remains skeptical of how the governor’s plan will work and predicted it would ultimately bring greater relief to wealthier taxpayers with more expensive vehicles. She suggested the state simply stop taxing vehicles worth $10,000 or less.
“It would immediately help owners of lower-value used vehicles,” she said, “and it would save them a lot of money.”