Officials Working Toward

Easing Residential Tax Burden

By John Voket

As the 2011-12 budget process was just wrapping up with the second-round approval at referendum May 17, officials from the Board of Selectmen to the Board of Finance and Legislative Council have already started focusing on the next fiscal cycle, with an eye on trying to ease or at least level out the tax burden on Newtown’s residential property taxpayers.

On May 26, the finance board discussed a proposal floated a week earlier by Councilman Gary Davis, who initially proposed the council adopt his “bolder vision” of committing to an across the board, one-percent reduction in property taxes in the 2012-13 budget.

During First Selectman Pat Llodra’s report to the finance board, Martin Gersten suggested that local property taxpayers have hit the wall, and that the town has to go to work developing real avenues to provide relief.

Finance board Chairman John Kortze then spoke to the council initiative warning that even with a year’s advanced notice, any effort to seek a one percent overall reduction, while a good idea, is “structurally problematic.”

He noted that state law prevents any town from reducing the school district’s budget below the amount funded in the previous year, which would mean a $4 million reduction on the town side would have to occur to achieve the one percent reduction, “which would be devastating.”

The difficulty in achieving that level of savings by exclusively reducing the town-side expenditures is compounded, according to Mrs Llodra, because the she is already identifying anticipated fixed cost increases of $1.3 million for medical benefits — $280,000 of that on the town side; $1.1 million in debt service increases carried on the town side, but incurred mainly to underwrite bonding the high school addition; and $750,000 in already negotiated salary increases.

Another $84,000 would be required to keep the local municipal employees pension funded.

Mrs Llodra has already suggested that equal, if not greater effort, should be devoted to offsetting the burden on residential property owners by targeting recruitment and retention of commercial taxpayers.

In a comparison among 12 Connecticut communities with characteristics similar to Newtown, the first selectman noted that local dependence on taxation of homes to meet budget demands now exceeds 82 percent, with just 7.7 percent coming from commercial and industrial sources.

She pointed out that Newtown’s 2008 Grand List assessment is just over $3.9 billion.

The next closest community in grand list total (reported as of 2008) is Southington, with slightly more than $4 billion. But that community, with several sprawling industrial sites and a densely populated commercial zone taps, its residential taxpayers to cover 71.4 percent of the overall operating expense of its municipal government.

Guilford, with a $3.5 billion grand list (2008), depends on residential taxpayers to cover 85.5 percent of its overall operating budget, while Farmington, with its $3.7 billion grand list, leans on its homeowners to fund 65.2 percent of its annual budget.

Windsor, with a grand list of $3.1 billion, draws just 50.6 percent of its grand list from residents, but that community taps a half-dozen major contributors to collect 15.4 percent of its grand list contribution in personal property tax — typically assessed on stock, hardware, equipment, and fixed assets.

Windsor’s Assessor Steve Kosofsky said an 800,000-square-foot Walgreen’s distribution center with its high-tech robotic equipment and robust 12-month inventory contributes $2 million to the town’s grand list annually.

Cigna and Aetna Insurance data centers and two new 450,000-square foot commercial office complexes round out Windsor’s top five personal property tax contributors.

As discussions about better balancing the tax burden on commercial/industrial contributors has ebbed and flowed with various elected and appointed bodies in recent years, Mr Kortze has often pointed out that Newtown lacks the kind of environment and infrastructure as a number of lower Fairfield County communities that have substantially lower property tax rates.

He has often cited the Route 1 and Interstate 95 corridor as a major attraction to commercial and industrial developers whose tax contributions much more equitably offset residential taxation.

Mrs Llodra also offered finance and council officials a list of 12 initiatives she has or is pursuing to help chip away at greater potential future property tax increases.

Among those initiatives is the town’s recent switch to a self-funded employee medical benefit program; recalibration of contributions to the local pension plan to reflect current economic conditions; continuous honing and improving of financial best practices, which have helped elevate the town’s bond rating; and a plan to make installment contributions to a fund for capital purchases.